|Latin America I 2001
|Regulation of Telecommunication Services with the Advent of All-IP Networks
|Director of Government Relations for the Andean Region
Traditional circuit-based telephone systems and mobile systems are giving way to Internet Protocol (IP) networks. The greater capacity of IP networks makes many new applications possible. By facilitating the growth of these systems, important social and economic contributions to regional development can be made. Through convergence, wired, wireless and IP networks should reach one billion Internet users by 2001 however new standards, regulations and laws will be needed to make it happen.
It is worth noting that the evolution to Next Generation Networks is not just a technological change for which regulators, operators and providers must develop an adequate response. It is, rather, the advent of a new, radically different, scenario in the fundamental concept of telecommunications. Next Generation Networks are a means for developing and strengthening the Global Information Society. So far, voice transmission services have been the key component in communications systems using physical equipment and logical structures proper to each type of service. Packet switching will necessarily generate, mainly for economical reasons, service convergence. A shared interface telecommunication platform, which is independent of the type or means of access (wireless, Cable TV, XSDL, etc.), will allow the users freedom to establish, eliminate, or adapt services as determined by competitive circumstances. 3G/IMT-2000 wireless systems, one of the most significant pillars of this new scenario, will support a converged set of voice, data and multi-media services and will be fully integrated with personal networks. This convergence will produce applications that are based upon data/video-streaming, where voice is secondary. The traditional telephony regulatory framework will not always apply in this context. It will be necessary to migrate to an appropriate, new, regulatory environment coherent with the intrinsic characteristics of the Next Generation Networks. Regulators worldwide must realize that, following in the wake of the new business environment, vendors and operators are transforming themselves from voice-centric, circuit-switched providers of products, to data-centric, IP-based providers of solutions and applications with capacities hundreds of times greater than today’s networks. Large operators have already begun investing in upgrading their networks towards an “all-IP” architecture. It is expected that deployment of all-IP based networks by operators will first appear in Europe and Japan in 2002, with the rest of Asia following in 2003. The Americas are expected to deploy IP based networks in late 2003 to early 2004, in parallel with 3G deployment (Figure 1). As voice becomes an increasingly smaller fraction of the total percentage of bits transferred, deploying a network only for the delivery of voice services will no longer be justifiable. Consequently, there will be an enormous effort to create IP technologies, which support real-time applications of reliable services and carrier grade quality. The expected market should be robust. Today’s 500 million wireless voice users and 200 million wired access Internet users, it is predicted, will converge and create one billion wireless access Internet users by the year 2003. All-IP based networks will ultimately cause the current communication infrastructure to evolve into a true information infrastructure Circuit-Switched Networks Circuit switching is the network architecture for the PSTN. It allows communications facilities, or circuits to be shared among users, but with each user having sole access to a circuit, (i.e., each circuit is dedicated to a user). This network is optimized for voice transmission. For mobile communication, the current wireless circuit switched networks use wireless air interface protocols, such as Global System Mobility (GSM), Code Division Multiple Access (CDMA), Time Division Multiple Access (TDMA), to connect to the MSC , which in turn communicates with other network devices (e.g. the PSTN and the Internet) on a dedicated circuit basis. Each circuit-switched system in essence stands alone and each is regulated as an end-to-end service, consisting of: o The message origination; o The customer equipment (e.g., plain black phone, data set, cell phone); o The application (e.g., voice, SMS); o The carrier network; o The delivery, often to a subscriber on the same network. The owners of these facilities defined the services provided by their networks, usually including only limited inter-network services. These services were often hampered by major incompatibilities, both in technology and in business arrangements. In contrast, each IP-based system, including evolved legacy systems, is part of a larger, amorphous system. While the owners of the facilities may well offer services, the nearly seamless nature of this new environment offers added value to the applications that transcends single systems and therefore poses an entirely different business model. IP-based Networks IP-based packet switched networks can be expected to change: o How carriers provide their service; o How innovative and customized applications are offered; o How customers access them; Such fundamental changes will require a different regulatory approach than was needed for circuit-switched services. The core of the IP-based network