modul 06. mobile and voip interconnection

7/30/2019 Modul 06. Mobile and VoIP Interconnection

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Mobile Interconnection


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Maret 2011 InterkoneksiSemester Genap 2010-2011

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In many countries, mobile interconnection is regulated andpriced differently, depending on the form of

interconnection.

There are three broad forms of mobile interconnection:

A mobile network terminates a

call from a fixed network. The call might originate from a local

fixed operator, a domestic long-distance operator, or an

international operator

A mobile operator interconnects

with a fixed network in order to complete calls for the mobile

operator's customers. Again, the fixed network might be owned by

a local fixed operator, a domestic long-distance operator, or an

international operator

A mobile operator interconnects

with another mobile operator


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Mobile Termination Rates (MTR) are the fees chargedwhen you call a friend on a different mobile network, or

call their mobile from your landline. In doing so, the other

mobile network charges your operator a fee for carrying

the call.

There is no a unique treatment of mobile termination

charges among countries:

Some countries only regulate mobile termination charges for fixed-

to-mobile calls.

In other countries, mobile networks are required to apply a singleregulated termination charge regardless of where the call

originates.


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Under Calling Party Pays (CPP) the calling party, or the calling party'snetwork, pays for the call. The recipient of the call pays nothing.

CPP is used in many countries to structure interconnection payments

for fixed-to-mobile calls. Under the "old" CPP model, the mobile

operator sets a fixed-to-mobile tariff. The fixed operator deducts

specified charges from this fee (such as an origination charge, andbilling and collection charges), and passes the balance of the call

revenue to the mobile operator.

In recent years, some regulators have decided to regulate fixed-to-

mobile tariffs, rather than leaving this to the mobile operator to

determine. This generally reflects concerns that fixed-to-mobile tariffsare too high. This concern has also led regulators to control mobile

termination charges


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A minority of countries, predominately developed countries such as the United

States, use a system of receiving party pays or mobile party pays for

interconnection with mobile operators.

Under this system, the mobile user pays airtime on received calls as well as

calls that user has initiated. This reduces the problem of setting

interconnection charges to defining the costs of just the link between two

networks, which generally is low and easily defined. Thus, countries usingreceiving party pays have largely avoided the problem of high mobile

termination charges.

This is a definite advantage of the receiving party pays system. Since a

receiving party pays system requires the mobile user to pay directly for

network usage on the mobile network, its main disadvantage is that it makes

it difficult commercially to extend service to mobile users with very low income

levels, precisely where the calling party pays system has been most

successful.


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Regulation of fixed-to-mobile rates and/or mobile termination chargesis usually justified on the basis that those prices are "too high"

compared to a cost-based estimate, or to prices for outgoing mobile

calls.

The argument is that mobile operators are able to sustain high fixed-

to-mobile prices because they have market power in setting prices forfixed-to-mobile calls

This market power derives from the fact that the fixed subscriber who

places a call to a mobile subscriber has no influence over which

mobile network is used. Mobile subscribers make this decision when

they decide to join a network Under Calling Party Pays mobile subscribers do not pay for fixed-to-

mobile calls, so they may not take the price of these calls into account

in selecting a network


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Many regulators now control mobile termination charges.

Several forms of such regulation are:

In the absence of cost based data, regulators

are increasingly relying on international benchmarking to set regulated

mobile termination charges in their own countries

Some regulators have introduced regulations requiring mobile

operators to round each call to a lower unit of charging (for example

rounding to the second when the charging unit is to the minute). The effect

of this requirement is to reduce revenue from mobile termination

Regulators are increasingly pressuring

operators to base mobile termination charges on long run incremental

costs or fully allocated costs


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Market forces are also pushing down CPP rates and mobile termination

charges. For example users are increasingly substituting mobile-to-mobile calls

for fixed-to-mobile calls, creating additional pressure on mobile operators to

reduce fixed-to-mobile rates and mobile termination charges.

United States international carriers, supported by the United States

Government, are pressuring developing country operators to reduceinternational mobile termination rates. Because United States carriers are net

exporters of telephone traffic to developing countries, a reduction in mobile

termination charges would reduce their net interconnection payments to

foreign operators


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Under Calling Party Pays (CPP) for fixed-to-mobile calls, the fixedoperator deducts specified charges from the fixed-to-mobile rate and

passes the balance of the call revenue to the mobile operator

The fixed operator may retain charges for the following items:

Call origination charges reflect the cost of the fixed

network used to originate the call

The fixed operator may levy a contribution to the

cost of collecting call revenue from its customers. This fee may be

expressed as a percentage of the fixed-to-mobile tariff, or as an absolute

charge per minute, per call or per bill

The fixed operator may levy a fee for bad debts, on the basis

that fixed-to-mobile calls may make up a significant proportion ofcustomers' total bills

For instance in some countries fixed operators charge fees for

managing complaints related to fixed-to-mobile calls


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The basic economic principles of forward-looking cost models apply to

both fixed and mobile networks. However, the importance and typesof cost drivers in a mobile network differ from traditional fixed

networks.

