The significance of next generation networks
Next Generation Networks (NGNs) as a term used within the telecommunications industry. Change the business model of the Internet. Telephone, Internet and NGN Characteristics Compared. Contrast the Internet-based SIP concept with the NGN’s concept of IMS.
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The Significance of Next Generation Networks
1. Thesis
Next Generation Networks (NGNs) is a term used within the telecommunications industry to designate the successor to the Public Switched Telephone Network (PSTN). NGNs are intended to be all-IP Internet Protocol networks that will combine some features of the current TCP/IP-based protocol at the logical layer with a variety of features yet to be determined at the applications layer. NGNs are expected to replace the PSTN as well as a set of independent networks running on different protocols which are currently operated by telephone companies. The overwhelming need of large carriers is to reduce costs by getting all their traffic into a single infrastructure, rather than the several that they operate at this time. This can only be accomplished by a migration to an architecture based on IP. Carriers also seek to extract more money from Internet-based transactions for themselves.
Telephone companies (hereafter frequently called telcos) are in a race against time. Their core revenues from voice calling are declining. They need to migrate their businesses, or absorb more of the economic value of the Internet for themselves. NGNs can be seen as part of a strategy to do this. Telcos are threatened by the cable industry and other competitors, who may have relatively better prospects. The principal advantage of the telephone companies is that they are masters of the regulatory and standards arenas. Consequently it is rational for them to deploy their energies in these arenas to better their chances.
It is my contention that the NGN discussion is largely a self-interested ploy by the telephone companies to survive the onslaught of the Internet. The interesting question for me is whether the growing interest by governments and the state security apparatus in the security of communications and of communications infrastructure may lend assistance to their cause. This would occur through the development of processes for authentication and authorization which, it is generally agreed, are required if carriers are to be able to determine whether a person is of major age and can pay for what he has ordered.
NGNs are the telcos' attempt to extract more of the economic benefits of the Internet for carriers, as opposed to producers and consumers. My thesis is that the Internet's basic advantages will prevail, and that the NGN, though it claims to be a blend of the PSTN and the Internet, is in effect the last gasp of the telcos to transform and tame this dreadful innovation into something that will still keep telcos at the centre of power in telecommunications. There is a real possibility they could succeed, but I am highly skeptical.
A Caution
The disadvantage of outsiders to this discussion is that many things are presented as being real, or about to happen, when they are only discussions and standards being generated within the International Telecommunications Union (ITU), and which may have no practical effect. One such techno-fantasy is the underlying protocol of the NGN, called IMS, which will be dealt with further below.
It may seem a bold claim that billion-dollar industries are engaged in collective fantasy, which has been described as the “Stockholm syndrome” Richard Stastny http://enum.nic.at/documents/AETP/Presentations/Austria/0068-2006-03_Spring_VON_Standards_Update_RStastny_v1.ppt #532,4,Systems Standards Stockholm Syndrome of the standards-setting process. The basis for my confidence in my judgment has been built up over many years of watching the telecommunications industry react to the Internet, of listening to telecommunications experts, and in seeing the Internet work its transformations, and in listening to the “netheads”: people like Henry Sinnreich, one of the cofounders of SIP (session initiation protocol), Richard Stastny of Austria's telecommunications research agency, and Richard Shockey, a chief policy and technology architect for Neustar. My experience has taught me that the simplicity of the Internet tends to prevail over more complicated and carrier-controlled outcomes.
Terminology
This paper uses a layered model frequently to explain the differences between the telephone system and the Internet.
Table 1. Simple Layered model of Internet, PSTN, and Speech
|
Telephone system |
Internet |
Speech |
||
|
Applications layer |
voice |
applications |
The spoken word |
|
|
Logical layer |
Signalling system 7 |
TCP/IP |
The English language, for example |
|
|
Physical layer |
Switches and cables |
Routers and cables |
A podium and a hall, or Hyde Park speakers' corner |
It is also important feature of the discussion that services be distinguished from applications. Services are what you get from the owner of the physical and logical layers. In the case of telephony; services are vertically integrated with infrastructure. The Internet dissociated the provision of applications (word processing, games, photography etc) from the provision of the underlying physical infrastructure, and thus dissociated the massive costs associated with infrastructure from the costs of supplying the software which instantiates the applications. NGNs are expected to continue this dissociation.