is packet switching. Instead of reserving a dedicated circuit for the length of the call, a packet switching network allows many users to share transmission capacity by breaking up information into packets and then using a transmission line to alternately send packets from several different users. The IP backbone enables direct inter-connection between wireless networks (e.g., cellular, paging) and both IP and non-IP networks (e.g., PSTN, Internet) without the need, and consequent delay, of going through a circuit switch gateway circuit. The result is that all IP-based networks have the ability to offer “bandwidth on demand” (i.e., to carry a higher volume of converged voice, data and multimedia traffic over a common transmission and routing infrastructure more efficiently and at a lower cost). Additionally, the layered approach of IP-based networks improves flexibility for operator access networks, core network providers and service providers. It is important to underscore the fact that the advent of the Internet, its explosive growth, and hence its quasi universal presence means that the Internet Protocol is likely to be the universal interface on the access perimeter of future generation networks. In fact, three separate industries are converging around this concept: – The computer industry – The telecom industry – The mass media industry The acceptance of IP as a common protocol has a momentum of its own, fed by traditional market forces. For most operators, the question is not if they will deploy IP networks, but when. Benefits of an IP-based Network The convergence of wireless communication and the Internet will provide limitless access to information of all forms and provide extraordinary opportunity. It sets the stage for Universal Access, closing the gap between the “information haves and have-nots”. We have already witnessed the explosive growth of the Internet and the resultant economic benefits, including increases in revenue and job opportunities and decreases in costs. These benefits are generating unprecedented interest from diverse industry sectors (e.g., wireless providers, manufacturers, content industry, ISPs, virtual network providers, IT industry), operators, service providers, consumers, regulators and governments. The ability of an all-IP based network architecture to connect the Internet, the PSTN, myriad enterprise applications, existing and future third-party applications with the freedom of wireless mobility, is beneficial not only to operators, but to third-party entrepreneurs, the consumer and society in general. The benefits that IP-based Wireless networks provide to operators include: o An orderly migration path from existing wireless technologies (2G, 2.5G, 3G) o The capability of extending, re-using and upgrading existing technology investment in a modular fashion o Improved system capacity and quality of service o Reduced network operating costs associated with the maintenance of leased lines and interconnects on the current circuit switched network. Because IP is open and non-proprietary it allows third party developers to access and add applications and features to the network, which in turn enables them to provide feature-rich customized applications to the consumer. IP increases system performance and reliability. It allows for the creation, storage and access to a wide range of information resources. For the consumer, there will be a choice of customized services and features at lower cost. IPs inter-working function ensures that appropriate network resources are assigned so that services (e.g., IP Telephony and Real Time Video) can be optimally delivered to a wide range of wireless and fixed subscriber devices. Deployment of IP-based networks will be accompanied by: o A considerable decentralisation of network management o Access technology independence o Different, constantly changing business and market models, especially with regard to the pricing and financing schemes; o The entry of many new industry players from other sectors; o An increasing concentration of broadband services environment on IP platforms, which will resemble the Internet client/server model more than the traditional telecommunications model. Thus the circuit-switch regulatory paradigm, especially for regulators accustomed to regulating end-to-end Quality of Service becomes inapplicable. Wireless IP Standards Activities One of the main attributes of next generation networks is their adherence to standards. Actually, a standard, more than an attribute, is a critical element that ensures next generation networks have a series of attributes in common such as modular flexibility, safety, service quality, convergence, open architecture, scalability and the like. The influence of the Internet and IP technology has extended to encompass the mobile communication industry. Its standards bodies, operators and radio access network equipment vendors have embraced IP as the networking architecture of choice for delivering a whole new class of service application offerings by adding mobility to Internet accessibility. Today’s wireless core network is based on a circuit switched architecture similar to that found in SS7 wireline telecommunication networks. With the advent of IP technologies and the tremendous growth in data traffic, the wireless industry is evolving their core networks toward IP technology. Wireless telecommunication started as an offshoot of wireless telephony and with the absence of global