|Issue:||Latin America I 2001|
|Topic:||Preparing the World for IP telephony: The 2001 World Telecommunications Policy Forum|
|Organisation:||International Telecommunication Union, Switzerland|
Internet Protocol (IP) Telephony is the transmission of voice, fax and other services over packet-switched IP-based networks. There are several “flavours” of IP telephony using various combinations of PCs, telephones and the Web. IP growth is of vital importance to governments, operating companies, manufacturers and users. The ITU’s 3rd World Telecommunication Policy Forum on IP Telephony seeks to find ways to prepare the world for the arrival of IP Telephony.
Internet Protocol (IP) Telephony is rapidly reaching the top of the agenda for the telecommunications industry world-wide. The possibility of transmitting voice-over IP-based networks, with all its challenges and associated opportunities, such as voice and data integration, constitutes a milestone in the convergence of the communications sector. But what is IP Telephony? Internet Protocol (IP) Telephony is broadly defined as the transmission of voice, fax and related services over packet-switched IP-based networks. Internet Telephony and VoIP are specific sub-sets of IP Telephony: Internet Telephony: IP Telephony in which the principal transmission network is the public Internet (Internet Telephony is also commonly referred to as “Voice-over-the-Net”— VON, “Internet Phone,” and “Net Telephony” — with appropriate modifications to refer to fax as well, such as “Internet Fax”). Voice-over-IP (VoIP): IP Telephony, in which the principal transmission network or networks are private, managed IP-based networks (of any type). (Depending on the type of network, you can have “Voice-over-frame relay,” “Voice-over-cable,” and “Voice-over-DSL” or “VoDSL,” as examples). The Public Internet (also referred to as the Internet): The global, public, IP-based meta-network created by the interconnection of many public and private IP-based networks. IP Telephony began life as a curiosity among computer hobbyists. Starting in 1994, it first became possible to send voice messages from one PC user to another, providing they both had multimedia PCs and the same software. Crucially, both users had to be logged on at the same time. For many people, this first incarnation of IP Telephony is still the one that comes to mind when the term is used. But the industry has moved on. Nevertheless, PC-to-PC use is still very popular, and has been given a recent boost by the popularity of instant messaging combined with chat such as the Yahoo Messenger service that offers free calls to anyone in the United States from this popular portal site. Starting around 1996, it became possible to relay voice messages originating on the public Internet to telephone subscribers on the public switched telephone network (PSTN). For a while, PC-to-Phone became the dominant form of IP Telephony. The next logical stage in market evolution occurred around 1997. By this stage, IP Telephony was becoming “respectable” and attracting the attention of the large established telecommunication manufacturers and vendors. At present, Phone-to-Phone is probably the biggest segment of the market in terms of revenue, and it may also be the largest in terms of minutes of international traffic too. There are multiple operators, many of whom sell service via calling cards. As more and more of the traditional PTOs (Public Telecommunication Operator) enter the market, it is becoming harder to distinguish between “pure” IP Telephony traffic and other traffic which perhaps traverses an IP-based network at some stage of its journey but which would otherwise be classified as normal PSTN telephony. However, the initial gloss concerning “free long distance over the Web” has begun to wear off as PTOs have found technical difficulties in providing the equivalent functionality over IP-based networks that customers expect over circuit-switched networks. Also, the motivation for carriers (as wholesalers) to use the Web, rather than the PSTN, has diminished as accounting rates have come down towards cost and as many new least-cost routes have become available on conventional networks. The motivation of price arbitrage is still the driving force for Phone-to-Phone IP Telephony. However, the number of markets where it is still a viable commercial proposition is diminishing as competition spreads through the world. In low-price, developed country markets, we are now seeing a fourth stage of IP Telephony evolution that is characterised by convergence. The main driver for IP technology in these markets is the desire of service providers to offer value-added services that combine the functionality of the Web with the ease of use and ubiquity of the telephone or mobile phone. Examples of this type of service include unified messaging (e.g., access to voice-mail or fax messages by telephone or mobile phone), number portability, and “click-to-talk” functions on websites. ITXC’s “webtalkNOW!” service demonstrates the possibilities for integrating voice into e-commerce websites. Phone-to-Phone services most closely approximate the traditional telephone experience and can display very good or very poor quality, depending on the nature of the network or networks over which packets are carried. While the Internet can be used as the underlying means of transmission for Phone-to-Phone calls, it is much more likely for these services to rely on closed, managed IP networks and formal billing relationships among gateways and carriers. In that respect, Phone-to-Phone VoIP services actually have very little to do with the Internet, but rather operate nearly in parallel to the global PSTN and its settlement rate system. To the user, the fact that a particular call travels for part of its journey via the Internet or another IP network is irrelevant, as long as the price is low and the quality is acceptable. For IP Telephony service providers (IPTSPs), the main motivation is to reduce costs, particularly on the international leg of a call. There is scope for service providers