The costs of both fixed and mobile networks increase with increases

in:

The number of subscribers, and

The traffic produced by those subscribers

The costs of a mobile network also increase with coveragethe

geographic size of the network.

Coverage costs are an example of common costs. They do not

increase with the volume units usually considered in wholesale orretail price structures (such as access connections and usage).

Accordingly, retail and interconnection prices for mobile usage need to

contain mark-ups to recover coverage costs


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Structre of a GSM Mobile System


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Roaming is the term used to describe the situation when a subscriber of one

mobile operators service travels outside that service area and obtains

connectivity and service from another operator. Roaming can take place withina country or between countries, as long as it involves a customer of one

operator being connected to the mobile network of another operator.

Conceptually, roaming is similar to a call forwarding arrangement. Callers use

the customers usual mobile phone number. The home network hands the call

over to the host network, which passes the call to the customers mobile

phone

Roaming charges are generally much higher than termination charges within

the home area. Customers often pay a monthly fee to be able to roam plus

usage charges, the combination of which can be quite expensive


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VoIP Interconnection


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Internet telephony, or Voice over the Internet Protocol (VoIP), is a category of

services that enable users to make real time voice calls, transmitted over theInternet (rather than using traditional circuit switched telephone networks).

VoIP enables network operators, service providers, and consumers make

significant savings, by:

Reducing the underlying costs of a telephone call. VoIP uses network resources

much more efficiently than conventional telephone service, reducing the costs of

providing a call (albeit with the loss of some call quality and service features)

Creating opportunities for regulatory arbitrage that enable service providers and

consumers to reduce or avoid call charges and/or regulatory fees

Currently the volume of voice telephony traffic is small compared to

traditional, dial up, circuit-switched telephone services. However, the very real

potential exists for packet switched, Internet Protocol networking to become

the primary medium for most voice and data services. Should this occur,

information services (including VoIP) will become the primary end user service

provided by telecommunications networks


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VoIP services differ depending on whether:

The service provides a competitive alternative to conventional

telephone services

A conventional telephone can transmit and receive calls

Subscribers need to acquire and install additional equipment on

their premises Traffic routes into or from the PSTN

Users pay for service

Three broad categories of VoIP service:

Internet telephony via computer; Internet telephony that is partially accessible from and to the

PSTN; and

Internet telephony that is fully accessible from and to the PSTN.


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Internet telephony via personal computer has several drawbacks:

Typically, calls do not access the PSTN (unless one of the computers accesses the

Internet via a modem and conventional dial-up telephone line)

Subscribers must log onto the service in order to make and receive calls

The service does not provide caller identification and location information needed in

emergencies The service does not offer the same sound quality and reliability as conventional

circuit switched telephony

For these reasons, most countries treat Internet telephony via computer as an

unregulated information service, largely free of traditional telephone carrier

responsibilities


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This category of VoIP calls includes:

Long distance telephone calls originated by subscribers of incumbent carriers,

and by users of calling cards who call from payphones and mobile phones

Internal corporate VoIP traffic that originates and terminates over anenterprise network. Some enterprise networks can route traffic into the PSTN

VoIP services that enable customers to make calls over the Internet


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The Internet and conventional circuit switched telephone numbering systems

use different addressing systems. Thus VoIP services in this category mustprovide call processing software that can map Internet Protocol addresses to

call recipients with conventional telephone numbers.

The software routes the call as far as possible through Internet networks, to a

gateway or point of presence as close as possible to the intended call

recipient. At that point, the service converts the call to telephony traffic and

hands it off to a conventional telephone network.

To access this category of VoIP services, users need:

A subscription to a VoIP service

Broadband Internet access

A modem

An Analog Terminal Adapter, to configure VoIP onto the users DSL or cable modemlink

The ability of subscribers to access service from conventional telephones, or

alternatively to call conventional telephone numbers, makes this form of

Internet telephony more attractive to customers (and therefore more

commercially attractive) than Internet telephony via computer


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Many telephone companies already use Internet carriage to handle long

distance calls. The customer making the call may not even be aware of this

Most current VoIP services do not use the PSTN for both call origination and

termination.

In the future, almost all VoIP services will require a broadband, digital Internet

access link. Telephone companies and cable television companies will replace copper

networks with optical fibre. This will enable voice services to ride over a

ubiquitous broadband digital network as a software application


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Decisions on the regulatory status, availability, and price of VoIP services will

directly affect the economic viability and future regulatory status of incumbentoperators

VoIP services can traverse the telephone network without detection. Thus,

even where regulators permit only limited or no VoIP services, incumbent

operators will still face competition from this source. Incumbent operators

may no longer be able to expect voice traffic to generate lucrative revenues

and profits

In response to this competitive pressure, incumbents may seek regulatory

relief. For example, incumbent operators may approach regulators seeking:

Regulatory parity with new entrants, for example by removing asymmetric

regulation not imposed on other operators

Protection from competition, for example by banning or seeking to limit VoIPservices

Finally, regulators will have to consider how best to encourage incumbent

operators to retrofit their existing networks and install new digital plant,

optimized for switching and routing data (of which VoIP will be a significant

component in the future)


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Many countries regulate information services and traditional

telecommunications services differently. Differential regulatory treatment creates opportunities for arbitrage. It also

encourages incumbent network operators to:

Focus new investment into unregulated broadband networks

Migrate services (including voice telephony using VoIP) onto those new networks

wherever possible

This behaviour achieves operational savings, and also qualifies voice telephonytraffic for a lower level of regulation.

