IP Telephony Regulation in Korea Information & Communication Policies for the Digital Economy Korea...

IP Telephony Regulation IP Telephony Regulation in Korea in Korea

IP Telephony Regulation IP Telephony Regulation in Korea in Korea

Information & Communication Policies

for the Digital Economy

Korea Information Strategy Development Institute

Chong-Hoon Park & Osang KweonChong-Hoon Park & Osang Kweon


Definition of IP TelephonyII

Analysis of IP Telephony Market IIII

Policy IssuesIIIIII

Foreign Policy Trends IVIV

Policy DirectionVV

ContentContentKISDIKISDI

Definition of IP Telephony Definition of IP Telephony


KISDIKISDI

Information & Communication Policies for the Digital Economy

Voice telecommunication services provided through the Internet

KoreaKorea

ITU DefinitionITU Definition ITU DefinitionITU Definition

Japanese DefinitionJapanese Definition Japanese DefinitionJapanese Definition

ReferenceReference

VoIP : Use of Private NetworksInternet Telephony : Use of Public NetworkIP Telephony : VoIP + Internet Telephony

Communication service using a packet switching system where voice is converted to IP packets and transmitted

DefinitionDefinition

KISDIKISDI


Phone to Phone

is mainly provided by SSP(type1) and FSP

1998

IP Phone to IP Phone

is mainly provided by SSP(type1, 2)

2000

Wireless IP Phone to Wireless IP Phone

will be provided by whom?

post 2003

PC(Web) to Phone

is mainly provided by SSP(type2)

1999

Development PathDevelopment Path

KISDIKISDI


① Characteristics of voice, data, fixed, mobile (under laws and regulations related to spectrum use)

② Service area boundaries of fixed telephony does not apply

③ Mobility from fixed services is possible

14.9% → 20%14.9% → 20%Internet TelephonyInternet TelephonyInternet TelephonyInternet Telephony

CharacteristicsCharacteristics

KISDIKISDI


Service Type Fixed Mobile Internet

Mobility Indoors(Fixed)Indoors(Fixed)

Indoors and Outdoors

(high)

Indoors and Outdoors

(high)

Indoors and Out(Dependent on type of internet

access)

Indoors and Out(Dependent on type of internet

access)

Area Code YesYes NoNo NoNo

Content VoiceVoice Voice and some dataVoice and some data Voice and DataVoice and Data

Service Fees LowLow HighHighDependent on service type

and internet access

Dependent on service type

and internet access

Positioning Positioning

Analysis of Market DemandAnalysis of Market Demand


KISDIKISDI


-

20

40

60

80

100

120

Apr-

00

May-00

Jun-00

Jul-

00

Aug-00

Sep-00

Oct-

00

Nov-00

Dec-00

Jan-01

Feb-01

Mar-

01

Apr-

01

May-01

Jun-01

Jul-

01

Aug-01

Sep-01

Oct-

01

Nov-01

Dec-01

Jan-02

Feb-02

Mar-

02

Apr-

02

May-02

Jun-02

Jul-

02

Aug-02

Local/Long Distance Mobile

Data : KISDI

Unit: 1 million persons

July 2001July 2001

-

500

1,000

1,500

2,000

2,500

3,000

Apr-

00

May-0

0Ju

n-0

0Ju

l-0

0Aug-0

0S

ep-0

0O

ct-

00

No

v-0

0D

ec-0

0Ja

n-0

1Feb-0

1M

ar-

01

Apr-

01

May-0

1Ju

n-0

1Ju

l-0

1Aug-0

1S

ep-0

1O

ct-

01

No

v-0

1D

ec-0

1Ja

n-0

2Feb-0

2M

ar-

02

Apr-

02

May-0

2Ju

n-0

2

Jul-

02

Aug-0

2

Data: KISDI

Unit: 1 million persons

2000.62000.6

3,1173,117

2000. 122000. 129,0629,062

2001. 62001. 612,73212,732

2001. 122001. 125,9195,919

2002. 62002. 69,7329,732

2002. 82002. 8

3,2563,256

• Internet telephony traffic dropped sharply after service is charged since July 2001 • Share of L-L and L-M traffic became similar with the technology development of interconnection

