VoIP and ENUM

Voice over IP is certainly the most prevalent conversation within the industry at present. While voice continues to play the role of mainstay of the telco industry, the signs of further disruption to this model are certainly evident. From an Internet perspective voice is a small volume and relatively undemanding UDP application. Call signalling is just a rendezvous application, commonly implemented as an XML application. When combined with the DNS as a line database, and tied into the regular E.164 PSTN numbering plant via ENUM, then all of the critical components of VOIP are defined. VOIP, as a service platform , is both completely functionally compatible with traditional telephony and also poses the greatest risk to the future viability of traditional telephony. It is now largely a matter of the regulatory sector defining the timeline for VOIP adoption, and with that adoption mass market voice services will once more be the subject of further price pressures. If VOIP is priced in a manner consistent with the cost of supporting this application within the larger network, then voice will cease to be the backbone application of the industry.

There is no next vertical killer application coming, and it certainly isn’t going to be just VOIP.

We are seeing a new suite of application components in the form of XML, Ajax, RSS, Torrents, Podcasts and similar, and methods of constructing content in previously undreamt of methods. Many of the more captivating services are now in the form of overlay applications, such as Skype for voice or Google’s Gmail for mail . The common factor here is that these services do not use dedicated network infrastructure, but exist as application level overlays. Its clear in this that user’s perception of where the value lies is shifting to the application rather than remaining with the network’s access infrastructure. This value shift is not coalescing within a single application, however. What is evident is that the application space is now an area of intense innovation, and we are seeing diversification in this space, rather than convergence. The richness of structured data sets and their potential to create innovative services is an obvious outcome of this application level activity.

Perhaps its time to forget about convergence, and instead look at what it takes to survive as a carrier ISP in today’s deregulated, competitive, unconverged world. Certainly one of the more important principles is to stop attempting to add value to the network by spending large amounts of effort in providing a panoply of services that customers simply don’t want and don’t value. It would appear that what customers want today is for packet carriers to stick to the basics - keep overheads low and operate a network that is simple, stable, fast and cheap. User value construction is happening at the edge of the network through overlay structures, and the major attribute of networks today is not convergence per se, but the ability to open the network’s edge up for competitive innovation.

It appears that vertically integrated service providers are fading away, and convergence is fading away with it. The deregulated service industry continues to specialize rather than generalize. Valued service delivery is increasingly based on overlay systems that treat the network as a simple packet transmission service. The harsh lesson here is that the converged Utopia of the old world carrier industry is now no more than a piece of nostalgic mythology. And a rather dull and uninteresting one at that. The unconverged service world of layered applications is vibrant, innovative, exciting and very much alive . And maybe that’s a very good thing.

Vive la différence!

1. Regulators should continue to seek a balance between the benefits and costs of intervention, on the one hand, and regulatory forbearance, on the other.

An overly interventionist approach, which could lead to short-term benefits, could potentially stifle a dynamic market process with inevitable and adverse competitive, economic and even social consequences on the longer term. In general, competition is deemed to be a better approach to economic efficiency than regulation, and the regulators must encourage sustainable competition for the long term.

2. Regulation should be based on clearly defined goals and policy objectives and should be kept to the minimum necessary to meet these objectives.

Once effective competition is established or there is a reasonable prospect of a effectively competitive market in the near term, regulatory forbearance should prevail (with competition law providing appropriate safeguards).

3. Regulators should acknowledge that 'normal' competitive markets reflect a range of operator return and should not intervene in competitive markets where one or more operators' return appears to be above the 'norm'.

In the mobile market, the reality is that some operators have made good returns (on invested capital), while others have not. This situation is not of itself a cause to regulate away 'excess profits'. If a regulator judges from the highest standard, and regulates accordingly, then the less performing companies will unavoidably hit, thus further reducing already inadequate returns and threatening long term competitive development.

4. Regulation should fit (reflect) the market situation and balance the micro and macro views.

For example, when in certain cases mobile termination or roaming charges may appear high to regulators in certain countries, these cannot be judged in isolation.

5. Regulators should be publicly accountable and act in a transparent way.

Regulatory intervention should only be imposed after an appropriate public consultation process, which in most cases, will include market definition and assessment and a further assessment as to the appropriate regulatory remedy. A full right of appeal both on grounds of law (substance) and procedure (process) is an essential element of the checks and balances, which are necessary between operators and regulators.

6. Governments should adopt licensing practices that encourage new investments in telecommunication infrastructures and facilitate competition within the sector.

Un-harmonized license award procedures together with varying license conditions/obligations may lead to varying investment incentives in national markets and may eventually give rise to some discrepancy with respect to the levels of mobile service developments. Licensing policies and procedures must be applied judiciously] since not only they can influence market entry but also the post-entry conditions affecting competitiveness and market development. For auctions to contribute positively to economic welfare, they must meet a set of stringent preconditions (all potential bidders must be fully informed as to any Government imposed terms and conditions, including fees and changes to fees). When designing auctions, policy-makers should seek to achieve efficient resource allocation rather than primarily aiming to raise surplus government revenue. High license fees in some developed countries may constrain the ability of operators to invest in developing countries.

7. Spectrum should be allocated on the basis of achieving economically efficient, competitive and structurally desirable outcomes rather than to extract monopoly rents from the industry.

If the market is the best allocator of scarce resources, as most economists would argue, it is important that countries should be able to develop their own spectrum trading arrangements. In principle, regulators should allow for secondary trading of spectrum within planned internationally frequency allocations, after a thorough consultation process with the industry (i.e. mobile operators) evaluating the advantages and disadvantages of spectrum trading.

8. The feasibility and commercial desirability of sharing of facilities and infrastructure is a matter, which is operator and market specific.

In certain circumstances, sharing can be beneficial by, for instance, driving efficiencies through accelerated network rollout, the potential elimination of unnecessary cost duplication and the minimization of certain adverse environmental impacts. Accordingly, regulators should enable commercial negotiations on facility sharing among mobile operators to proceed subject however to license conditions not prohibiting the proposed form of sharing and competition not being materially and adversely impacted by the proposed form of sharing.

9. Restrictions on the deployment of mobile networks should be based on science and substantiated studies, and not in response to 'public concern' which is without scientific basis.

10. Adequate consumer safeguards against the inappropriate use of customer data are in place in most countries.

In overseeing the implementation of those safeguards, regulators should balance the interests of consumers to data privacy, on the one hand, and timely and easy access to services and information on the other. Further, regulators should look first to relevant self-regulatory industry initiatives to achieve those objectives.

They have two models:

• Be a "Linus" and share your connection freely with others. Other Linus’ can also use your connection for free.
• Be a "Bill" and charge for your connection. You must then pay to use others connections when you use them. But, you pay substantially less than the $6/hour that the big hotspot providers charge today.

There is a lot of comments on the blogosphere on this, so I do not need to comment on this further by myself, just read, e.g.:

The Telecom Regulatory Authority of India (TRAI) has released a consultation document on the impact of transition to NGNs (also see press release). TRAI will be conducting open house discussions in Delhi and Bangalore on the NGN consultation paper as well as the recent consultation on convergence and competition.

QoS obligations on VoIP are becoming an exception i.e. many regulators are going for forbearance on this. The general view is that consumers are best judges of quality. Also, in the long-term, due to technological development in IP, the QOS is not going to remain an issue any more.