New Technologies and Services in Telecommunications€¦ · 2X Data Frame/ATM Data ... n1 99 7 Ja...
Transcript of New Technologies and Services in Telecommunications€¦ · 2X Data Frame/ATM Data ... n1 99 7 Ja...
© 2006 AT&T Knowledge Ventures. All rights reserved. AT&T is a registered trademark of AT&T Knowledge Ventures.
New Technologies and Services in Telecommunications:
Effects on Competition and Investment
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The Way We Communicate Has Changed
Local exchange company access lines have declined 9% in Florida since 2001, while wireless subscribership has grown 40%.
87 100 111 120 123 126
210 199
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U.S. Total Access Lines (Millions) U.S. Wireless Subscribers (Millions)
Cell Phones Outnumber Wireless
Source: Kaufman Brothers, “A General Flavor of Mild Decay,” July 14, 2003
Wireless Surpasses Landline!
U.S. W
ireless Subscrib
ers (Million
s)
U.S. Total Access Lines (Millions)
Source: Responses to 20012006 FPSC data request & FCC Report on Local Telephone
12.0 11.8 11.7
11.7 10.9 10.9
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13.2 12.5
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2001 2002 2003 2004 2005 FL Local Exchange Company Access Lines FL Wireless Subscribership
FL Local Exchange Access Lines v. FL Wireless Subscribership
(Millions)
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The Way We Communicate Has Changed
For the period 20022005, Florida accounted for approximately 7% of all U.S. broadband lines.
29.6
40.1
49.7
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62 65.7
69.4
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136.3 144.6
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Residential Broadband Households Residential Broadband Users
Residential Broadband Forecast Source: Yankee Group, 2005
(Millions)
(Millio
ns)
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Yesterday… Regulation was based on preconverged network models
Title III Wireless Networks used cell towers to relay voice calls
Title VI Cable networks used coaxial cable to provide video
Title II Wireline networks used landlines to carry voice calls
Regulation Network
Cable Companies
Wireless Companies
Wireline Companies
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Factors Driving Network Convergence
Technological Change
Consumer Demand for Bundled Services
Providers Seeking Increased Efficiencies
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Technological Change: From One Network/Service => Many Services/One Network
Today
2X
Frame/ATM Data Data
Video Video
Internet Access
IP Backbone
Internet Access
Wireless MTSO & Circuit Hierarchy
Wireless
Voice Class 5 & 4 Hierarchy
Voice
Tomorrow Multiple Access
Technologies & Services on One Backbone
Video
Data
Internet Access
Wireless
Voice Voice
Wireless
Internet Access
Data
Video
IP / MPLS Backbone
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Technological Change: Silos to Integration
Past
Voice
Video
Internet Access
Entertainment
Applications
Guides/Directories
CPE
Internet Protocol (IP)
Broadband Connection
Future
Network
SONET Frame ATM
Voice Video Data
Operator Services
Directory
Vertical Services
CPE
Network
Content
Guide
CPE
Network
Past
Voice
Video
Internet Access
Entertainment
Applications
Guides/Directories
CPE
Internet Protocol (IP)
Broadband Connection
Future
Network
SONET Frame ATM
Voice Video Data
Operator Services
Directory
Vertical Services
CPE
Network
Content
Guide
CPE
Network
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Factors Driving Network Convergence
Technological Change
Consumer Demand for Bundled Services
Providers Seeking Increased Efficiencies
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Consumer Demand Drives Development of Bundled Services
ISPs Cable Providers
“TRIPLE PLAYS”
OvertheTop Applications
Wireless
Wireline Providers
“QUADRUPLE PLAYS”
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Factors Driving Network Convergence
Technological Change
Consumer Demand for Bundled Services
Providers Seeking Increased Efficiencies
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The Internet An Enormous Growing Data Network
North American Revenues by Source Category 2005 2006 2007 2008 2009 2010 CAGR
Broadband Music Revenues 1 $6.5 $10.8 $15.3 $20.5 $24.7 $29.1 35% Online Gaming 2 $0.9 $1.3 $1.9 $2.4 $2.9 $3.3 30% VoD Revenues 3 $0.5 $1.0 $1.9 $3.0 $3.8 $4.4 54% IPTV Revenues 4 $0.1 $0.4 $0.7 $1.3 $2.1 $2.9 97%
$8.1 $13.6 $19.9 $27.2 $33.4 $39.7 38%
1 Ovum, Aleksandra Bosnjak and Michelle MacKenzie, September 2006 2 Ovum, Aleksandra Bosnjak and Jonathan Arber, August 2006 3 Ovum, Aleksandra Bosnjak, August 2006 4 Ovum, Aleksandra Bosnjak and Annelise Berendt, August 2006
Number of Hosts Advertised in DNS
0 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000
