Trends and Technologies in Telecommunications Services

1
Trends and Technologies in Telecommunications
Services

• 5 February 2003
• BAD 64046

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Residential Broadband

• Faster speeds are imperative so that new
  applications will work correctly
• FCC regulations limit uplink to 33.6Kbps, and
  downlink to 53Kbps
• Few MODEM links will support these speeds, though
• ISDN is not the answer for residential service --
  expensive and only doubles the speed

3
The Last Mile for Business

• This last mile is the connection from the CO to
  a business location
• Speeds are usually quite good to the CO, only to
  hit a big bottleneck getting from there to the
  user
• For some, T1 lines are fast enough, but it is a
  long wait to get them

4

• Fiber is an alternative for business
• Bandwidths of 10Gbps are possible
• BUT, this requires a fiber connection to the
  business location
• CLECs are installing fiber in the central part of
  large cities, but it is very difficult to do so
  only 5 of buildings in the U.S. have fiber
  connections
• 86 of total network growth in the U.S. is in the
  20 largest cities
• Right of way negotiations are the major
  bottleneck
• Many fiber carriers are forced resort to the
  existing Cu network

5
DSL

• Availability is growing, both for residential and
  business service
• Residential service is usually ADSL, with
  1.544Mbps down and 384Kbps up (or less)
• DSL is usually cheaper than traditional leased
  line service

6
DSL Limitations

• Only 2/3 of the population has access to
  DSL-capable lines
• Cu loop must be free of load coils
• Lines must be shorter than 18,000 feet
• Orders are filled slowly
• CLEC must negotiate a lease with the ILEC for the
  lines
• Extensive line testing is necessary
• Personnel shortages are severe
• Much on site work is required
• ILEC drops circuits by accident
• (Theres no audible dial tone on a DSL circuit)

7
Terrestrial Fixed Wireless

• Advantages
• Delivers more bandwidth than T1
• DSL and broadband wireless offer about the same
  speeds
• Requires less infrastructure investment and
  disruption
• Less expensive to deploy

8
Terrestrial Fixed Wireless

• Disadvantages
• Wireless providers are dependent on long haul
  backbones and CO switches of ILECs and CLECs
• Perception of unreliability transferred from
  cellular
• Precipitation can wipe out 10 days/year
• Requires landlord and zoning cooperation

9
Terrestrial Fixed Wireless

• Principles
• Some use licensed LMDS frequencies (Local
  Multipoint Distribution Services)
• Less vulnerable to interference
• Others use U-NII (Unlicensed National Information
  Infrastructure) frequencies
• 100 MHz - 5 GHz
• This is not protected spectrum
• Small business is the target of U-NII providers

10
Lasers for Terrestrial Wireless

• Free space optical transmission
• Appropriate for short distances
• Reliability is lower than PSTN
• Very susceptible to fog and snow
• 10Gbps has been shown over distance of 2.7 miles
  by Lucent
• Terabeam, a new CLEC, will deploy proprietary
  FiberlessOptic service

11
Satellite

• Likely to be the solution for ubiquitous
  broadband
• Available anywhere
• Teledesic
• 9 billion Internet in the Sky via 288 LEO (Low
  Earth Orbit) satellites
• Service in 2004 promised but not likely
• Skybridge
• two constellations, 40 satellites each
• Speeds 2Mbps up, 64Mbps down

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Wireless Broadband in the Local Loop

• Direct Broadcast Satellite
• 400 Kbps downlink achieved through time division
  multiplexing
• Analog phone MODEM used for the uplink
• Local Multipoint Distribution Service
• Two way wireless
• WLL (Wireless Local Loop)
• 500 - 1000/month

13
Transitioning to Packet-Switched Carrier Networks

• Data networks are suddenly more important than
  the analog network, as data traffic now exceeds
  voice traffic
• Thus there is huge market opportunity for data
  network providers
• Makes it inevitable that these data carriers will
  begin also to offer voice telephone service

14
Who Will Regulate the Phone Providers of the
Future?

• Is an open question whether the future phone
  service providers will be regulated under the
  same rules as the PSTN
• In the meantime, several alternative services are
  being offered, all based on packet-switching

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Voice Over IP

• Voice is digitized, then packetized, then
  transmitted using IP protocol
• Packet switched call requires only 8Kbps, one
  eighth of a circuit-switched digital signal
• VoIP is not feasible on the public Internet
  because of congestion, the inability to reserve
  bandwidth, and other unreliabilities

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VoIP Requires New Protocols

• New protocols for packetized voice are under
  development
• Will include packet prioritization, call-duration
  bandwidth reservation, and various classes of
  service
• Much of the impact of these protocols will be
  realized in the routers and their packet
  switching algorithms

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VoIP on Private Networks

• The TCP/IP problems with voice on the public
  Internet have already been solved on private
  corporate networks, where bandwidth reservation
  is not a problem

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Three Service Models for VoIP

• Toll Bypass
• Long distance calls between a companys locations
  are carried by the companys private IP network
• Realized by adding a voice-to-IP gateway to each
  of the companys network segments and then
  configuring the companys PBX to route
  interoffice calls through those gateways

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Three Service Models for VoIP

• VoIP via an IXC
• Company has a private IP backbone in each city
  where it operates, and each has a POP
• Each POP is interfaced to a commercial IXC
• Calls are converted to IP packets for
  transmission over the IXCs network, then back to
  voice at the other end
• Users make calls normally, using standard
  telephones

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Toll Avoidance ?

