An introduction to NTT’s NGN and new services in Japan March 17, 2007 Tadanobu OKADA Associate Senior Vice President, Executive Director of Information Sharing Laboratory Group, NTT © 2007 1 Outline 1. The current status and future direction of Japan’s telecommunications market 2. NTT’s plans for the deployment of its NGN 3. Conclusion © 2007 2 Measures taken to prolong the lifetime of NTT’s PSTN facilities • NTT’s PSTN consists of several thousand switches. • Although a then-state-of-art switching system (NS8000) was developed around 10 years ago, the rapid progress in technology since then has resulted in the discontinuation of production of some components used in the system. Currently, we are trying to prolong the lifetime of the switches by re-establishing sources for such components. POI Transit switch Transit switch Other carriers POI NW between prefectures Several hundreds Transit switch NTT West NW inside a prefecture Several thousands Local switch Local switch NTT East Transit switch 0.35µm 0.5µm 3.3V PS 5V PS 0.6µm 0.8µm 1.0µm 1.2µm 90 nt in ue d Several tens Other carriers Di sc o NTT Communications Integration degree Migration to more highly integrated LSI that operates with lower voltage power supply 1.8, 2.5V PS 0.25µm 95 00 Year 05 NW inside a prefecture Local switch Local switch NS8000 (developed around 10 years ago) © 2007 3 Maturing of IP telephony technology in Japan y IP telephony is spreading from business users (IP-PBX). Low rates (or free between specific points) offered by ISPs have increased the number of IP phone users in Japan to more than 13 million. y NTT already provides an IP phone service “Hikari Phone” using the ordinary telephone numbering plan. 1 OCN 2 Free Affiliated ISP’s IP network Free (178ISPs) *2 *1 3 ¢7 / 3min *2 4 Affiliated ISP’s IP phone Non-affiliated ISP’s IP phone (12ISPs) PSTN phone ¢7 / 3 min *2 5 ¢9 / 3 min PSTN phone 6 ¢14 / min Mobile phone ■ Increase of subscribers to IP phone service 14 Number of subscribers (millions) OCN.Phone 12 10 8 ble a k ar th m w Re gro 6 4 2 0 2004 2005 2006 Int’l phone network 7 Discount rate Int’l phone *1: NTT Communications, Inc.: http://www.ocn.ne.jp/english/personal/option/voip/ *2: not changed by distance © 2007 4 Change in net increase of subscribers to broadband service 1.6 1.4 7 1.2 6 1.0 5 ADSL 0.8 4 0.6 3 0.4 2 FTTH 0.2 1 0 -0.2 0 Q2 Q3 2002 Q4 Q1 Q2 Q3 2003 Q4 Q1 Q2 Q3 2004 Source: Website of the Ministry of Internal Affairs and Communications Q4 Q1 Q2 Q3 Q4 Q1 2005 Q2 Number of subscribers (millions) Net increase in numbers (millions) • In the first quarter of 2005, the net increase in FTTH users exceeded that of ADSL users. In the second quarter of 2006, the number of ADSL users began to decrease. • In contrast, as anticipated by the u-Japan Plan, optical access is increasing rapidly. Q3 2006 © 2007 5 Decrease in revenues from both fixed-line and mobile phone services of NTT • The revenue from the fixed-line phone service has decreased considerably. • The revenue from the mobile phone service has also begun to decrease. Fix-line-based operators NTT East/West/Communications (billion US$) Profit Profit 9.2 8.8 +0.4 Profit -2.7 6.9 6.5 +0.4 1.8 +530 2.8 +1.0 50.6 2.6 -0.2 49.4 2.0 -0.6 48.0 Revenue Revenue 47.2 Mobile (NTT DoCoMo) (billion US$) 55 Revenue Revenue 50 45 40 40.1 42.1 40.4 39.7 2004 2005 35 2002 2003 2004 2005 2002 2003 © 2007 6 80 70 o aid kk Ho ori m Ao a it Ak te a Iw gi ya ta Mi aga a m im Ya ush k Fu aki ar i Ib hig c To ma n Gu ama it Sa a ib Ch o a ky To gaw i na sh Ka ana m Ya ta ga Ni ma ya To awa ik Ish fu Gi ano g a Na uok iz Sh i ch Ai i ku Fu e Mi ra Na o ot Ky ka a Os a ig ma Sh aya ak W o og a Hy am a ay Ok shim ro Hi ri t to e To an i h im Sh guc a m a Ya aw g Ka e a im Eh shim ku To hi c a Ko ok ku Fu a g i Sa sak ga Na ta i Oi zak to ya Mi amo a m im Ku sh go a Ka aw in