Perspective of this paper
The purpose of this paper is to examine what those issues are from an Internet-based perspective. By this I mean that my perspective favours the openness to creativity, collective action, and empowerment of the end user that was and may yet be the characteristic of the Internet. This was based on the end-to-end principle http://en.wikipedia.org/wiki/End-to-end_principle of network design. These physical arrangements, coupled with readily available computer power, and an appropriate legal environment, have made possible very large-scale innovation in products and service since the World Wide Web became broadly available http://www.w3.org/People/Berners-Lee/1996/ppf.html. The Web was available from 6 August 1991 but only became a mass phenomenon with the development of commercial browsers, the first of which was Netscape, launched 13 October 1994. See http://news.bbc.co.uk/1/hi/technology/5243862.stm for the news clip.. Legal authors have been viewing with alarm the increasing enclosure of the creative commons under the influence of courts and legislatures. These authors include Laurence Lessig Lessig, Free Culture, New York, The Penguin Press, 2004, among others, Yochai Benkler Benkler, The Wealth of Networks, New Haven, Yale University Press, 2006 and James Boyle James Boyle, Shamans, Software and Spleens: Law and the Construction of the Information Society, Cambridge, Massachusetts, Harvard University Press, 1996, among others. These authors consider that the vast extension of private property rights over intellectual property threaten the maintenance of a sphere of common culture and creative possibilities. The same tendency works in telecommunications policy. The effect of court decisions and policy has been to strengthen the hand of facilities-owners against those who would lease facilities to complete their connection to the customer. In both Canada and the United States, telecommunications policy has turned away from a regime favouring a strong measure of leased competition in facilities. MTS-Allstream Submission to the federal government in relation to the Policy Directive to the CRTC under section 8 of the Telecommunications Act, August 16 2006, Appendix A, Lee Selwyn and Lee Golding, “Avoiding the Missteps made South of the Border: Learning from the US experience in Competitive Telecom Policy” found at
http://strategis.ic.gc.ca/epic/internet/insmt-gst.nsf/en/sf08689e.html under “MTS-Allstream”. My analysis draws on this submission, which is broadly consistent with many other sources on recent US telecom regulatory history.
For substantiation of the claim in relation to Canadian telecom policy, see my submission on behalf of the Quebec Coalition of ISPs on the same policy directive, at http://www.tmdenton.com/pub/interventions/policy%20directive%20final.pdf
At the same time, the Internet is threatened by its own success. Its mutation from a high-trust environment of university research computing to the standard logical platform for the world's communications has not been without difficulty. It has transmuted from an essentially privately-owned set of networks into the public domain. The Internet, and not NGNs, will be the basis of the replacement for the public switched telephone network, unless NGNs are successful in displacing the Internet.
2. Next Generation Networks defined
The ITU http://www.itu.int/ITU-T/studygroups/com13/ngn2004/working_definition.html working definition of the NGN is as follows:
“A Next Generation Network (NGN) is a packet-based network able to provide services including Telecommunication Services and able to make use of multiple broadband, QoS-enabled QoS stands for Quality of Service, a feature that the Internet is by and large unable to provide, since it functions on a best efforts basis. transport technologies and in which service-related functions are independent from underlying transport-related technologies (emphasis mine -TMD). It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users. “The NGN is characterized by the following fundamental aspects:
· Packet-based transfer
· Separation of control functions among bearer capabilities, call/session, and application/ service
· Decoupling of service provision from network, and provision of open interfaces
· Support for a wide range of services, applications and mechanisms based on service building blocks (including real time/ streaming/ non-real time services and multi-media)
· Broadband capabilities with end-to-end QoS and transparency
· Interworking with legacy networks via open interfaces
· Generalized mobility
· Unrestricted access by users to different service providers
· A variety of identification schemes which can be resolved to IP addresses for the purposes of routing in IP networks
· Unified service characteristics for the same service as perceived by the user
· Converged services between Fixed/Mobile
· Independence of service-related functions from underlying transport technologies
· Compliant with all Regulatory requirements, for example concerning emergency communications and security/privacy, etc.
Many of these points seem to mirror the fundamental features of the Internet. It is my contention and those of others closer to the standards development process that this is not really so. The NGN standards process is schizophrenic, to misuse the term in the popular sense: it cannot really accommodate the logic of the Internet because in the Internet there is no real need for a service provider.
