ip interconnection market developments€¦ · volte requires the deployment of ip multimedia...
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IP interconnection – market
developments
March 2015
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Legacy networks are being migrated to common IP platforms
2
Ofcom, Next Generation Networks: Further consultation, 30 June 2005
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This migration to IP will affect many telecom markets
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Circuit switched
fixed network
Fixed network -
Access
&backhaul
Circuit switched
fixed network
Voice
Private data interconnection
OLO mobile
network
Circuit switched
mobile network
Broadband access
Other ISP
Network
Fixed network -
Access
&backhaul
OLO
Tier 1 Tier 1
Internet interconnection
Tier 2 Tier 2
Tier 3
Segmented market Market convergence
Fixed
Access Mobile
Access
Metro-Core
Network
Metro-Core
Network
IPX
IPX IPX
IPX
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Convergency is driving major structural changes in the sector
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Services Content
Networks
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Firms are moving across the IP value chain
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Internet companies and device manufacturers are disrupting the
market
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And telcos are pursuing different models of vertical and horizontal
integration
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Ireland: O2 merger with Hutchison 3G
Details of other M&A deals focus on middel east
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Traditional retail pricing models are becoming challenged
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Zero rating
Bundling
http://iveybusinessreview.ca/cms/4800/wind-mobile-quad-play-fourth-place/
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What can telcos do?
Rethink price – cost
relationship
Look at whole value chain
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Implications for:
■ Interconnection prices
■ Regulation
■ Tax
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Fixed operators will be migrating PSTN to VOIP to reduce costs
Incumbents now looking to switch off their PSTN
networks:
■ PSTN switching technologies approaching the end
of their life
■ TDM equipment not supported
■ Likely rise in cost per TDM voice customer
■ Lower cost of VOIP network
■ Price pressure from VOIP providers
Already happening in US
Plans elsewhere
■ Deutsche Telekom – plans to migrate by 2018
Migration plans will depend on a number of factors
10
Analysys Mason, Roadmaps for the transition to new fixed and mobile voice
technologies, Final report for Ofcom, October 2014
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Fixed operators will be migrating PSTN to VOIP to reduce costs
Incumbents now looking to switch off
their PSTN networks:
■ PSTN switching technologies
approaching the end of their life
■ TDM equipment not supported
■ Likely rise in cost per TDM voice
customer
■ Price pressure from VOIP providers
Already happening in US
Plans elsewhere
Migration plans will depend on a
number of factors
11
Analysys Mason, Roadmaps for the transition to new fixed and mobile voice
technologies, Final report for Ofcom, October 2014
Reduction in network nodes for IP network
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Development of new interconnect structures will need to be
developed
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Migration from PSTN to VPOI raises lots of questions
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The benefits to MNOs of moving to VoLTE
14 GSMA Intelligence Building the case for an IP-communications future, February 2015
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Mobile termination rates - VoLTE
Circuit-switched fallback (CSFB). This uses the LTE
infrastructure for data, but “falls back” to the legacy UMTS
and GSM networks to make or receive voice calls
Simultaneous voice and LTE (SVLTE). Certain handsets on
CDMA networks have a dual radio system and can transmit
data over LTE and voice over CDMA simultaneously
VoLTE requires the deployment of IP Multimedia Subsystem
(IMS) core elements which control how calls are initiated
and directed in the network.
Single radio voice call continuity (SRVCC) is a technology
that can bridge 4G coverage gap. SRVCC allows a VoLTE call
to transition to the legacy networks when LTE coverage is
insufficient
Application-based voice services using the packet-switched
LTE network as their data transport mechanism
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Superior quality of VoLTE compared to BB internet VOIP could justify
interconnection charges
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But prices will be constrained by competition from VoIP and 2G/3G
VoLTE or VoIP over LTE – Who is the Ultimate Winner – imgtec , March 2013
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VolTE interconnection is still being worked on
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Likely standard is IPX
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VoLTE developments
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The IP traffic market is growing rapidly to meet demand
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Video streaming drives internet bandwidth requirements
21
Sandvine Global Internet Phenomena Report 2H2014
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Social networks are more important on mobile networks
22
Sandvine Global Internet Phenomena Report 2H2014
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Annual traffic growth rates have been in excess of 50%
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Transit prices falling rapidly
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Source: Arthur D Litt;e, Liberty Global, The future of the Internet Innovatiopn and Investment in IP Interconnections
May 2014
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Internet exchanges are being installed in many countries
25 http://www.internetexchangemap.com/
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A local IXP brings a number of benefits
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Source: Analysys mason, 2012, Assessment of the impact of Internet Exchange Points – empirical study of Kenya and Nigeria,
report for the Internet Society
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Benefits of local IXPs
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Source: Analysys mason, 2012, Assessment of the impact of Internet Exchange Points – empirical study of Kenya and Nigeria,
report for the Internet Society
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What’s different in the Arab countries?
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• The key to provide competition in these market is often the access by smaller
operators to national and international transmission
• It is important to monitor the access to these services in order to grant
access to telecom services at competitive prices
Fixed penetration Mobile penetration
• Fixed penetration for Arab countries
lower than developed countries
• Less than 10%, other than in GCC
•Main telephone access is mobile
• Customers often use multiples SIMS
to take advantage of offers
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
European Union Average GCC Average Arab Countries
0%
50%
100%
150%
200%
250%
European Union Average GCC Average Arab Countries
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Wide variation in fixed line penetration
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Source: ITU
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Higher penetration of moobile
30
0%
50%
100%
150%
200%
250%
Source: ITU
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LTE coverage 2013
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https://gsmaintelligence.com/images/analysis/entries/2013-08-30-dashboard-lte-map.png
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Very different make-up of fixed and mobile traffic
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