Ok 0 NTT average 60 50 40 30 NTT’s share (%) Competition for share of FTTH is particularly fierce in urban areas •NTT has over 50% share in optical access nationwide. However, in urban areas, where fibers can be installed efficiently, NTT faces tough competition and is falling behind in many prefectures. Share of FTTH market in individual prefectures (As of March 2005) 100 90 20 10 7 © 2007 What is expected in 2010 . . . Numerous and diverse devices and appliances will be connected to the network, which should inevitably increase the variety of services, the means whereby services are provided, and number of service providers. Domestic e-business & life market 54T yen (2005)Æ86T yen (2009) Platform market 2.4T yen (2005)Æ4T yen (2009) Security market 1.2T yen (2005)Æ1.6T yen (2009) A variety of application services Application Application Application Application Application Future network The future network needs a capacity of... Peta bits (1015) in 2015 Exa bits (1018) in 2024 Source: “R&D strategy for the 21st century network core technology”, Ministry of Internal Affairs and Communication http://www.nri.co.jp/news/2005/050114.html 1.3B (2005) Æ1.8B subs (2010) Source: ITU statistics http://www.itu.int/ITUD/ict/statistics Internet Fixed-line Mobile access 2.0B (2005) Æ7.0B subs (2010) 1.0B (2005) Æ2.5B subs (2010) Source: ITU statistics Source: ITU statistics http://www.itu.int/ITUD/ict/statistics http://www.itu.int/ITUD/ict/statistics IP-TV 5M (2005) Æ53M households (2010) Source: RNCOS http://www.rncos.com/Report/I M063.htm New network appliances Domestic applications 9. 5M (2005) Æ15M units (2010) http://www.nri.co.jp/news/2005/050114.ht ml © 2007 8 Future direction of NTT as a telecom carrier It is urgent for NTT to increase profit by increasing revenue in addition to reducing capital and operational expenditure. z Promote broadband & ubiquitous services like FMC and triple play >Revenue shift from telephony Revenue from telephony Cost Revenue from Broadband and ubiquitous services z Establish service delivery platform for new seamless businesses >Expand telecom market z Migrate telephone network to IP >Reduce capital and operational expenditure © 2007 9 Key technology for revenue shift (GE-PON) © 2007 10 Triple play on a single fiber - already commercially available Broadcasting companies VOD Internet II S SP P Broadcast Broadcast Programs Videos High-speed Internet Telephone Telephone network network IP phone IP IP network network Optical Optical fiber fiber :: Simultaneous Simultaneous transmission transmission of of broadcast broadcast programs programs and and IP IP data data IP IP phone phone :: High-quality High-quality videophone videophone Telephone TV PC TV TV :: High-quality High-quality broadcast broadcast and and video video distribution distribution Internet Internet :: Stable Stable and and high high throughput throughput environment environment © 2007 11 Features of NTT’s GE-PON system - Fine-tuned bandwidth control for each user A A peak peak speed speed of of 100M 100M bps bps bidirectional bidirectional transmission transmission for for each each customer customer is is possible possible under under low low traffic traffic loads, loads, with with IEEE IEEE 802.3ah 802.3ah interface interface conditions. conditions. In In the the event event of of heavy heavy traffic, traffic, the the operator operator can can control control the the minimum minimum bandwidth bandwidth allocated allocated to to each each ONU ONU (this (this enhances enhances the the functionality functionality of of IEEE IEEE 802.3ah). 