• Revenue decrease is not as large as traffic drop

• As the share of L-M calls increased, revenues have reached previous levels • Market size of 20 billion won at the end of 2002

Market StatisticsMarket Statistics

KISDIKISDI


- persons between ages of 15~ 59 years old

Target Target

- 13,684,008 persons /750 persons

Collected Group/Sample sizeCollected Group/Sample size

- Face to Face Interview

Survey MethodSurvey Method

- Seoul, Busan, Daegu, Daejeon Gwangju(5 major areas)

Area CoveredArea Covered

Demand Survey of Internet Phone Service (August 2003)Demand Survey of Internet Phone Service (August 2003)

Potential Demand: 3,196,584 II

Market Size : approx. 800 billion wonIIII

Based on population at the end of 2002Based on population at the end of 2002

Market PotentialMarket Potential

KISDIKISDI


- service classification, number, and interconnection rule is not clear

Legal BarrierLegal Barrier

- recognized as having lower call quality than fixed telephony services- recognized as a free service

Perceptions of UsersPerceptions of Users

- concern of taking away revenues of voice telephony - taking away competitiveness from Incumbent Carrier if new service introduced

CannibalizationCannibalization

Barriers

BarriersBarriers

KISDIKISDI


- reasonable fees compared to fixed telephony services

Low FeesLow Fees

- internet/ video calls in addition to voice

Various Value-Added ServicesVarious Value-Added Services

- indoor/outdoor use based on type of internet connection

MobilityMobility

- enhance service reliability in emergencies of PSTN network

Reliable service in EmergenciesReliable service in Emergencies

Drivers

DriversDrivers

Policy Issues Policy Issues


KISDIKISDI


How should government classify IP Telephony?

- Depending on classification, IP telephony service can be regulated

and service operators needs to go through licensing process

- Government need to consider whether IP phone has the same characteristics as voice telephony

- Government needs to differentiate local/long/International of IP phone.

- Government needs to know whether it can categorize

fixed and wireless.

IssuesIssues IssuesIssues

Classification Classification

KISDIKISDI


Are terminating numbers allowed for internet telephony services?

Which is the best numbering system for IP telephony: local numbering system, identification numbering system (mobile numbering), ENUM?

Up to how many numbers will be allowed including identification and subscriber numbers if identification numbering system is implemented?

What are the possible barriers to the mobility of IP telephony, if the local numbering system is implemented? Is it technically possible?

Would service providers be able to use the identification numbering system if local service providers are using the local numbering system?

Can all types of IP phones receive terminating numbers regardless of QoS?

IssuesIssues IssuesIssues

NumberNumber

KISDIKISDI


Are IP telephony operators ‘free riding’ on broadband subscriber lines?- If it is free riding, what would be the impact on settlement?- If it is free riding, what would be the impact of settlement?

Is there a method to calculate cost based on the amount of usage of the subscriber networks?

Can the current telephone and data networks be added to IP telephony networks?

IssueIssue IssueIssue

Can the concept of QoS guarantee be introduced to the internet based on Best Efforts?

Are regulated operators responsible for QoS of IP networks?

Should QoS of IP telephony be announced for the protection of IP telephony users?

IssueIssue IssueIssue

Interconnection & QoSInterconnection & QoS

Foreign Policy Trends Foreign Policy Trends


KISDIKISDI


Increase of broadband subscribers (13 million subscribers as of the end of 2002) and greater interest in IP Telephony- Significant increase of subscribers for IP telephony operators Vonage and Net2Phone

Plans by CATV operators to offer IP telephony services in 2003- AT&T Broadband, Comcast, Time Warner Cable, Cox Communications - Criticism on IP telephony positioning (Primary-line, and Secondary-line)

Roll-out of IP telephony is expected to be at current levels in the second half of 2004

MarketMarket MarketMarket

Continued growth in unregulated environment; currently FCC and PUC are re-examining classification of IP Telephony - Minnesota PUC designated Vonage’s VoIP service as a telecommunication Service in August 2003

Current position of the FCC on IP Telephony - contribute to public interest by leading the emergence of IP telephony through international and access charges - examine each case if two-way telephone terminals have characteristics of telecom services

RegulationRegulationRegulationRegulation

U.S.A. U.S.A.