to develop commercial opportunities (Table 2). But, the boundaries that define telephony from other services (such as radio, broadcasting, messaging) are diminishing and with it the chances for voice-only services. IP Telephony technology now represents a fully-fledged alternative to traditional circuit-switched telecommunication equipment and services. The flexibility of IP Telephony can be summed up in the term “XoIP,” the optimistic industry acronym for “anything over IP.” The basic IP Telephony technology can be extended to create limitless possibilities for the transmission of voice alone, or in combination with any other information that can be digitised. While IP-based networks are optimised for the carriage of data rather than voice, they can nevertheless carry voice very competently and cheaply. Voice currently occupies less than half the bandwidth available on international telecomm-unication networks, and by the end of the coming decade, that percentage may well be below one percent, by volume. As of late 2000, more than three-quarters of international traffic originated in countries in which the provision of IP Telephony was liberalised. Furthermore, the majority of IP Telephony now travels over managed, private IP networks as opposed to the public Internet. It is estimated that the total volume of Voice over Internet Protocol (VoIP) traffic carried over international networks in 2001 will be around six billion minutes, or some 5.5 percent of the global total (see Figure 1). What is more significant, however, is not so much the total volume of traffic as the rate of growth, which continues to be exponential at a time when overall international traffic growth appears to be slowing. It is also clear that the market is still far from mature. One sign of this is that, a new entrant, like DialPad.com, can enter the market, as it did in October 1999, and steal a significant chunk of the market. It claims to have carried some one billion calls, both domestic and international, in its first year of operation from its 10 million registered users. But it is not only start-ups that are generating excitement about IP Telephony. Major international PTOs have announced that they will migrate all their international traffic onto IP platforms. For instance, Cable & Wireless is spending more than US$2 billion on a global IP network. It plans to use voice over IP (VoIP) to deliver some 900 billion minutes of calls in the year 2006 compared with just 675 million in 1999. It estimates that VoIP technology will allow it to carry calls at a quarter of the cost of doing so over a conventional, circuit-switched network. The issue has become so important for the telecommunications industry, that in July 2000 the ITU Council selected IP Telephony as the topic of the third World Telecommunication Policy Forum, held in Geneva, 7-9 March 2001. While the Counsellors were united in recognising the importance of IP Telephony, they did so for very different reasons. Some Counsellors expressed the view that IP Telephony would become a key technology in the coming convergence between circuit-switched and packet-switched networks. Others saw the danger it posed to the revenue stream and monopoly status of their incumbent public telecommunication operator (PTO). This reflects the fact that from a regulatory point of view, IP Telephony is treated in widely divergent ways within ITU Member States. In some countries governments have used the definitive tools to allow the delivery of IP Telephony services to the public in general in spite of the existence of market exclusivity of the incumbent over basic voice telephony. In some others the service is being completely prohibited, in others is being licensed and promoted, while in some they are treated as just another technological platform which can be adopted by telecommunication operators. The rise of IP Telephony across the globe-regardless of the way it is delivered and the regulatory regime it bears-has, nevertheless, profound implications for consumers, industry, and national administrations. To address some of these implications the third World Telecommunication Policy Forum will discuss and exchange views on the theme of Internet Protocol (IP) Telephony, with the following agenda: the general implications of IP Tel-ephony for the ITU membership with respect to: (a) the telecommunications policies and regulations of ITU Member States; (b) the implications of IP Telephony for developing countries, particularly with respect to policies and regulatory frameworks, as well as technical and economic aspects; (c) the impact of IP Telephony on the operations of Sector Members, notably in terms of the financial challenges and commercial opportunities it presents; – actions to assist Member States and Sector Members in adapting to the changes in the telecommunication environment due to the emergence of IP Telephony, including analysing the current situation (e.g. by case studies) and formulating possible cooperative actions involving ITU Member States and Sector Members to facilitate adaptation to the new environment; actions to assist Member States and Sector Members in meeting the human resource development challenges presented by new telecommunication technologies such as IP Telephony, in particular, skills shortages and the need for education, and technology transfer. Conclusion By hosting the 3rd World Telecommunication Policy Forum on IP Telephony, the ITU and its membership (189 Member States and more than 600 Sector Members — operators, manufacturers, financing institutions, development agencies, etc.) are seeking to deepen industry understanding of this new technology and its socio-economic and regulatory implications. The Forum also seeks to find areas of common understanding among the currently divergent views of the best ways of preparing the world for the arrival of IP Telephony. This article is based on previous work of the ITU on the subject of IP Telephony. Further information on the matter can be found at “ITU Internet Reports 2000: IP Telephony” available at http://www.itu.int/ti