The result will be an increase in the volume of information services, and a

reduction in the volume of voice telephony minutes of use that are subject to

interconnection charges, or international accounting rate settlements.

Network operators traditional sources of revenues will erode, forcingregulators to rethink how network operators should be permitted to recover

their costs


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Wireless networks will have a substantial impact on VoIP service development,

particularly in developing countries As wireless and VoIP traffic increase, differences in the terms and conditions

under which wireline, wireless and VoIP operators interconnect networks will

create opportunities for arbitrage, and distort markets

Differences in call termination rates and interconnection arrangements can

cause operators to adjust traffic flows to obtain the lowest possible rate, and

to minimize regulatory fees

Incumbent operators may seek to exploit bottlenecks and essential facilities,

by imposing above cost termination charges to deliver calls to wireless

subscribers, or to deliver wireless traffic to wireline subscribers.

This may encourage wireless carriers and VoIP providers to avoid the

incumbents network by seeking cheaper alternatives for originating andterminating traffic


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These promise to have sufficient bandwidth

and operating standards to support high speed data services, presumably

including VoIP

Wi-Fi can also support voice telephone calls.

Wi-Fi is generally provided as unlicensed broadband network access, on an

stand-alone basis at homes, offices and public hot spots such as airport

lounges and coffee shops

VoWiFi can integrate Wi-Fi access with licensed thirdgeneration mobile services. With seamless roaming between the two

networks, subscribers could use voice over a WiFi network (where available)

and mobile connections where WiFi is missing, or outside a WiFi network.

VoWiFi has the potential to allow VoIP providers to completely bypass the

PSTN

WiMax is a wireless

broadband technology, which has a range of up to 30 miles and can be used

for wireless networking like Wi-Fi, but at higher data rates over longer

distances


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Benchmarking Voice Telephony Call Rates


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Nation or State Local Level Single Transit Double Transit

Fixed-to-Fixed EUaverage 2003 0.80 Euro-cents per MOU 0.75 Euro-cents per MOU(Minutes of Use) 0.63 Euro-cents per MOU

New York 2005 Port rate $2.57 flat rate 0.001147 cents per MOUoriginating; 0.00111 centsper MOU terminating

Tandem Switching0.000481 cents and0.000203 commontransport

Hungary 2004 1.85 Euro-cents per MOU 2.4 Euro-cents per MOU 2.76 Euro-cents per MOUCzech Republic 2004 1.3 1.62 2.06Japan 2004 1.727 local switching yen

per MOU 2.057 yen per MOUIndia 2005 0.20 - 1.10 Rupee based

on mileage bandsMalaysia 2005 2.6 Sen per MOU 4.8 Sen per MOU 8.43 Sen per MOU

Benchmarking data is sourced from Teligen, the OECD, the European Commission, Intug, and the NationalRegulatory Research Institute.


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Benchmarking Broadband Data Rates


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Nation or State

56/64 kilobits per second at 2,

50 and 200 kilometres

1.544/2 megabits per

second at 2, 50 and 200kilometres

155 megabits per second

at 2, 50 and 200 kilometres

United Kingdom 2004 229; 460; 583 Euro per month 464; 1691; 3612 Euro permonth 11,964; 33,908; 71,795Euro per month

New York 2004 186; 410; 1009 Euro per month(56 kbps) 488; 1578; 4635 Euro permonth (1.544 mbps) n/a

California 2004 88; 233; 689 Euro per month(56 kbps) 360; 1234; 3651 Euro permonth (1.544 mbps) n/a

Germany 92; 414; 478 Euro per month 340; 1979; 2504 Euro permonth 1600; 7511; 12,161 Europer month

Hungary 193; 337; 621 Euro per month 702; 2149; 5003 Euro permonth 7813; 13,727; 23,868 Europer month

Japan 655; 1122; 1190 Euro permonth 3164; 7301; 9046 Euro permonth 9302; 50,583; 122,998 Europer month

Malaysia 2.6 Sen per MOU 4.8 Sen per MOU 8.43 Sen per MOUBenchmarking data is sourced from Teligen, the OECD, the European Commission, Intug, and the NationalRegulatory Research Institute.


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ICT Regulation Toolkit Module 2 Competition and Price Regulation

InvoDev, ITU (http://www.ictregulationtoolkit.org)

Maret 2011 InterkoneksiSemester Genap 2010 2011

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http://www.ictregulationtoolkit.org/http://www.ictregulationtoolkit.org/

modul 06. mobile and voip interconnection

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