Biggs VoIP Trends Evolution 26 Oct 06
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TeleEvo 2006, Moscow, 25 October 2006 1
Phillippa Biggs, Economist, ITU
TeleEvo 2006
Radisson SAS Slavyanskaya Hotel
Moscow, 25 October 2006
VoIP:Current Trends and
Future Evolution
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Agenda
1. Market drivers
2. Defining VoIP regulatory treatment
3. VoIP market
4. Future Evolution
5. Conclusions
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Agenda
1. Market drivers:- IP as a key enabler NGN- Development of the broadband market
- Price reductions (operators & consumers)2. Defining VoIP regulatory treatment
3. VoIP market4. Future Evolution
5. Conclusions
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1. Market drivers: IP as a key enabler
Evolution from multiple separate networks
(each optimized for one service) to a
unified IP-based multi-service network
Telephony
Internet
Television
Multimedia Services
Telep
hony
Internet
Telev
ision
IP-based network
Control layer
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IP-enabled Next Generation Networks (NGN)
ITU Workshop What Rules for
IP-enabled NGN?
23-24 March 2006
- Policy and regulatory implications
- Market developments- Issues surrounding interconnection and
universal servicehttp:/ /http:/ / www.itu.int/ osg/ spu/ ngnwww.itu.int/ osg/ spu/ ngn//
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The transition towards NGNOld World
(PSTN telecom)
New World
(IP-based Internet)
Circuit-switched Packet-based, based on IP
Interconnection P2P peering arrangements
Capacity-based QoS guaranteed Quality of Service (QoS) class (best effort)
Cost orientation, focus on marginal cost Bundled offers: marginal costs near zero
Calling Party Pays (CPP) Unclear Bill and Keep? (Scott Marcusbackground paper and WIK Institutesworkshop on this subject).
Key issues asymmetric regulation
(numbering, universal & emergencyservice)
Unlicensed bands, spectrum trading,
competition policy, emergency service
Network-centric control & intelligence Edge-centric - intelligent nodes at edge
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Forces driving VoIP (contd)
Consumers cheaper, single provider,simplicity of flat-rate billing.
Operators:- Reduced costs of new & legacy networks
- Tapping into growth in new markets;
- Alliances with service and content providers, innew, converged business models
- Growth in broadband networks.
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Increasing availability of broadbandNumber of countries with broadband
commercially available
81
113
133145
166
0
2040
60
80
100
120
140
160180
2002 2003 2004 2005 2006
Source: ITU World Information Society Report.
Source:
ITU
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At faster speedsGrowth in max. broadband speed available
0
5
10
15
20
25
30
35
40
256
512
768
1024
1280
1536
1792
2048
2304
2560
2816
3072
3328
3584
More
Speed (kbps)
Num
berofcoun
tries
2003 2005 2006
2005
2003
2006
Source:
ITU.
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Growth in broadband in subscribers & share
0
100
200
300
400
500
1995 1997 1999 2001 2003 2005
Internet subscribers worldwide, in millions
Fixed-line narrowband
Fixed-line
broadband
Mobile broadband
Source:
ITU
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International voice traffic (bn mins)
15.5%13.1%
11.8%7.4%
4.8%1.6%0.2%
0
25
50
75
100
125
150
175
200
1998 1999 2000 2001 2002 2003 2004
VoIPPSTN
As % of total
Source:
ITU.
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Falling price (& revenue?) in intl voice traffic
3235
3944
5158
63
35
40
45
50
55
60
1998 1999 2000 2001 2002 2003 2004
Revenue (US$bn)
Price per minute (US cents)
Source:ITU WorldTelecom.
IndicatorsDatabase
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Transition to VoIP: incentives for operators
0%
20%
40%
60%
80%
100%
1995 1997 1999 2001 2003 2005
Costs
Competitors
Profits
Incentives in the Development of the Market (figurative)
Time
??
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But beware: price reductions for consumers!
$16.81
$37.44
$60.74
$34.28
$28.20
$12.94
0
10
20
30
40
50
60
70
Cos
t(USD)
2003
2005
mobile basket
-12% p.a.
20 hours' Internet
access
-12.5% p.a.
broadband
($/100 kbps)-20% p.a.