The nature of NGNs is being worked out in a number of places, one of the most important of which is Study Group 13 of the ITU http://www.itu.int/ITU-T/studygroups/com13/questions.html . The International Telecommunications Union is a treaty organization based in Geneva in which carriers play a leading role in standards development.
An earlier paper (2003) from the Electronic Communications Committee of the European Conference on Postal and Telecommunications Administration (CEPT) http://www.ero.dk/documentation/docs/doc98/official/pdf/ECCREP027.PDF at page 8 was more blunt in its definition of NGN:
“The term NGN is used here to describe the telcos' attempt to develop an IP-based platform for future services…”
A vital feature of the NGN is the separation of the provision of services, network and access, so that the vertical integration characteristic of the telephone system would not be retained.
3. Is there substance to the discussion of NGNs?
The fundamental question for the analyst is to try to see what the discussion of NGNs means. Is it merely rent-seeking behaviour on the part of carriers seeking governmental assistance?
· The core business of the telephone companies is dying
· They need new sources of revenue.
· They need to make the Internet pay, which means they need a new business model for the Internet.
· This means, for them, two things: obtaining subsidies to help them roll out broadband, and, probably more important, absorbing the Internet into a carrier-controlled paying business model.
The core business of telephony is dying. I have taken this from the Washington attorney Mark del Bianco with his kind permission:
“The remarkable growth of VoIP, together with the parallel expansion of
broadband and wireless service is leading to a permanent structural change in the
voice services market. This change is leading to a dramatic decline in revenue from landline voice services in countries around the world, including the United States.
“That revenue loss will begin to accelerate in 2006 and continue through the decade….. The trend is unmistakable: consumers will pay little or nothing for a large portion of their voice services by 2010.
“A key driver in the regulation of VoIP services is the perceived need to address the economic effects on the existing voice business. Landline voice revenues in the United States were almost $229 billion in 2000; in 2004 they were only about $196 billion. This $33 billion decline in annual landline voice revenues in the past five years dwarfs the total revenues of many U.S. industries. Hollywood movie studios, for example, gross less than $10 billion a year from U.S. movie theaters, while U.S. radio networks earned only about $20 billion in annual revenues in 2004.
“Thus, the decline in annual voice revenues is already larger than the combined 2004 revenues for the movie and radio industries' main sources of income. (emphasis added-TMD) Similar declines are forecast for other countries. The worst is yet to come: those revenues are inevitably going to shrink further and faster over the rest of this decade. Even analysts who disagree with the Murdoch-Whitman “voice will be free” position estimate that United States and European landline voice revenues may decline by as much as 1/3 or more in the next five years.” Mark del Bianco, “Voices Past: The Pesent and Future of VoIP Regulation” at 365 CommLaw Conspectus, vol. 14, at http://commlaw.cua.edu/abstracts/14_2.cfm The full set of included footnotes in Mr. Del Bianco's quotation can be found conveniently at http://www.tmdenton.com/pub/interventions/policy%20directive%20final.pdf
The same thing is happening in Canada; the CRTC's 2006 Telecom Monitoring Report shows a half-billion decline in incumbent telephone long-distance revenue between 2004 and 2005. http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2006/tmr2006.htm#4.3
Table 2: Wholesale long distance revenues ($ millions)
|
|
2003 |
2004 |
2005 |
Growth 2004-2005 |
CAGR 2003-2005 |
|
|
Incumbents |
686 |
530 |
469 |
-11.5% |
-17.3% |
|
|
Competitors (ILEC out-of-territory) |
130 |
270 |
270 |
0.0% |
44.2% |
|
|
Competitors (resellers and facilities-based) |
337 |
141 |
118 |
-15.9% |
-40.8% |
|
|
Total |
1,154 |
941 |
858 |
-8.8% |
-138.0% |
Source: CRTC data collection
[The Table above] displays wholesale long distance revenues for the 2003 to 2005 period. In 2005, the incumbents' wholesale long distance revenues decreased by 11.5%, accounting for the largest portion of the 8.8% wholesale decline. The decline in wholesale long distance revenues may be attributed to consolidation activities in the industry, as well as to the newer technologies such as VoIP that have a downward pressure on wholesale prices.
The same is explained in Richard Stastny's presentation: Richard Stastny, OEFEG, http://enum.nic.at/documents/AETP/Presentations/Other/0043-2005-01_IPComExecSummit05_RStastny.ppt
Figure 1
The claim is made, on the basis of the decline of circuit-switched traffic, called TDM TDM stands for time division multiplexing, which is a way of loading circuits according to divisions of time rather than, for example, divisions into packets. in the above graph, that the telcos will turn off the PSTN by 2015.
