Enhancing IP networks to support consecutive killer applications

1. Enhancing IP networks to support consecutive killer applications Tadanobu OKADA Vice President, Director NTT Network Service Systems Laboratories

2. Organization of NTT Group Fundamental R&D  Common technologies to create new services  Basic and core technologies to generate new principles and components NTT (Holding Company) R&D NTT East NTT West NTT Commun- ications NTT DoCoMo NTT Data NTT Facil-ities NTT- ME NTT Com-ware NTT Elec-tronics NTT- AT R&D R&D R&D R&D R&D Software development computer service Technology transfer, software & hardware development Maintenance and operation of network facilities Optical devices, LSI Bldg. mgt. Intl. & inter-pref. comm. Intra-pref. comm. Intra-pref. comm. Mobile comm. SI Class 3 (utilization of management resources) Class 1 (regulated) Class 2 (competitive) Class 4 (new business exploration) • Applied R&D • System improvement • Customization

3. Changes in the numbers of subscribers and users 7/1999 – NTT Reorganization e-Japan strategy 80 million ● IT Strategy Council Number of mobile phone subscribers: 77.72 million (as of end Sept. 2002) Telephone 60 million ● ● （3/2000） Mobile phone Number of telephone subscribers: 50.61 million (as of end Sept. 2002) 40 million Internet (fixed networks + mobile Internet) Broadband (fiber optic + DSL, etc.) 20 million ISDN 94 95 96 97 98 99 00 01 02 03 04 05 06 Note 1: Numbers of telephone and ISDN subscribers after 2002 are an NTT projection. Note 2: Numbers of mobile phone subscribers are a projection of the Mobile Computing Promotion Consortium (MCPC). Note 3: Numbers of Internet users are a projection of InfoCom Research Inc. Note 4: Numbers of broadband user households are the target of the e-Japan strategy.

4. Internet-user household projections （％） 75.7% Bar graph Line graph 73.1% Number of Internet-user households (x1 million) 75% Broadband user household penetration rate 69.3% ･Narrowband use 74.8% 71.8% 45 70% 41.75 ･Broadband use Mobile Internet user penetration rate 41.28 39.24 40.87 Other 66.3% ＡＤＳＬ 63.7% 5.28 40 ＦＴＴＨ 6.41 36.52 60% 8.84 Number of user households 55.9% Penetration rate 8.43 52.8% 31.15 13.86 50% 8.44 30 7.64 45.8% 19.33 40% 23.25 6.10 36.0% 13.95 20 14.94 22.30 29.8% 30% 15.39 4.10 19.39 14.42 20% 18.7% 10 10.68 2.32 14.09 10% 11.49 8.2% 8.99 6.30 1.45 4.86 0.22 0.03 2.41 2.38 0% 0 2001 2002 2003 2004 2005 2006 2007 (Source: InfoCom Research, Inc.)

5. Broadband access penetration Broadband environment (high-quality movies, interactive, constant connection) ADSL (9%) ADSL (2%) CATV Internet (5%) CATV Internet (4%) ADSL (32%) Fiber optic access (59%) CATV Internet (18%) 〔9/2000〕 〔3/2001〕 〔8/2001〕 (47 million households) (14 million households) (103 million households) Japan Republic of Korea United States

6. 60 $56.62 50 40 $33.91 （3,900won） $26.08 30 $23.30 $22.95 （2,900won） （\2,703） （\2,663） 20 10 0 1.5Mbps 8Mbps Monthly ADSL service fees in Japan, the US, and Korea （＄） Japan： 1.5Mbps：@nifty, OCN, Plala; 8Mpps：@nifty, OCN, Plala, and Yahoo!BB U.S：　 1.5Mbps：Verizon, SBC, Covad Korea： 1.5Mbps：KT, Hanaro; 8Mbps：KT, Hanaro ADSL services for household users are not provided yet.(2002) Note 1: Fees compared: ADSL subscriber fees, ISP fees and NTT line connection charge (applicable in Japan only). Note 2: Dates of calculation: September 1,2003 for fees in Japan;April 1, 2002 for fees in the US; January 2002 for fees in Korea. Note 3: Exchange rates: ￥120.2 to the U.S dollar; ￥0.1045 to the Korean won. Source: “Predicting the Spread of the Internet, ” May 21, 2002, InfoCom Research, Inc.

7. Changes in the electronic commerce (final consumption goods) market Electronic Commerce (EC)： Commercial transactions involving the ordering of goods and services on the network using TCP/IP. （billion $） Source： MPHPT

8. Changes in the use of contents before and after broadband （%） Source: An Outlook for the Spread of the Internet, May 21, 2002, InfoCom Research, Inc.