standards resulted in regional standardization. Two major mobile telecommunication standards have dominated the global wireless market, namely TDMA/CDMA developed by the Telecommunications Industry Association (TIA) in North America and GSM developed by the European Telecommunications Standards Institute (ETSI) in Europe. As we move towards third generation wireless there is a need to develop standards which are more global and collaborative. The trend towards a different approach to regulations and their development is nowhere as evident as it is in the development of standards. Once the exclusive purview of the International Telecommunications Union (ITU) and governments around the world, standard-making is now very much a joint effort. Recently the global wireless industry has created two new partnerships projects to address the subject issue: o 3GPP, which is developing 3G standards for GSM based systems o 3GPP2, which is developing 3G standards for IS-95 based CDMA standards. 3GPP and 3GPP2 have developed radio technology standards to support higher data rates and are now focusing on development of standards for all-IP networks. The work plan anticipates that a recommendation on how the specification development should be done on all-IP networks should be concluded by December 2001 for release to the Standards Development Organizations. A common set of IP Mobility protocols are needed to provide network level mobility between different access networks including wireless. The IETF is developing a suite of protocols (Mobile IP) to achieve such mobility. A new Forum MWIF started recently intends to drive a single open mobile wireless Internet architecture that enables seamless integration of mobile telephony and Internet services and is independent of the access technology. TIPHON is an ETSI body that is focused on the broad question of making the new IP networks inter-operate with the old circuit switched networks. Standards Committee T1 contributes to IP/telecom issues as well and TIA also has relevant working groups. Regulatory Approach Regulatory authorities now must face the challenge of transforming themselves into strategists whose policies for the transition period must facilitate this shift and the advent of new operators, without encroaching on the stability of operating permits and legal commitments that are currently in force. The basic regulatory framework should encourage convergence, competence and the dissociation between networks and applications or services. The idea is to shift gradually to an environment in which the only factors regulated are: o Management of scarce and unique resources (such as the radio frequency spectrum, numbering plans and/or domain names) o Interconnection/access requirement. o Licensing for the provision of the ‘service of telecommunications,’ comprising of voice, data and multi-media applications. o Management of Universal Services This will ultimately allow users to choose the access to services, contents and applications that best suits them while seeking the best financial conditions. Many regulators have already begun this transition, at least in some measure, with the move to a competitive, market-based, telecommunication environment. How-ever, upon closer inspection of the regulatory environments of most countries, one finds that there is still significant reliance on regulations that were designed for a much earlier time. Conclusion Most existing telecommunication regulations, standards, rules and policies, grew up with today’s circuit-switched voice telecommunication services. While a great part of the wireless IP networks now going into service will evolve from existing systems, the services they will provide will not be voice-centric. Therefore, it would be wrong to assume that the regulatory framework can be the same. Creative minds are working on entirely new paradigms for marketing, charging for services or packages of services, revenue sharing arrangements among all players in the sector (i.e., PSTN, cellular operators, cable television providers, etc). They are also working on new parameters for inter-operability criteria, contents and applications, and business models. IP-based 3G/IMT-2000 wireless net-works will provide users with a personal networking capability and give them access to an array of unique, innovative, converged services. In some parts of the world these systems will provide the primary means of Internet access. As non-voice-centric services, they clearly should not be subject to traditional voice regulation. On the contrary, regulators should provide operators with every incentive to make these data/multi-media centric services available to the public as quickly as possible. The technologies being employed to implement IMT-2000 are significant breakthroughs; they will totally transform the way telecommunication infrastructure is used. The capability will soon be here for entrepreneurs to offer new services using streaming video, data and voice. These services, originating anywhere on the emerging integrated, global, IP-based telecommunication network, will be available to customers anywhere else on the network. The technical impediments are all but solved. This is the dawn of a new telecommunication era. Regulators, however, must allow and encourage the potential of all-IP based systems, in benefit of the social and economical development so that their countries and regions can become active partners of the Global Information Society.