If the carriers are faced with a need to improve their balance sheets, the obvious strategy is to
· remove their competitors through regulatory or political action;
· plead for subsidies to help them roll out optical fiber; and
· change the underlying business model of the Internet.
Political action
With revenues from the core business crashing, and cable television and other rivals gaining on them, it is always possible to plead for a change of policy. The telcos have succeeded in the United States in litigating the Telecommunications Act of 1996 into the ground. In Canada, they have won significant victories against the regulator under the influence of a new Minister of Industry. Faced with an uncertain future, it is always possible to plead that you need new incentives to lay out more investment in broadband facilities, and to challenge the business model of the Internet. Both strategies have been and will be tried.
Change the business model of the Internet
The Internet is fully paid for by consumer subscription to largely fixed monthly fees for access to an ISP and through that ISP, the rest of the Internet. However, if carriers could charge Amazon, eBay or Google for reaching a customer, or take a portion of the revenue sent to the supplier by consumers, their revenues would be secured forever. Since the Internet's costs are fully paid for already, capturing the value of economic transactions on the Internet would be pure profit, and rational businessmen would seek to do this. Some believe that it is theoretically possible for carriers to use market power to extract all the consumer benefit that has been created by the Internet. John M. Peha, “The Benefits and Risks of Mandating Network Neutrality, and the Quest for a Balanced Policy”, Carnegie Mellon University, Presentation to the 2006 Telecommunications Policy Research Conference, September 2006, at http://www.cybertelecom.org/ci/neutralref.htm
Ed Whitacre, Chairman of AT&T declared his dissatisfaction with an Internet payment model that allowed Google to use “his” pipes for free At SBC, It's All About 'Scale and Scope', BusinessWeek online (Nov. 7, 2005) at
http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/05_45/b3958092.htm..
"Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
The Internet can't be free in that sense, because we and the cable companies have ade an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"
In my opinion, the telcos have succeeded partially in reducing competition by getting rid of the obligation to lease wholesale facilities. The plea for subsidies will not be examined in the scope of this paper, though they are tightly connected to notions of deploying optical fiber for NGNs. The attempt to change the underlying business model of the Internet will be examined. It forms a part of the agenda behind NGNs, though this is not the whole story. There are also serious issues with the Internet that society has an interest in resolving.
4. Moving all Platforms onto IP
The foremost attribute of NGNs is the notion that all separate physical infrastructures will be moved onto an Internet Protocol platform.
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Source: Tony Rutkowski, Vice President for Regulatory Affairs and Standards, VeriSign Inc., Dulles VA USA, a presentation called “The NGN Global Regulatory Ecosystem” by permission.
Illustrating it a different way, we have the following: Richard Stastny, presentations, http://enum.nic.at/documents/AETP/Presentations/Other/0043-2005-01_IPComExecSummit05_RStastny.ppt
Figure 3: The TCP/IP Hourglass
5. What will be retained and what will not
The foremost contrast between the PSTN and the Internet is openness, in almost every level of meaning of the word. A few details here will convey the sense of what I mean. The telephone system is characterized by carefully guarded end-points. That is to say, you cannot access the end points of the system unless you are recognized by other carriers as a carrier, which in every jurisdiction of which I am aware involves some form of governmental recognition, licensing or regulation. Telephone numbers are carefully regulated in every jurisdiction, and are handed out only to carriers. Subscribers' rights in telephone numbers are a carefully controlled balance between the end-user and the carrier. Moreover, the PSTN uses a separate signaling infrastructure, called in North America the SS7 (signaling system 7) More information is found at http://www.iec.org/online/tutorials/ss7/topic01.html It says: “Signaling links are used to carry all the necessary signaling messages between nodes. Thus, when a call is placed, the dialed digits, trunk selected, and other pertinent information are sent between switches using their signaling links, rather than the trunks which will ultimately carry the conversation.”. All of these features are carefully controlled and available only to those entities recognized as belonging to the club of telephone companies. These features - closed end-points and a separate signaling architecture- render telephone systems and telephone users immune from denial of service attacks and a variety of ills that make the Internet so annoying. The telephone system is also able to guarantee quality of service (QoS) for voice transmission. The public Internet cannot do this, and private IP-based networks by definition are not part of a global public infrastructure, which NGNs are supposed to be. The integration of voice service with the underlying logical and infrastructure layers, and the very high state of technical specification of the PSTN, have also meant that it has not been open to service innovation. Carriers want to be able to offer innovative services and cannot do so on the basis of their existing circuit-switched platforms.