802.3ah). For For example, example, ifif 32 32 users users share share the the bandwidth bandwidth equally, equally, the the operator operator can can guarantee guarantee at at least least 30M 30M bps bps for for each each customer. customer. ONU-1 Downstream ONU-2 Upstream ONU ONU-3 ONU-4 Max: 100M bps/ONU OLT Optical splitter (Max: 32 branches) © 2007 12 1. The current status and future direction of Japan’s telecommunications market 2. NTT’s plans for the deployment of its NGN 3. Conclusion © 2007 13 Approach to NGN Build Build NGN NGN that that is is of of high high quality, quality, flexible flexible and and secure secure Smooth migration from existing fixed-line to IP telephony, and from copper to optical access Develop and spread broadband and ubiquitous services that allow fixedmobile convergence (FMC) Open network that allows collaboration with other carriers and xSPs Expand business opportunities by exploiting broadband and ubiquitous services xSP: Provide new business opportunities Strengthen competitive edge and financial base, and contribute to achievement of u-Japan © 2007 14 Basic concept of NTT’s NGN Community, e-commerce ASPs and various service players Broadcast, content providers Lifestyle support, home appliance Open network interface IP-based network enabling provision of seamless fixed and mobile services Home network IMS NGN Network interface disclosure, to enable various service players to provide a wide array of applications on the NGN Safe, secure, and convenient network equipped with features of both the existing fixed-line telephone and IP networks Office, hotspot, etc. IMS: IP Multimedia Subsystem © 2007 15 Roadmap to building NTT’s NGN Fiscal year Steps in introducing the NGN 2006 2007 2008– STEP 1 Provide optical access to 30M users (End of fiscal 2010) STEP 2 Field trials STEP 3 Core network Construct transit network Construct access networks -deploy core nodes -deploy optical wavelength transmission equipment deploy edge nodes Deploy service control functions Service control functions Service development Seamless integration with mobile network IMS deployment (conforming to ITU standards) Trial services <For limited regions and users> Full-scale development of next-generation services •Broadband Internet access •IP telephony •Multicast transmission for video distribution •Bi-directional video (data) communication •Ethernet services, etc. © 2007 16 Overview of Field Trials of NTT’s NGN • Trial period: One year from Dec. 2006 • Areas: Tokyo and its surroundings and Osaka Various services through tie-ups with IThome appliance manufacturers and ASPs SNI (Application Sever-Network Interface) IP multicast function NGN Security functions End-to-end quality control Base station IP telephony FMC Video distribution Internet access © 2007 17 28 participants in the field trial The following companies are participating in the NGN field trial. Cisco Systems Inc. Sony Corp. NEC Corp. Matsushita Electric Industrial Co., Ltd. Oki Electric Industry Co., Ltd. Fujitsu Ltd. Hitachi Ltd. Iwatsu Electric Co., Ltd. Sumitomo Electric Networks, Inc. Mitsubishi Electric Corp. Asahi Broadcasting Corp. Square Enix, Inc. TOHO Cinemas Ltd. USEN Corp. NTT Communications Corp. Internet Initiative Japan Inc. NTT DoCoMo, Inc. eAccess Ltd. K-Opticom Corp. KDDI Corp. ASAHI Net, Inc. NIFTY NEC BIGLOBE Ltd. Plala Networks Inc. So-net Entertainment Corp. an EditNet Co. Global Solution K.K. FreeBit Co., Ltd. As of February 2007 © 2007 18 1. The current status and future direction of Japan’s telecommunications market 2. NTT’s plans for the deployment of its NGN 3. Conclusion © 2007 19 New activities for the NGN Upgrade the fixed -line telephone network fixed-line to a broadband IP network by applying the latest optical, broadband and IP technologies Deploy new broadband and ubiquitous services Create new markets by collaborating with various service players on the network © 2007 20 Conclusion As one of the first carriers in the world to implement an NGN, NTT will be happy to share with Asian Pacific countries our experiences of NGN trials and deployment. © 2007 21 © 2007 22