9. Bandwidth usage by several contents delivery systems (actual data) Source: Stefan Saroiu, Krishna P. Gummadi, Richard J. Dunn, Steven D. Gribble, and Henry M. Levy; “An analysis of Internet content delivery systems”, Proc. of the 5th Symposium on Operating Systems Design and Implementation, December 2002.

10. IP network as an infrastructure Preventive medical care business Community business Solution business e-learning business Database business Financial portal business Net game business Marketing business Collaboration business Remote nursing-care business Movie distribution business Image creator support business Travel EC Online publishing business IP network Simple, Safe, Smart IP network should grow into a sound infrastructure on which various business players provide users with “killer” applications and get money.

11. Requirements for IP telecommunication network IP network should become simple, safe, and smart. ・Variety of QoS ・Security ・End-to-end connectivity ・Scalability ・Openness ・Economy

12. Session control Presence Outline of network architecture Application servers Service platform Authentication Charging Network platform ・・・ Mobile IP Security Network control Control information Transport Gateway Core network Edge node Other networks Main information Optical ＤＳＬ Wireless Regional ＬＡＮ TV Home network Corporate network

13. Secure Session Technology ～A Key to mass communication～ Mass communications between many users will be made possible by secure session technology combining session-control and secure-communications technologies. Large between unspecified number of people Medium between specific enterprises Small within an enterprise Target NM approach - user authentication - address resolution - session control - secure signaling Mass communications with: 　 ・Mutual user authentication 　 ・Secure communications 　 ・Privacy protection PKI, server-mediated authentication Non-NMapproach Breakthrough by combining session-control and secure-communications technologies Limits to Non-NM approach e.g. S/MIME e.g. TLS, Kerberos Authentication by pre-shared key (password, etc.) e.g. IPsec, HTTP digest authentication NM : network-mediated Client/Server End-To-End

14. Network control associated with communication lifetime Specific services with application-dependent controls Application servers Service platform Authentication Billing/payment Network control Location registration Connection establishment Commu nication Monitor connection Check status Search Authentication Access control Location management Presence control Encryption control Security control QoS control Transport session IP transport

15. Examples of business player model Use User Bi-directional video communication service platform Notes Authentication service provider Service portal Main player Value added service player Video content (2) Provide service menu (1) User authentication Control & management signal Session management provider User (terminal) Service gateway User (terminal) (3) Connection request (4) Connection agreement Delivery service provider (5) Visual communication Network quality management Provide terminal management (including application code download) claims Provide terminal management (including application code download) Network management service provider Customer and terminal service provider (6) Billing and collecting charge Billing proxy, Service provider Main Player: Essential player in C2C Value added service player: Players who provide additional services to main players. They provide outsourcing functions to the main player. (Source: HSAC)

16. >< >< ^ ^ ^ ^ Network evolution toward resonant communication environment Resonant communications environment Server-client type End-to-end type Broadband progress age in the next 5-10 years From now Present ● Low-cost Quality concerns Reliability and quality assured -Difficult to flexibly meet ever-diversifying user needs -High cost Until now Internet age Telephone age Progress from advantages Disadvantages cause delay and decline. Disadvantages cause delay and decline. Centralized administrative type Autonomous distributed type

17. Features of the resonant communication environment Notes Fixed lines Contents Mobile phones - Text, audio, video Current Internet (Narrowband/broadband) video Resonant communication environment Charges (price/distance) low-cost high audio Time shift static images text high anywhere Security Ubiquity good good Quality (bandwidth, delay) Interactiveness (real time)

18. Impact on the Japanese economy The impact on the Japanese economy is estimated in the range of \64 trillion annually by 2007. 15 trillion Impact of introduction of broadband systems into industries 17 trillion 11 trillion 64 trillion 17 trillion 3 trillion Distribution and financial etc. ( facility operation type ) Retail etc. ( processing & distribution type ) Medical etc. ( profession service type ) Other manufacturing industries ( domestic demand type ) Automotive and electrical machinery ( global competition type ) (Source: McKinsey & Company, Inc.)

19. Summary ・Broadband communication era has started. ・IP network should grow into an infrastructure, that has high reliability, multiple transfer quality classes, and secure end-to-end connectivity. ・Session control is one of the key technologies to meet the requirements. ・These technologies provide “simple”, “safe”, and “smart” connection between end-to-end users, which can create a variety of new businesses.