The Internet is characterized by:
· A first come, first served approach to owning a domain name
· Ready access to underlying IP addresses from Internet service providers
· Open end-points, so that anyone with the technical ability to exchange traffic may do so with any other;
· A logical layer, the TCP/IP which is a freely available standard rather than, as is the SS7, a proprietary protocol of Telcordia, Inc.
· Separation of the economic actors: the carrier is not the application or service provider
Therefore, as all telecommunications are moved onto a common global interconnected infrastructure using a common logical layer (TCP/IP), the stakes are very large. One could ask the question in several ways, so let us start with the carriers' point of view. How are the advantages of the PSTN to be preserved? They include
· infrastructure security,
· knowing the identity of users for the purposes of billing,
· a billing apparatus and
· an assured revenue stream (until recently).
The advantages of the Internet would include openness to innovation at the applications level, independence of the applications from the underlying infrastructure, and declining costs and increasing performance characteristic of computer technologies.
4. What is the problem to be solved?
Apart from the problem that the circuit-switched architecture of the PSTN is not open to innovation in services or applications, it is also expensive to run separate networks.
Telephone-based carriers are currently running five kinds of network: PSTN, IP, ATM (asynchronous transfer mode); frame relay, and Sonet. The main incentive to move to an all-IP infrastructure is to save on costs. Mobile operators, VoIP providers and cable television companies are moving into their formerly monopolized preserves. Land-line (fixed wired) revenues are sinking as a proportion of total business. The cable industry is offering serious competition to telephone-based carriers here and in the United States.
Operators expect to save money from labour reorganization, greater productivity, and savings from a common-consistent architecture Cohen. op.cit., p. 16 and to increase revenues from new services that an all-IP infrastructure would allow. An all-IP infrastructure helps to optimize the use of a carrier's available spectrum, by releasing it from previous constraints built into terminals optimized for one service or set of frequencies.
The following table portrays the relative importance if household expenditure on various categories of telecommunications services. The NGN is an attempt to place the telco in a position to capture potentially all of a household's expenditure on communications services.
Table 3: Average Consumer Spending US HH 1st quarter, 2006 (only for households that use the service)
|
Service Average Monthly Spending ($) Change from Previous Quarter (%) Local 37.11 -1 Long Distance 13.38 5 Wireless 80.88 3 Video 59.38 1 Internet 31.58 -3 |
Source: http://www.tnstelecoms.com/press-6-22-06.html By TNS Telecoms Research, based on a sample size of 32,000 households (HH), from June 2006
5. What remains of the Internet?
The telephone-centric view of how NGNs will work out was presented in a report, cited above, of the Electronic Communications Committee of the European Conference of Postal and telecommunications Organizations (CEPT), “Next Generation Network Developments and their Implications for the New regulatory Regime ECC Report 27, Bornholm, October 2003, p.6 at http://www.ero.dk/documentation/docs/doc98/official/pdf/ECCREP027.PDF ”, in 2003.
Table 4: Telephone, Internet and NGN Characteristics Compared
|
Telco Networks |
Telco- NGN Networks |
Internet |
|
|
Circuit switched technology Intelligent network Dumb terminal User-user services centrally controlled by provider of transport service Usage related charges and quality control Access control for users and interconnection Interconnection is service related and controlled Few/no third party services |
ATM/IP based technology Less intelligent network More intelligent terminal User to user services centrally controlled, with much greater scope for third party services run via APIs Usage-related charges and quality control Access control for users and interconnection Interconnection may occur at various levels. Above the IP level it is likely to be service-related and controlled |
IP-based technology Dumb network Intelligent terminal No service creation - services and applications run from edge User-user services run by users themselves Client-host services run by independent hosts at edge Access control for users but otherwise open Interconnection is open and only at IP level No usage-related charges and little quality control Gateways to telco networks have control and charging |
We need to keep in mind that this table of characteristics represents the most telephone-centric conception of what NGNs might mean. What will it mean that user-user services would be “centrally controlled, with much greater scope for third party services run via APIs APIs are application protocol interfaces.”? This is really the core idea of the PSTN, carried forward into the NGN, and it contradicts the ITU's list of characteristics of the NGN which was cited before.