• Use of service model 2, VoIP via an IXC, has a
  huge toll advantage for the users
• At present, voice calls over packet-switched
  networks are considered data
• This avoids most of the access charges now paid
  for telephone call service
• The FCC is considering regulatory changes

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Three Service Models for VoIP

• Third service model is VoIP by a CLEC
• User company would install a VoIP gateway and IP
  network connection to the CLECs POP
• Conversion to packets would occur at the user
  companys site, thus there is not a normal dial
  tone
• CLECs only role is to provide the transportation
  of the packets from the sending gateway to the
  receiving gateway

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Moving VoIP Data from A to B on a Backbone

• The two primary protocols for moving data
  (including voice calls) from point to point are
  Frame Relay and ATM
• Frame Relay
• Most widely used
• Low delay and low packet overhead
• Was designed as a link between remote
  international locations of a corporation

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Moving VoIP Data from A to B

• More Frame Relay
• FRF.11 is the 1997 standard for Frame Relay
  networks
• Does not address interoperability issues with the
  PSTN
• Standard was initially designed only for voice
  and FAX call support
• Frame Relay is not easily extended to the desktop
  or into IP networks in house
• Does support a Committed Information Rate because
  voice calls generate lots of streaming data

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Moving VoIP Data from A to B

• Voice Over ATM
• More sophisticated and newer than Frame Relay for
  voice support
• High level of control over QoS
• Access equipment is more expensive because of its
  sophistication
• Designed and implemented mainly as a backbone
  technology
• Integration into a LAN is very difficult and may
  torpedo ATM long term

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Quality of Service in VoIP

• Key to good quality of voice calls via IP is to
  keep the overall end-to-end delay under 200 ms
• Challenging, because traditional circuit-switched
  services can manage the circuit bandwidth so as
  to guarantee end-to-end latency

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Delays in Packet Switched Networks

• Voice compression and decompression, packet
  forwarding, and buffering each range from 1 to 60
  ms
• Unfortunately, congestion delays often add up to
  200 ms of delay
• Thus, main constraint in getting good quality
  VoIP is packet congestion
• Extensions are being made to the IP protocol to
  try to minimize congestion delay

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IP Protocol Extensions

• RTP (Real Time Transport Protocol)
• Includes a class of service parameter in the IP
  packet header
• MLPS (Multi-Layer Label Switching)
• Achieves reductions in congestion delay by
  prioritizing packets at various layers in the
  network protocols

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Other IP-Based Services

• FoIP
• FAX over IP is attractive because a significant
  proportion of a companys telecommunication costs
  are for FAX
• PSTN T.30 FAX standard supports seamless use of
  existing FAX machines
• Unified Messaging
• Will allow for a phone message or FAX to be
  packaged and sent as if it were an e-mail
• VPIM (Voice Profile for Internet Mail)
• FPIM (FAX Profile for Internet Mail)

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Other IP-Based Services

• Managed Network Services
• Service Providers are offering various network
  management services
• Dynamic monitoring and reconfiguration of WAN
  networks
• Configuration and support of VPNs
• Hosting and managing applications
• Equipment for Service Management
• Alcatel/Xylan ATM OmniSwitches are an example of
  integrated access device that allows different
  kinds of equipment at company to be routed to the
  carrier via only one single access line
• Sprints Integrated On-Demand Network (ION)

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Pricing Models and Operational Support Systems

• Pre-deregulation
• One PSTN, owned by a government PTT a single
  carrier (British Telecom) or a few carriers
  (ATT, GTE)
• PSTN is nationwide, accessible to all consumers,
  and is government regulated
• Post-deregulation
• Services are now driven by the demands of the
  marketplace

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Modern Service Bundling

• Service traditionally was defined as voice, data,
  video and as local, long distance, international
• Increasingly, providers are attempting to bundle
  all services together, with a single customer
  point of contact and a single customer bill
• Not all carriers can offer all services
• RBOCs barred by regulation
• Exchange carriers cant service the local loop

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Pricing Changes

• Phone service is increasingly distance-insensitive
  (costs are distance-insensitive)
• Cellular service is becoming distance-insensitive
• Flat rate/minute charges shifting to
  bandwidth-used pricing
• Since 1970, revenue from voice traffic has
  dropped by a factor of seven !!!!!
• May lead to an end to per call billing
• Time-of-day pricing is disappearing as bandwidth
  pricing grows

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Billing Patterns

• Service bundling and unified billing is leading
  to greatly enhanced customer retention

