Voice over IP (VoIP) – background and regulatory aspects

1. Voice over IP (VoIP) – background and regulatory aspects Background for discussions at ERG meeting 17.6.04 Olli Mattila Finnish Communications Regulatory Authority ( Chairman of the IRG FN WG / VoIP Subgroup)

2. Content • Technical concept of VoIP vs PSTN phone • Comments on market development / impact on PSTN • Comments on regulatory issuers • Ficora`s decision on VoIP service • IRG FN WG / VoIP subgroup

3. Technical concept of VoIP vs PSTN

4. Next Generation Networks (NGN) / IP-architecture approach All services and applications ( voice, data, video) Services Internet protocol (IP) Transmission All network technologies

5. Voice is one service inside NGN-communication services Person-to-Person – Communication Services Conversational • Voice call • Video call • Chat call • Multimedia call Messaging • e-Mail • SMS EMS • MMS • IM Content-on-demand Browsing Download Streaming Push Broadcast Peer-to-Peer

6. Concept of IP Communication • Protocols split transmitted data into packets, add necessary addressing information to the packets and transmit them and assemble again data in receiving end

7. PSTN telephony vs VoIP • PSTN telephony VoIP • - Circuit switched - Packet switched • E.164 numbering - URL SIP names, E.164, IP addr, • Intelligent network / - Dumb network / • dumb terminal intelligent terminal • Charging bases - Charging bases • location, distance, min - more limited • Closed system - Open system • inherited security - security vital issue • Tech quality - Tech quality • standardised transmission - depend mainly on delays • characteristics and delay variations

8. Co-existance of IP phone and PSTN phone Today and long in the future publicly offered VoIP has to co-operate with PSTN (terminated, originated at PSTN) PSTN Internet Gateway This reflect to questions, like - numering

9. Nature of VoIP service creates problems with several consumer protection issues, like • Location independence (”nomadicity”) • customer is able to register at any access point in any country • service provision can be controlled from any point world wide • Active terminals • requires electric power • Open network ( compared with closed PSTN network) • security questions

10. Comments on market development / impact on PSTN

11. VoIP market trends • At present at its infancy, estimated in September 2003 • less than 200 000 VoIP users world wide • less than 20 000 VoIP users in Europe • But expected to grow rapidly because • reduced capital and operating costs • voice services with a number of new features • new revenue opportunities for access providers through “triple play”, • that means voice, data and broadband internet • Growing number of broadband internet access will accelerate • the use of VoIP • Public VoIP service is at least on plan/ trial basis in most of EU countries

12. Estimations of VoIP switch over varies • Today 10 – 15 % of international voice traffic is based on VoIP • Optimistic estimations suggest that 50% of world`s telephone traffic will be based on VoIP by 2006. More pessimistic estimates refer to year 2015. PSTN IP based 2006 -2015

13. Comments on regulatory issues

14. Regulatory discussions have started • USA • FCC published a proposed rulemaking in March 2004 • several state regulators are considering the issue. New York Public • Service Commission issued decision (in May 21) on Vonage´s VoiP • EU • Ficora made regulatory decision on TeliaSonera`s VoIP service • in October 2003 • Several EU countries are establishing national working groups or about • to launch national consultations on the issue • EU Commission plans to put document on VoIP regulatory aspects • for public consultation

15. Categories of VoIP services from regulators point of view • Outside of regulatory concern • Corporate internal use on business LAN/WAN • IP phone – IP phone, self provided • 2. In principle under regulation (end user services) • Carrier internal use • 3. Inside regulatory concern • IP phone to PSTN phone • PSTN phone to IP phone • IP phone – IP phone service provided by operator

16. Dimensions of regulatory issues on VoIP • a) Consumer protection • USO directive: PATS definition / obligations? • b) Market / competition control, for example • Relationship with relevant markets – substitute to • PSTN voice telephony? • Interconnection / termination - regulatory costing? • Retail prices – location / distance independent?

17. Definitions in the USO Directive • Electronic communications service (ECS): A service normally provided for remuneration which consists wholly or mainly in the conveyance of signals on electronic communications networks… • Publicly available telephone service (PATS): a service available to the public for originating and receiving national and international calls and access to emergency services through a number or numbers in a national or international telephone numbering plan…

18. Basic regulatory questions Are VoIP (which of VoIP services) classified as publicly available telephone services (PATS) and thus regulations set for traditional telephone service apply ? If yes, can the obligations be obeyed ( due to technical restrictions) in practice ? Note: see as an example list of obligations set in the Ficora`s VoIP decision

19. Emergency calls • Emergency arrangements do not fit calls over internet, • because the nature of internet • customer is able to register at any access point in any country • service provision can be controlled from any point world wide • Basic problems • problem with reach the emergency centre • problem with wrong or lack of caller`s location information

20. VoIP quality • Mainly affected by transmission delays, • delay variations, packet losses (and bandwith) • Quality classes defined by ETSI/TIPHON for • end to end quality • ITU has technically standardised 5 QoS classes. Two first are regarded acceptable for VoIP service • Current international VoIP is mainly based on “Best Effort”

21. Legal interception • Difficult to administrate due to (international) location • independence of IP • VoIP also makes use of encryption more easy • ETSI is working on the issue concerning technical arrangement • Communication security • Network integrity /service availability (power failures, terminal closing due to spam and network overloading) • Communication confidentality

22. Numbering issues • VoIP numbers in national numbering plans • Is there reasons to aim specific number series for VoIp service ? • Is there need in future for common URL to identify for emergency services (for example SIP:SOS@ home-domain) ? • Universal service issues • review USO models including VoIP ? • Extra territorial issues ( services coming outside Europe) • influence of possible unsymmetric regulation ? • obligations for services coming outside of EU ?

23. Ficora`s decision on Sonera`s VoIP service in Finland

24. VoIP regulation in Finland • TeliaSonera’s VoIP Service (”Sonera Puhekaista”) • service is offered only to TeliaSonera’s broad band users • offered as a subsitute for PSTN connection • FICORA’s decision in October 2003 • www.ficora.fi/englanti/document/SoneraPuhekaista.pdf • TeliaSonera’s VoIP service was considered to be PATS because • the service is available to the public • the service is offered through a number in the Finnish numbering plan • users can originate and receive national and international calls and use emergency services • the service was also considered to be offered at a fixed location

25. TeliaSonera’s VoIP service has to comply with • the obligations set for PATS in the national regulation, • main obligations beeing (1): • ensure that users are able to make international calls • using access code 00 • ensure that users are able to access the emergency call • number 112 and other special emergency number free of charge • on request of user , free of cost, arrange a categorised • barring service • free of charge provide itemized bills • ensure that user`s nme, address and telephone number is • collected and published in telephone directory

26. TeliaSonera’s VoIP service has to comply with the obligations set for PATS in the national regulation, main obligations beeing (2): • equip its communications network and communications service • with technical facilities that allows legal interception • service that recipient can see calling number (CLI) • ensure that its activities can continue under exceptional circumtances • ensure that network and service satisfies the quality requirement of the Act • follow provision of the Act on protection and Data Security in Telecommunications (for example regulation how to treat , store and use call data)

27. IRG / FN WG / VoIP subgroup • Just starting the work, first meeting on Monday June 21th • Co-operation with • Commission • IRG End User group • CEPT / ECC / TRIS group • ” / NNA – VoIP PT • Follow • National regulatory development in Europe • USA (and Japan) regulatory development • Work of other organisations (OECD, ECTA, etc) • Standardisation work (ETSI, IETF, etc)