Average cost of ICTs worldwide2003-2005
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Incentives with price reductions
0%
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8 9 10 11Costs
Profits
Incentives II (Taking into account declining costs)
Time
Costs
Competitors
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Agenda
1. Market drivers2. Defining VoIP
- ITU work and working terminology- Country definitions- Regulatory treatment
3. VoIP market4. Future Evolution
5. Conclusions
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2. Defining VoIP
ITU Internet Report 2001IP Telephony
IP Telephony carriage of voice over IP-basednetworks irrespective of ownership
Voice over Internet Protocol (VoIP) voice
traffic carried wholly or partly using IP overbroadband networks competing with incumbent
operators
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2. Defining VoIP: Country definitionsDefinition Selected countries
QoS, now replacedby Functionality
India, JapanHong Kong
Numbering system Japan, Taiwan-China
Netwk. Architecture Israel, Saudi Arabia
Degree over PSTN& terminals used Israel, JordanIndia, Japan, Malaysia, Spain
Service Egypt, Barbados, Indonesia, Italy,
Jordan, UK, United States.Users Australia, Chile, Tunisia
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Regulatory status of IP Telephony, 2005
2
7 8
33
10
5
3
2
2
5
7
2
12
46
4
1
13
33 3
11
3
9
0%
20%
40%
60%
80%
100%
Africa Americas Arab States Asia-Pacific Europe/CIS
No policy for
IP Telephony
Prohibited
Restricted
Partial
Competition
Full
Competition
Note: Based on responses from 149 economies. Prohibited = no service is possible. Restricted = only licensedPTOs can offer service. Partial competition = non-licensed PTOs may use either IP networks or public Internet.Full competition = anyone can use or offer service.Source:ITU World Telecommunication Regulatory Database (2005 questionnaire).
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The spectrum of regulatory treatment of VoIP, 2006
Explicitly legal
(57 countries +)
Explicitlybanned (atleast 23countries) Yet to be
madelegal-TwilightZone ofregulatoryambiguity
If in doubt,
hold a PublicConsultation(22 countries
+)
Underconsideration bygovt/regulator(30+).
Explicitly deregulatedand/or light regulatory
touch (19 countries+)
License required(26 countries+)
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& Russia? Directive on Telematic Service
Source: http://www.minsvyaz.ru/site.shtml?id=3075
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Agenda
1. Market drivers2. Defining VoIP regulatory treatment
3. VoIP market- Subscribers & distribution- The problem of the missing millions
- Revenues4. Future Evolution
5. Conclusions
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3. VoIP market - strong growthWorldwide VoIP Subscribers
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010 2011
Millions
0
2
4
6
8
10
12
14
16
18VoIP subscribers (millions)VoIP share of total mainline subscribers
Source:
IDATE.
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Distribution of VoIP subscribers
Distribution of VoIP subscribers, mid-2005
Japan62%
NorthAmerica
16%
France11%
Germany2%
Norway0%
Neth.1%
Sweden1%Italy
5%
Korea2%
Source:
PointTopic.
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But how to measure the missing millions?Household VoIP in the UK
(1.8 million)
150,000
8%
1.35m
75%
300,000
17%
Skype/
Vonage
BT
Wanadoo
Orange
Source: OFCOM
Difficult to estimate!
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Agenda
1. Market drivers2. Defining VoIP regulatory treatment
3. VoIP market4. Future Evolution- Market projections
- Voice in bundles- The transition to flat-rate pricing
5. Conclusions
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4. Future Evolution: Market projectionsEstimates of international VoIP traffic
0
5
1015
20
25
30
35
40
45
50
1996 1999 2002 2005 2008
%o
ftotalint'alm
inutes
Yankee
Gp.
Telegeography
/PriMetrica
Tarifica
DeltaThree WP
Delta Three
White Paper
Analysys
Yankee Gp.
ITU
Source:ITU et al.(ITUestimate
refers to IPTelephony)
Pink lineTelegeograhy
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Voice included in bundles (UK)
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Shift towards flat-rate pricingEvolution in Pricing Strategy
133145
166
0
20
40
60
80
100120
140
160
180
2004 2005 2006
Nu
mberofcountries
Data Time
Both Flat-rate
75%68%
81%
Data: billed by data downloaded or time spent online or combination both.
Source:
ITU
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VoIP is a growing reality for operators, consumersand regulators, with strong growth by all metrics.
Opportunity or threat?
A bit of both!
Despite regulatory uncertainty in many countries, itmay still be best to engage:
Operators early mover advantage;Consumers benefits in cost reductions;Governments help shape/develop a stable market,
instead of holding it back.
5. Conclusions
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Thank you very
www.itu.int