Jan1993
Jan1994
Jan1995
Jan1996
Jan1997
Jan1998
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Jan2000
Jan2001
Jan2002
Jan2003
Jul2004
Jul2005
Source: Internet Systems Consortium, Internet Domain Survey, January 2006
Global users growing by >10M per month
Websites growing by >40M per month
Backbone load doubles every 1215 months
Global Internet User Estimate April 2002 December 2006
y = 10.405x + 508.58 R 2 = 0.9866
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Millions of U
sers
Source: http://www.allaboutmarketresearch.com/internet.htm
Months
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Exponentially More Volume: IP Traffic Mar02
May02
Jul0
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Sep02
Nov02
Jan03
Mar03
May03
Jul0
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Internet Growth as seen
by AT&
T
Web File Sharing (P2P) Real time Multimedia NetNews Mail ftp Gaming Expon. (Web)
Mar02
May02
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Sep02
Nov02
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Jul0
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Jul0
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Mar06
Internet Growth as seen
by AT&
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Web File Sharing (P2P) Real time Multimedia NetNews Mail ftp Gaming Expon. (Web)
Mar02
Jul0
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Nov02
Mar03
Jul03
Nov03
Mar04
Jul04
Nov04
Mar05
Jul0
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Nov05
Per Su
bscriber Growth Web Real time Multimedia Expon. (Web)
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Impact on Investment
Increased usage is driving more bandwidth needs on the backbone.
Increased applications (triple play) are driving more bandwidth needs in the last mile.
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Impact on Investment & Competition
With no guaranteed return on investment, companies are looking for efficiency and innovation as ways to differentiate themselves.
At the same time, consumers and application providers continue to innovate in ways that affect the network.
Network Providers Competing & Seeking
Efficiencies
Consumer Behavior Changing
Innovation
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Convergence Allows for Efficiency
Managed Network Applications
Packet Size
“Burstiness”
Delay Tolerance
VoIP Video
Conf
Gaming
HQ Audio
Bulk File Transfer
High Quality Video Download
ECommerce
Streaming
Video
Voice Msg
Web Browsing
EMail
HD
Telemedicine/
Teletraining
Real Time HQ Video
Common Internet Applications
Growing Internet Applications
Key:
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Impact on Consumers Broadband: Competition has resulted in lower prices and increased speed and quality.
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Oct 06
256K 1.5M 3M 6M
6M 9%
3M 31%
1.5M 34%
256K 38%
• Customers can purchase FastAccess DSL at prices up to 34% lower than they could five years ago.
• These lower prices represent permanent price reductions and not limited time promotions.
Broadband Pricing as a Function of Speed 20012006
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Impact on Consumers
Bundle Discounts: Discounts offered by local service providers and cable providers that provide customers with a “triple and quadruple play” bundle (voice, video, wireless and data).
Video: Competition for Internet and telephony services is expected to continue and expand into video services.
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Tomorrow… We must ask ourselves “should we regulate” before considering “how we regulate”.
Regulatory Impact
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Legislative Impact: Why update laws to encourage video entry?
IPTV is an innovative new service that will benefit consumers a suite of entertainment, information, and communication services delivered to consumers using advanced Internet technologies and various Audio/Video devices in the home.
Archaic regulations (e.g.," mustbuild” obligations) that have not kept pace with technological progress and product innovation have slowed IPTV deployment. • Regulation should not be a barrier to competitive choice for consumers.
Updating laws to facilitate video choice will have a positive impact on consumers and municipalities. • Video choice means significant savings for consumers.
• Competition works quickly to produce lower prices and sizable consumer benefits.
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Take Aways
We are just beginning to realize the explosion of innovation that convergence will bring.
Multiple players from varied backgrounds will all be competing in this “converged” space – telcos, cablecos, ISPs, and wireless providers.
Regulation has the power to unleash or hamper investment, innovation, and convergence.