However, the issue of who will create services is only one, albeit the most important issue, from an Internet-centric view. NGNs can be seen as an opportunity to saddle the Internet with many of the characteristics of the current telephone system. The regulatory and standards battles ahead concern virtually every issue currently at play in telecommunications. In the pages that follow, we briefly outline the issues and try to transform them from an “amorphous blob of rhetoric Courtesy of Richard Shockey, director, Neustar Inc. in conversation with the author, April 16, 2007, describing NGNs.” into a feasible program of research.
6. Issues
a) Technical Complexity
The underlying protocol architecture of the Internet, using SIP (session initiation protocol) and the NGN, which will use IMS, can be compared. Below is a representation of SIP/internet ideas of communication, based on the work of Henry Sinnreich and Alan Johnston http://enum.nic.at/documents/AETP/Presentations/Austria/0068-2006-03_Spring_VON_Standards_Update_RStastny_v1.ppt #534,5,The IETF SIP Trapezoid. This is a very pure end-to-end conception.
Figure 4
Contrast the Internet-based SIP concept illustrated in Figure 4 with the NGN's concept of IMS http://enum.nic.at/documents/AETP/Presentations/Austria/0068-2006-03_Spring_VON_Standards_Update_RStastny_v1.ppt #537,6,3GPP IMS Architecture Overview (optional).
Figure 5
IMS stands for IP multi-media subsystem, on which the NGN is expected to rely heavily. A leading telecommunications reference Lillian Goleniewski, Telecommunications Essentials, Stoughton, Mass., Pearson Education Inc., 2006, second edition, at pp. 420-437 describes IMS as follows:
“IMS creates a telephony-oriented signaling protocol that overlays the underlying IP network…..Although IMS is SIP-based, it includes enhancements and exceptions to the SIP specification, particularly for registration, authentication and session policy.” Ib9id. At p. 421
The exceptions are important, because the exceptions are aimed at controlling what can be done in the session. The word “session” replaces the word “call” because a session can encompass any kind or medium of machine or human interchange. Richard Shockey speaks of IMS as a technical “abomination,” that uses 30 SIP messages to set up a call, and employs 70 discrete network elements. “Simple always wins, and beats complex every day.” He says that IMS tries to re-aggregate the services with the physical layer Richard Shockey in conversation with the author, 16 April 2007. Used with permission..
As mentioned before, Richard Stastny calls the process of technical complexification the “system standards Stockholm syndrome http://enum.nic.at/documents/AETP/Presentations/Austria/0068-2006-03_Spring_VON_Standards_Update_RStastny_v1.ppt# 532,4,Systems Standards Stockholm Syndrome”, and being a technical aficionado it becomes S4: victims are addicted to technology complexity and hostages of group thinking.
b) Services versus Applications
We need to remind ourselves of the obvious in these technical jungles. A “service” is something generated out of the network. Telephone calls are a service made possible by the PSTN. An “application” is something that one buys or leases, but which is a program downloaded from anywhere on the network, and is therefore priced in a competitive market unless it is monopolized somehow. VoIP is not necessarily a service, but can be an application.
· If VoIP is an application, like the Internet portion of Skype, it is not a service. And if it is not a service, you do not need a service provider.
Skype does not pass several tests that would apply to an NGN. It is not standards-based and it does not provide interconnectivity with other providers through a common addressing scheme. Its success shows that consumers will respond to something as easy to download and use as Skype, particularly as the price for Skype-to-Skype calls is zero.
c) Interconnection - Inter-carrier compensation and subsidies
Interconnection is the process whereby traffic is exchanged among carriers. Compensation in telephony is organized around interconnection between carriers, who pay each other on the basis of minutes of traffic. The standard model of for inter-carrier compensation is that the operator receiving the traffic is compensated for the call going through from the originating carrier. This is called the Calling Party's Network Pays (CPNP) model. As both carriers maintain infrastructure, payments are made between entities with roughly similar cost characteristics.
