Voice over Internet Protocol: Policy Implications and Market Realities

1. Voice over Internet Protocol:Policy Implications and Market Realities Phoenix Center 2004 Annual U.S. Telecoms Symposium Agenda December 16, 2004 Dave Belanger, Chief Scientist & Vice President, Research, AT&T Labs

2. Internet Protocol (IP) separates applications from the network: Voice is not longer restricted to telephone networks Voice becomes another IP data application VoIP: A Data Application on an IP Network IP/Internet Applications Domain Name Service Video Voice WWW E-mail Enhanced/ Information Services Application Layer SMTP POP3.. DNS.. HTTP SIP.. H.323.. TCP…UDP...RTP… Logical Layer IP (Internet Protocol) Packet Routed Data Circuit Switched Voice Traditional Telecom Services Physical Layer Satellite, Wireless, Cable, Phone, Electric Networks Public Phone Network

3. Private Line Network The Internet Voice Network 5ESS 4ESS 5ESS Frame Relay Network BX9000 BX9000 BX9000 ATM Network Gobal IP Network The Industry is Making Major Investment: To IP Networks Supporting Real-time Applications like VoIP From: Legacy Networks To: Common IP/MPLS Backbone Frame/ATM/Voice/IP-VPN Route Servers Route Servers MSE MPLS Core MSE Frame/ATM/Voice/IP-VPN MPLS: MultiProtocol Label Switching

4. Investment in All Parts of the Network is Essential to Enable Real time IP Applications Data/Communication Networks Worldwide Equipment Investment Estimate Source: Based on data from Prudential Securities Note: Software, network integration, consulting and product support expenditures are expected to match and eventually surpass total equipment expenditures per year.

5. Business Priorities Drive VoIP Adoption • Rate arbitrage: • TDM origination and termination with IP transport in the WAN • Intra-company calls and faxes on converged network • Emergence of native IP origination environments • Web-based call centers/web callback with IP Enablement • New network-based IP features and services • Converging Local, LD and data • IP enablement of call center features on a converged network Common, Global IP Network Separate Networks Network Convergence

6. WHAT THE FUTURE HOLDS: Presence (Instant Messenger, Follow me) One Number / “Follow Me” Services Click-to-Talk Interactive Call Centers Universal Messaging Virtual Meetings / Collaboration (like NetMeeting) Real time language translation IP Centrex in a Box Multi-Point Videoconferencing Desktop Multimedia Push to Talk Cellular Voice Chat VoIP: A “Killer” IP Application An Information Service that Delivers Voice Communications and Enables Voice Convergence with Other Data Applications and Devices

7. VoIP Technical Challenges • Network Characteristics • Quality of Service • Interoperability at the application level (SIP) • Security • Wireless • Global Standards • Power and Reliability

8. R Factor for VoIP R=a-b1*delay-b2*(delay-b3)*H-c1-c2*log(1+c3*loss) where loss = packet loss percentage for the call delay = one-way end-to-end delay in milliseconds The terms "R-score" and "R-factor" are used to relate latency and loss to MOS scores for speech.

9. Inter-active Video VoD Thin Client Tele- phony Games Bandwidth Isn’t Everything Inst Msg (Video)File Transfers Bandwidth B-castTV Email Bufferability 2 Way Web Brows- ing 1 Way

10. SIP Basics • Session Initiation Protocol (SIP) is a protocol for allowing users to join a “session” for the purposes of exchanging media • Session Initiation • Session Modification • Session Termination • SIP definition is governed by the Internet Engineering Task Force (IETF) • Core of SIP defined in RFC 3261 which supersedes RFC 2543 • SIP is based on “IP Model” • Transport and Application Signaling are separate • Intelligence and state resides in end device (the phone) • SIP is an application signaling protocol • Can use either TCP or UDP as underlying transport protocol • RTP is media protocol • Defines how the media itself (e.g. encoded voice or video) is transported • Uses UDP • Very Important: Media path ≠ Signaling Path

11. VoIP is Caught in the Middle All we want to do is deliver VoIP! Computer Application Non-Regulation Telecom Services Regulation

12. Economic Challenges Intercarrier Compensation Universal Service Fund Taxes and fees Technical Challenges Network Characteristics Quality of Service Interoperability at the application level (SIP) Security Wireless Global Standards Power and Reliability VoIP Challenges Social Policy Challenges • Numbering • 911 • Law Enforcement Access • Accessibility for the disabled • Consumer protection • Privacy • Consumer choice

13. Numbering Resources (E.164 numbers): who can get them, and how can they be used Most users still want numbers, not SIP addresses! Potential barrier to market entry and innovation Location independence/nomadic considerations Geographic v. non-geographic ranges Scarcity concerns and strategies ENUM IETF originally developed ENUM as method for end users to provide mapping from E.164 numbers to Internet resources Built on top of DNS Public ENUM is based on end-user opt-in; customer controls Tier 2 name server and records With network transformation, carrier or infrastructure ENUM becomes more attractive Supports IP interconnection Does not require end user opt-in or IP-enabled end user Carrier controls Tier 2 name server and records Example: Numbering

14. End User Choice of VoIP Provider Numbering Intercarrier Comp Taxes and Fees FCC Classification Proceedings: UK. Singapore, EU, Germany USF Emergency Services (911) “CALEA” Domestic/Int’l Jurisdiction Telecom Rewrite Consumer Protection VoIP Policy Initiatives Continue to Pop Up