Regulation of NGNNew Approaches to Interconnection

John Horrocks

ECC TRIS Chairman, Consultant to DTI

+44 1483 797807

john@horrocks.co.uk

Regulatory concepts

• Technology independence

• Cost based termination

• Only regulate where there is significant market power

• BUT………..

The regulatory problems are…• Costs are technology dependent so cost based

termination conflicts with technology independence

• The significant market power doctrine is too hard to apply as there are many micro-markets like termination

• No theoretical justification for cost based termination

• Current approaches are inevitably technology based eg emergency access

• New wine in old bottles?

Where is the market now?

• Confused - crossing a discontinuity - conflicting and different models

• Internet has separated services and connectivity and so leapfrogged developments by 20 years

• Users can self-provide services - peering• Telcos want to preserve service revenue and

are fighting a rear-guard action

Why do we need a new model?

• We need to accommodate new services• We need to simplify interconnection• We need to reduce charging costs• The cost basis has changed and the existing model

was designed for expensive core networks• The retail market is changing with subscriptions and

bundled calls and is now out of line with interconnection

• Running a service-aware backbone for multiple services will be organisationally complex

It is time to change!

Costs old and new

Terminal A Terminal BAccess Access

Backbone

Old

Terminal A Terminal BAccess AccessBackbone

New

Line rentalLine rental

Distance and time dependent call chargesCarrier selection

Freephone

Line rental Line rental

Regulation is based on this!

Three questions

• How should the telco world change now?

• Where should the telcos go?

• What are the telcos thinking about now?

Three answers

• The case for zero/low rate termination

• ECC Ideas on a new model for interconnection - ECC Report 75

• Current NGN options/intentions

Zero/low termination rates

• Maximises competition - all revenue from own subscribers

• Regulators no longer need to control the market - they can withdraw

• Interconnection becomes simpler• Promotes fixed-mobile convergence and portability• More incentives to invest in new technology as full

benefit from cost reductions• Achieves technology neutrality• ….but need to adjust call origination (~*2)

Three answers

• The case for zero/low rate termination

• ECC Ideas on a new model for interconnection - ECC Report 75

• Current NGN options/intentions

ECC Report 75: A long term model

• High quality interconnected service platform - a new utility

• Full separation of transport and services• Transport consists of access and backbone• Interconnection charging based on capacity

and quality - not service• Uncontrolled service creation from the normal

customer interface (friendly to 3rd parties and innovation)

The new model

Terminal A Terminal BAccess

Transit

Access

Retail subscription or usage

SP

Capacity charge

Sender keeps all

TransitTransit

SP

Access subscription or usage

Capacity charge

Peering Peering

Access subscription or usage

……….but

• There are still some very expensive calls, eg premium rate, non-liberalised countries and mobile

• We need a smooth migration for any changes

• So we cannot avoid a system of parallel running

The Migration Concept

• A growing area with the new interconnection model

• Operators can join at any time• Gateways to the old model• Allows parallel operation of old and new

models and overlays• The old model will continue but diminish

indefinitely

Calls to the old model

Terminal A Access

Transit

Retail subscription or usage

SP

Capacity charge

TransitTransit

Access subscription or usage

Capacity charge

Peering Peering

Oldmodel

Gateway

Retail subscription or usageInterconnection

Call charge

Three answers

• The case for zero/low rate termination

• ECC Ideas on a new model for interconnection - ECC Report 75

• Current NGN options

NGN Interconnection parameters

Parameter Options

IP Layer Open (common IP addresses)

Closed (isolated IP addresses)

Service Layer Sender Keeps All

Keep some and pass some

Agreements Multiple bilateral,

Centralised hub, or none

DNS/ENUM Public Internet, shared private, or internal only

NGN Interconnection options

• Circuit switched only

• All walled gardens

• Private IP domain with own DNS/ENUM (GSMA IPX)

• Private IP domain with public DNS/ENUM

• Add service hubbing (GSMA)

Public Internet

NGN-1 NGN-2 NGN-3 NGN-4

LAN

NAT

DNS(ENUM)

Network termination point

(Gateway)

Session BorderControllers

Private IP

Private IP Private IP Private IP Private IP

Public (User ENUM)

DNS(ENUM)

DNS(ENUM)

DNS(ENUM)

DNS(ENUM)

Walled gardens - copying PSTN

Call Server Call Server Call Server Call Server

Public Internet

NGN-1 Backbone NGN-4

LAN

NAT

Network termination point

(Gateway)

Private IP

Private IPPublic IP

Private IP

DNS(ENUM)

Public (User ENUM)

GSMA - IPX (private IP)

DNS(ENUM) NGN (Carrier ENUM)

Call Server Call Server

Number SIP of serving network serverSIP public IP

NB: Preliminary option only, not confirmed

Public Internet

NGN-1 Backbone NGN-4

LAN

NAT

Network termination point

(Gateway)

Private IP

Private IP Public IP Private IP

Call Server(with barrier)

Call Server(with barrier)

DNS(ENUM)

GSMA - IPX (private IP) + public DNS/ENUM

Number SIP of serving network serverSIP public IP

Public (Carrier ENUM)

SIP:<E164>@<servingnetwork server>

Public Internet

NGN-1 Backbone NGN-4

LAN

NAT

Network termination point

(Gateway)

Private IP

Private IPPublic IP

Private IP

DNS(ENUM)

Public (User ENUM)

GSMA - IPX (private IP) + Hubs

DNS(ENUM) NGN (Carrier ENUM)

Call Server Call Server

Number SIP of serving network serverSIP public IP

SIP:<E164>@<servingnetwork server>

NB: Preliminary option only, not confirmed

Hub Hub

Intermediate thoughts

• No clear direction yet, telcos only doing "PSTN on IP" + TV delivery

• Beyond E.164, relationship to Internet needs much thought as the Internet controls user names

• Users only need connectivity + software + DNS/ENUM, they do not really need service providers, service provision is in decline

• If users self provide, NGN becomes "Internet overflow network"

• Telcos cannot compete with their customers