The decoupling of the service supplier from the network operator undermines all current ideas of compensation for interconnection. In a situation where a person makes a call through the PSTN to a person subscribing to a VoIP service, the VoIP operator, who is the entity which permits the party to receive the call, has relatively minuscule costs to bear. The VoIP operator is not maintaining the infrastructure that has permitted the call to go through. Three things can be observed about this situation:
· The VoIP service provider has no contractual relationship to the network operator;
· There is no mechanism to transfer payments to the network operator from the service provider; and
· Since the TCP/IP protocol suite hides information on traffic usage from the VoIP operator, and from the network operator, both are ill-equipped to know who is responsible for what traffic. The analysis is taken from Scott Marcus, NGN Interconnection and Access, a paper presented to the ITU Global Symposiuum for Regulators, Dubai, UAE, Feb.5-7, 2007 at http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR07/discussion_papers/JScott_Marcus_Interconnection_IP-based.pdf
Call termination fees have depended on variables that were relatively easy to measure in telephony and which become much more difficult to measure in an IP environment. Moreover the number of players among whom arrangements would have to be made to compensate for traffic multiplies tremendously in the Internet so as to make direct interconnection unmanageable.
The administrative overhead of making arrangements among hundreds and even thousands of IP-based service providers was met early on in the development of the Internet by what are called peering and transit arrangements. A peering arrangement occurs when carriers exchange traffic but are not obliged to pass on the traffic to another carrier. Usually this occurs when they exchange roughly comparable levels of traffic. Transit arrangements occur when one carrier has to pay another for the passage of traffic through the latter's system to another carrier.
The problem of intercarrier compensation has been solved among ISPs in the case of Internet traffic. The sudden move in the 1990's from the telco compensation regime to the Internet one caused consternation. The international arrangements for telephone compensation were well understood. Richer countries subsidized poorer ones. Rates were set by risk-averse telephone bureaucracies, which were often monopolies. Beginning about 1996 carriers were being forced to pay all the costs associated with Internet traffic of reaching the then centre of the Internet Traffic patterns on the Internet are subject to sudden and massive changes caused by the deployment of new technologies such as peer-to-peer file sharing., which was the United States, and then forced to pay the costs of interconnection to ISPs once the traffic landed on the continental United States. These were purely private deals with large (American) ISPs. Transit and peering, as they came to be known, were poorly understood and thought to be unfair. Nevertheless the intercarrier IP compensation regime has been established and purely private commercial arrangements make it work This was the subject of the author's work for APEC Tel on International Charging Arrangements for Internet Services..
· The problem for regulators is that the basic metrics on which compensation and subsidy schemes have been based disappear.
Regulators have managed various schemes whereby some customers have subsidized others, whether these were inter-regional subsidies or subsidies among income-groups. These have been based on call-minutes where such minutes were measured. With the increasingly fast disappearance of the thing measured, the basis for these subsidies disappears, and if the subsidy is to be retained, it has to be placed on a new basis.
It is highly likely that regulators will seek to tax telecommunications traffic for social purposes. Universal service funds have been established in many jurisdictions to encourage connectivity, which has been considered important by voters for many valid reasons. The disappearance of measured voice traffic will cause regulators to shift the basis of taxation to new measures.
It is within the scope of human ingenuity that the carriers can work out a basis of compensation among themselves that is based on relevant metrics and which will provide regulators with the means of carrying on subsidies of the kinds we have now. Inevitably a period of turmoil lies ahead for all subsidy regimes, national and international.
d) Interconnection and access
The prices for interconnection on the Internet have not been regulated, and this has proven to be a generally satisfactory outcome. The prices for interconnection on the PSTN have always been closely regulated, in order to prevent the abuse of market power by the incumbent against the customer and the would-be competitor seeking access to the customer.
The issue of the exercise of market power will not disappear in the NGN world. It is unclear whether regulation of access prices and interconnection will be required. Carriers will have every incentive to lever their power over the last mile access to extract rents from users and service providers attempting to deal with end-users. This is really the concern that lies behind the debate on “network neutrality”, and was the substance of Mr. Whitacre's ruminations quoted above.
However, the presence of suitable competition in the infrastructure market, such as cable or satellite uplinks, and the dissociation of services/applications from the carrier, may mean that regulation of interconnection can be abandoned. In each case, however, it is a gamble to dismantle interconnection regulation regimes (statutes and regulatory agencies) in the hope that there will be no trouble on this score.
e) Security, Authentication and Authorization
No one wants to create the spam situation in VoIP. This means that end points “must be able to assert their identity cryptographically across domain boundaries” Richard Shockey, Director, Neustar, in conversation with the author, 16 April 2007..
