VoIP: New regulatory paradigm or
more plain old telephony?
Will VoIP change the regulatory landscape?
About ECTA
 European Competitive Telecommunication
Association represents some 150 operators
across Europe
 Aims to drive forward liberalisation and
competition across the telecoms sector
 Our operator members are diverse – panEuropean & national, consumer & business most have made substantial investments in
infrastructure
Contents
Same market or something new?
Removing barriers to VoIP development
-Economic
-Administrative
A need for a whole new paradigm?
Same market or something new?
 Voice continually evolving
• analogue  digital  IP, 1 to 1  conf call, per min  flat rate
 Would customers switch PSTN fixed voice for VoIP?
 Depends on quality and reliability, service, price…
• Voice over Broadband (VoB): Offered over private IP access.
Usually substitute, sometimes with additional functionality
• Voice over Internet (VoI): Offered as an application over the
public Internet. Not full substitute at present, may evolve
 Will it impact fixed mobile substitution? For access, no
– cost, bandwidth factors prevail. For calls, maybe
 Substitution of VoIP for PSTN signals success. POTS+
How can we facilitate substitution?
 VoIP development is indicator, not cause, of
competitiveness
 Action needed to open markets, prevent leverage,
address PSTN lock-in
• Fixed: Full LLU, naked DSL (not available in UK, Spain,
Germany). Does price allow provision of voice only?
Whilst not effective, safeguards to prevent leverage?
• Mobile: Are consumers benefiting from VoIP (eg 3 and
Skype in UK)? Is the market competitive enough?
 A competitive market will offer consumers choice
of provider, payment model, bundles or single
services
Case studies: France triple-play
Voice over IP (VoIP) is increasingly making inroads in countries
like France and Japan… France had a relatively high level of
VoIP (high QoS) take-up – a reflection of the success of
alternative operator Free in marketing VoIP services, and of
France Telecom’s subsequent response.
Ofcom – Nov 2006
Case studies: Japan fibre
25,000,000
FTTH
Broadband
subscribers
Total：24.22million
DSL
【NTT’s investment in fiber
local loops & total
investment in equipment】
1,200
（\bn）
CATV
1,100
1,097.7
20,000,000
1,000
FTTH：26%
（6.31million）
15,000,000
Total Investment
900
775.4
766.2
800
885.1
810.0
796.9
696.6
700
600
10,000,000
DSL：60％
（14.49million）
Investment for
fiber local loops
500
400
349.0
333.0
283.0
300
200
about
350.0
237.0
164.0
149.0
100
5,000,000
0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
（planned）
CATV：14％
（3.41millon）
01
/0
3
01
/0
9
02
/0
3
02
/0
9
03
/0
3
03
/0
9
04
/0
3
04
/0
9
05
/0
3
05
/0
9
06
/0
3
00
/9
-
Competition in broadband including
through fibre unbundling has
contributed to VoIP success
Addressing the network effect
 Interconnection also critical for VoIP success – issue is
overcoming network effect. Absent regulation:
 Operators with control over largest customer base have the
most valuable asset and greatest bargaining power. This
provides an incentive to deny interconnection
Lack of explicit voluntary VoIP termination arrangements with
incumbents may signal the likely outcome when starting with an
operator having a large inherited customer base. Migration from
the PSTN to NGNs will extend this power
 Operators of similar size may have greater incentives to
interconnect or ‘peer’, although this is far from guaranteed
Experience from instant messaging, VoI and the birth of
telephony suggest possible market outcomes for more evenly
sized players. Voluntary peering has occurred for SMS
Addressing the network effect
The termination ‘game’
Regulators action
Market response
Any-to-any connectivity
Excessive termination pricing
and margin squeeze by biggest
‘club’ owner
Price control on dominant player
Relative increase in bargaining
power of smaller players
Termination bottleneck. All
dominant
Enforcement issues. Cost
recovery concerns for entrants
 Regulatory intervention inevitable, except if true substitute
emerges for termination
 Regulators should provide advance guidance on principles
including the price control mechanism. Options are:
• Bill and keep: suitable for ‘best efforts’ with plentiful bandwidth
• Quality and element/capacity: where QoS guarantees needed
A new regulatory paradigm?
… IP opens the way for a logical separation between the passive
networks (cables and ducts) and the more active elements …That is
why I am noting with great interest some of the experiments around
the world, notably in the UK, New Zealand, and now also in Italy and
Ireland, where there are attempts to functionally separate the
regulation of access loop of the incumbent – the key bottleneck assets
– from the rest of the business.
Commissioner Viviane Reding, 4 Dec ITU Conference
 VoIP itself is not a new service, and the problems are familiar, but
there is now real scope for competition to flourish if we tackle the
problems at their core for legacy networks and their NGN successors
 In a market where voice can be made competitive, separating access
from services (including VoIP) also makes sense for a forward-looking
universal service, giving all customers the benefit of choice
Administrative/technical barriers
 Administrative and technical/standardisation as well as
economic issues blocking VoIP expansion
 Numbering: need for all ranges to be available for VoIP; number
ranges should indicate cost not lock in geographic position
 Authorisations should at least be consistent – or room for a
pan-European authorisation system?
 Number portability: must be available for VoIP on reciprocal
basis
 Emergency access: issue for universal service, technical/
economic feasibility issues relevant for nomadic services
 Standards: ENUM (E164 NUMber Telephone Mapping to IP) - the
technology together with SIP enables all VoIP islands to interconnect
 Data protection/security: consistency/proportionality
 ERG highlighted VoIP fragmentation as key barrier to European
development – have committed to address through Best
Practice template. Relevant internationally also?
Conclusions
 VoIP is an evolution, not a revolution: POTS+
 Success in VoIP indicates, but doesn’t cause
competitiveness
 Access bottlenecks and the ‘club effect’ remain key
economic barriers to VoIP development
 Role of regulators will be critical in addressing
blockages. VoIP will not make them disappear!
 Functional separation may be the new paradigm we
need to ensure that the future of voice is vibrant and
competitive
 Time for pan-European authorisations, and
geographically neutral approach to numbering?