KISDIKISDI


JapanJapan

Rapid increase of IP telephony subscribers along with internet subscribers- broadband subscribers increased from 65 thousand in 2001 to 10 million in June 2003- 5 million subscribers of IP telephony; 3 million using IP phone with terminal 9 million : total wireless voice service of 11 IP telephony operators with terminating number of 050

Softbank and KDDI are leading the expansion of IP telephony; NTT plans to offer IP telephony services based on FTTH in the later half of 2003


IP Telephony is considered ‘voice’ in Japan where telecom services is classified as voice, data, and dedicated lines

050 system allowed for wireless voice services to 11 operators in the same year inMay 2002- Numbering system: 050-ABCD-XXXX (11 numbers)- Same numbering system for different telecom service operators

3 levels of call quality based on R value (A; 80, B; 60, C: 50) Numbering is grantedonly if call quality is above C level


KISDIKISDI


AustraliaAustralia

Rapid expansion of the broadband market (112% growth in 2002)

Switch to voice services from PABX to internet for large financial institutions

Comindico established an All IP based telecom network and acquired a carrier license to become an IP telephony wholesaler and B2B operator


ACA, ACCC service policy: “Technology Neutral” - IP telephony was classified as other voice services

Investigating the impact of mid-long term changes of the current regulatory framework (ACIF) in consideration of NGN

Studying the ENUM numbering system for a connecting method between internet and existing telecom services (ACA)

Examining the interconnection relationship between voice and data networks (ACIF)


Policy Direction Policy Direction


KISDIKISDI


Examine the plan for IP telephony introduction as a way to develop the telecom market

Introduce new services to stimulate growth in the telecom market

Introduce new services to stimulate growth in the telecom market

Consider the impact of other related systems Consider the impact of other related systems

Modify legal framework including numbering systems and interconnection

Modify legal framework including numbering systems and interconnection

Policy DirectionPolicy Direction

KISDIKISDI


Classify IP telephony service as ‘telecommunication services’ and differentiate between“international” and “long-distance”

Service ClassService ClassService ClassService Class

Special service provider or Facilities-based service provider license is needed depending on ownership of network

LicenseLicense LicenseLicense

Classification & LicenseClassification & License

KISDIKISDI


Apply the identification numbering system for terminating numbers of IP telephonyEx.) 0N0 – XXXX – XXXX

※ Examine the views of service operators with local service licenses on the use of unallocated numbers

Numbering SystemNumbering System Numbering SystemNumbering System

Establish minimum standards for call quality in terms of regulations

- Create new standards for call quality for IP telephony

Quality of ServiceQuality of Service Quality of ServiceQuality of Service

Number & QoSNumber & QoS

KISDIKISDI


Apply Long-Run Incremental Cost

- Need for improvement in current interconnection standards

※ Account settlement for backbone networks

• Need for detailed fee structure for between data networks, between data and telephone networks, interconnection and user costs• Examining the establishment of “IP telephony networks”

※ Account settlement for subscriber networks

• Settlement principles based on a fixed amount

InterconnectionInterconnection InterconnectionInterconnection

InterconnectionInterconnection

KISDIKISDI


Establish an appropriate system in response to the paradigm change to facilitate the development of the telecom market

Build a NGN, Ubiquitous environment through improvements in current systems including service classification, numbering system, call quality and

interconnection

Build a NGN, Ubiquitous environment through improvements in current systems including service classification, numbering system, call quality and

interconnection

Establish a cyclical relationship between existing and new markets

Establish a cyclical relationship between existing and new markets

Stimulate growth in the telecom market through developments and expansion of new services

Stimulate growth in the telecom market through developments and expansion of new services

Policy Objective Policy Objective

KISDIKISDI


Thank You!Korea Information Strategy Development Institute

IP Telephony Regulation in Korea Information & Communication Policies for the Digital Economy Korea...

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