If telephone companies want to be able to deliver third party content across an IP-platform, they must ascertain that the customer has money and is of legal age. The network operator must be able to assert the identity and verify the age of the person with whom it is transacting.
Therefore, according to Tony Rutkowski, Vice-President of Regulatory Affairs and Infrastructure Standards for VeriSign, identity management has emerged as the most important capability for NGNs. Tony Rutkowski, “Protection and Other Mandates for Public Infrastructure :Synergies and Globalization” slideshow presented to the futures conference sponsored by the Defence Research Development Corporation and the Office Of The National Security Advisor, 23 March 2007, in Ottawa Rutkowski's recent presentation in Ottawa spoke of the need to develop a
“Common global ability to
? Rapidly discover and query authoritative source information for any entities.
? identities, credentials, identifiers, communication routing, attributes, and patterns for any entity involved in a communication
? Use an assurance trust metric and protocol associated with all identities and identifiers
“Which requires
? Convergence on discovery and interoperability capabilities
? Accommodation of platform diversity and autonomy
? Extensibility to enable constant evolution”.
“Entity” was characterized as including “anything that has separate and distinct existence that can be uniquely identified” (real persons, legal persons, objects, geospatial constructs, RFIDs, sensors, devices, software,…)
The next thing of importance in his presentation was the observation that telecommunications policy is only one of three major foci of influence over this issue of security and identity management. He illustrated it thus:
Figure 6: Foci of Influence in Security and Identity Management in Telecommunications
Identity Management is turning out to be a key component of the standards development work in NGNs. The ITU has established a Focus Group http://www.itu.int/ITU-T/studygroups/com17/fgidm/index.html under Study Group 17 on this matter and has encouraged broad participation from all sectors and interest groups.
The Group's webpage says:
“The objective of the Focus Group is to facilitate the development of a generic Identity Management framework, by fostering participation of all telecommunications and ICT experts on Identity Management. The FG IdM is open to ITU Member States, Sector Members and Associates as well as any individual from a country which is a member of ITU willing to contribute to the work; this includes individuals who are also members or representatives of interested Standards Development Organizations. The FG IdM will report to SG 17.
It has, unusually for the ITU, established a Wiki to allow broader participation http://www.ituwiki.com. A list of issues being address is found at http://www.ituwiki.com/index.php?title=IdM_Annex_Topics
f) Emergency services
The provision of emergency services is made more complex when a person's location is not derived from a telephone number. Personal identifiers, such as telephone numbers, are being progressively detached from fixed locations. Unfortunately, emergency service operators are still very much tied to ideas of land-line telephone communication. It will be necessary to upgrade emergency services response capabilities to deal with a world of many IP-based communication gadgets. The risk is that the public interest in emergency response capabilities will give the emergency responders power to slow down the adoption of communications technologies, and lead to regulation in the name of emergency responsiveness.
Conclusions
network telecommunication internet
The real question to discern in all of this talk about NGNs is whether the telcos will be able to adapt the Internet to their purposes and if so, whether the public Internet that we all know will continue unaffected. The PSTN shows a hardy resistance to dying, despite the fact that its demise has been long predicted.
My inclination is to believe that forces unleashed by the Internet have created an expectation on the part of the population that will not tolerate their return to being captive consumers of carriers. My fear is that the state may, for its own reasons, find a compelling interest in knowing who is talking to whom, and without much thinking about it try to rescue centrally planned and directed communications systems. This topic is subsumed in the discussions around authentication and authorization.
Another major source of power for carriers is in the domain of emergency response (9-1-1 services). Wherever there is regulation in the public interest, the masters of the regulatory process can delay and soften the impact of competition. In the case of emergency services, the telcos can let the emergency response organizations do their work for them, since the latter are highly tied into the PSTN as it is. In other words, the emergency response organizations can cause the innovators in telecommunications to retrofit features of the PSTN, such as location identification, in the name of public security.
Whether Next Generation Networks (NGNs) prove to be a viable competitor to the Internet is unclear. What we can be sure of is that the urge to control traffic and extract revenue from the Internet by carriers, at the expense of producers and consumers, is strong. The regulatory agenda will change drastically in the next few years, and the forums in which the issues are fought will change too. Any social arrangement based on concepts and facts derived from the PSTN is bound to change in the next five to ten years, even as the urge to subsidize certain uses, users and social purposes continues.
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