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Telecommunications Billing Systems

• Traditional billing
• Switch captures call data and builds a CDR (Call
  Data Record)
• CDR is in standard automatic message accounting
  (AMA) format
• Processing centers use the CDRs to calculate
  correct rates, apply discounts, promotions, and
  taxes
• EMI (electronic message interchange) data is then
  send to traditional billing vendors

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Billing for IP Services

• IP networks have different traffic and network
  characteristics which demand different billing
  approaches
• Technology exists to allow providers to detect
  use of, and charge more for, priority services

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Billing Technologies

• SS7
• Signaling System 7 collects usage data using
  IP/SS7 gateway systems
• This billing data is passed to legacy billing
  systems of the PSTN
• Eliminates the need for wholly new IP billing
  systems
• Traffic polling
• Measurement of the type and quantity of data
  passing through the network
• Create CDRs that the IP billing systems can use
  to generate statements
• Cheaper than SS7 billing for small ISPs

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Billing Technologies

• Mediation devices
• Data on usage is collected directly from the Ip
  network devices
• Hewlett Packard and Xaact Technologies
  manufacture these mediation devices
• IP probes
• Probes installed on the network
• create CDRs
• Narus is a key probe vendor

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Bigger Margins

• Sophisticated IP billing technologies permit
  vendors to charge premium prices for the services
  most demanded by a customer
• Flexible billing systems are critical to
  accommodate new services not yet envisioned
• Scalability is also central

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Standards for IP Billing

• Work is underway on a billing standard for
  Internet usage
• Narus, TeleStrategies (billing software vendors)
  and ATT are combined with many other vendors to
  work on the IPDR (Internet Protocol Data Record)
  standard
• XML format records will be able to store data
  about any type of Internet activity
• IPDR is still not announced

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Billing Services

• Billing itself is a lucrative business
• Interspan, IBM Global Network, MCI ResponseNet
  collected 250M, mostly in PSTN services
• Other PSTN vendors
• Amdocs, Kenan Systems, Saville
• Prepaid and postpaid phone card services are
  lucrative markets
• IP Billing vendors
• MindCTI, Rodopi Software

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Operations Support Systems

• OSS are all the systems at a telecommunications
  carrier that implement, monitor, and support the
  business processes and network operations
• Three segments of OSS
• Billing
• Customer care
• Network management

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Separate OSS Segments

• Traditional OSS segments are separate
• Ex Billing data, which has imbedded customer
  usage patterns, is not fed to network management
  systems
• This makes ordering of services extremely time
  consuming
• Automatic ordering of services is the goal of
  most telecomm providers
• OSS improvements will eventually enable customer
  self-service

43
Telecommunications Deregulation

• Global deregulation of the telecommunications
  industry has led to three major trends
• Provider Consolidation
• One Stop Shopping
• Emergence of Smaller, Local Operators

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Provider Consolidation

• Mergers and acquisitions, worldwide, are rife
• Bell Atlantic acquired GTE in 1998
• BT, GTE, WorldCom all fought over purchase of
  MCI, with WorldCom winning in 1997
• Vodafone (UK wireless), Bell Atlantic, and MCI
  WorldCom all sought to acquire AirTouch, with
  Vodafone winning now part of Verizon
• Horizontal combinations seek economies of scale
  vertical combinations open markets and cut
  supplier costs

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One Stop Shopping

• In U.S. most people purchase local, long
  distance, wireless, data, and Internet services
  from separate suppliers
• Market studies show that most customers want to
  buy all these services from a single source
• Vendors are actively acquiring companies in order
  to move toward supercarrier status

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Becoming a Supercarrier

• ATT is purchasing IBM Global Services, Teleport
  Communications Group, TCI, and MediaOne
• This added 26.5 million homes local loop and
  data service to ATT
• (1.8B will be needed to upgrade TCIs
  infrastructure)
• Thus, ATT is the first U.S. company with a
  chance to become a consolidated provider

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Emergence of Local Operators

• 3,000 new local operators are expected to emerge
  worldwide in the early years of the 2000s
• They include cable, electric, and wireless firms
• Potomac Electric is providing phone, Internet,
  and CATV service in the D.C. area
• 60 local utilities in Germany started offering
  local phone services in 1998
• Cox Cable now offers local phone service in
  California and Nebraska

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The Telecommunications Act of 1996

• The first comprehensive legislation to regulate
  the telecommunications industry since 1934
• (The ATT breakup in 1984 was a judicial
  decision.)
• Allows RBOCs to enter long distance within their
  own states once they have opened their local
  loops to competition
• Allows CLECs to exist, but they only have 3 of
  the market

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Global Deregulation

• Significant and rapid deregulation is occurring
  worldwide
• Single PTT operators such as Singapore Telecom
  and France Telecom are being privatized most all
  PTTs worldwide will be privatized by 2005
• World Trade Organization adopted liberal
  telecommunications policies as part of the Fourth
  Protocol
• China and Russia are not signatories