“I think I’m losing my voice”
Voice telecommunications in
the Internet era
Taylor REYNOLDS
OECD
The views expressed in this presentation are those of the author and
do not necessarily reflect the opinions of the OECD or its Membership.
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Voice troubles
“chez les Reynolds”

Taylor

My wife
– VoIP is great!
– I want our old phone back
– It’s fantastic to have a US,
CH and FR line at home
– So which phone am I supposed to
call with when you’re travelling?
– The prices are SO low
– The quality is SO low
– Calls from US are free
– No one ever calls.
– The calls skip over the
French PSTN
– The calls don’t skip anywhere
when broadband is down
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How important is voice?
Access growth 1997-2005
Fixed telecommunciation paths (voice)
Mobile
Other broadband
Cable
DSL
Subscribers access (millions)
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
3
The telecom industry is still
“voice”

Voice
– Voice is at least 79% of total telecom revenues in all OECD
countries
– Of Verizon’s USD 75 billion in revenues - only 14% were from
data

Mobile
– OECD mobile revenues alone were 40% of total telecom
revenues in 2005
– Mobile over of 50% of total revenues in 12 countries
– Mobile revenue in Japan or US is larger than the GDP of 125
out of 213 countries covered by the World Bank
4
Big change #1:
Growth of mobile
Mobile (subscription)
Mobile (prepay)
Mobile (3G)
Mobile subscribers (millions)
1,000
900
800
700
600
500
400
300
200
100
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
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Traditional mobile vs 3G growth
OECD ce llular m obile vs 3G, four year grow th from 20 m illion s ubs cribe rs
140,000,000
Cellular subscribers (1993-1996)
120,000,000
3G cellular subscribers (2002-2005)
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
1993/2002
1994/2003
1995/2004
1996/2005
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Big change #2:
Shift to VoIP
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

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Proportion of VoIP revenues to total revenues declines
€10/month for 1 Mbit/s wholesale transit = 4 continuous
phone conversations at 256 kbit/s (high quality).
France: Unlimited phone calls to France and 25
countries
VoIP is technically only authorization and directory
There is practically no marginal cost for a call.
XBOX, WII, PS3, XBOX360, PS2 do voice - next?
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Policy issue: Numbering
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We don’t call numbers. We call people (with a name)
There is no geography in the network. A call to an Orange VoIPcustomer in The Netherlands is routed through Paris. (No more
switches)
Name  PSTN-number  IP-number  Network identifier
(seems redundant)
Numbers == billing?
Number portability and VoIP?
Then what is a number worth? To me a Paris-based “01” area
code was worth EUR 100
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Policy issue: Interconnection
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From RPP to CPP to NPP (No Party Pays)
Interconnection is guaranteed money for all involved
There is essentially a terminating monopoly
Low impetus for change: Everybody gets their cut so
why would participants be against it?
Unclear to end-user. Why does it cost 15 cents to
connect to mobile and 0 cent to fixed? Same general
idea, similar technology
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Policy issue: VoIP and traffic prioritisation
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Voice can be one of the biggest winners or losers with traffic
prioritisation
Discriminatory traffic prioritisation can severely degrade VoIP traffic
– Jitter
– Lags
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Encrypted transmissions are still subject to anti-competitive traffic
shaping
Jitter
1
2
3
4
5
6
7
8
9
13 15 17
11
18
14
16
10 12
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Policy issue: Universal service

Regulating voice over the PSTN and voice over IP differently is not a
long-term solution
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Countries where VoIP has been regulated like PSTN voice have
struggled with voice development (e.g. Korea)
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At what point will universal service move from being a “voice line” to
a “data line”?
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Conclusions


Voice is still extremely important
to telecommunication operators
but they need to wean
themselves off it
There are big changes in the
industry
– Mobile growth
– VoIP

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Consumers/operators/regulators
are still figuring out how this will
work
10 years from now my children
will laugh when I tell them I
used to pay for phone calls
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Merci beaucoup
taylor.reynolds [ @ ] oecd.org
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