Transformation of Voice Services:
Implications for Future of Regulation
Tomas Lamanauskas
Deputy Director
Communications Regulatory Authority
LITHUANIA
1 psl
Outline of the presentation
• When voice becomes data…Implications for:
•Technologies
•Services
•Identification systems
•Business models
•Regulatory response to the changing environment
2 psl
When voice becomes data…
“A seismic shift is underway in the telecommunications world where Voice over Internet Protocol
has begun to make its inevitable move from the consumer realm into the mainstream as an
enterprise service, and is beginning to consign traditional telephony to the dustbin of history.”
- Can there be any future for traditional telephony?
“It was the industry’s bread and butter for over a century. But the end is now in sight for traditional
telephone services, which will soon be overtaken by voice-over-internet calls in terms of usage, and
displaced by broadband internet access as the core revenue- earning service offered over fixed lines
by telecoms firms.”
- The end of the line
What does it
means? Does voice
have any future?
3 psl
When voice becomes data…
•
•
•
•
•
For 100 years, telecommunications has been carried on a
closed proprietary network, highly stable but limited in its
applications, and connected to tens of millions of
telephones.
As voice over IP grow, telecommunications are changing to
become open and extensible, capable of supporting new
applications, carried on a public network, connected to
complex and vulnerable multitasking end points (usually
computers).
It is important and stunning, that VoIP is switching over
naturally, driven by market forces, not a bureaucracy or
political decisions. It is just happening.
With VoIP, phone conversations move around the world in
the same way that e-mail, videos, IM conversations, as little
packets of bits. Seams that voice will no longer be voice. It
is becoming to be data…
It is a cultural and infrastructural shift from plain old
telephone service, POTS, to VoIP, which are deeply
challenging ingrained customs of consumers, services
providers and regulators…
4 psl
When voice becomes data… Technologies
As VOIP service relies on software, rather than the traditional physical telephone
infrastructure, this leads to significant changes in the entire telecoms industry…
•Technology transformation – from "single" service networks to IP-based service architecture
Yesterday
Today and Tomorrow
•one – service optimized networks
–PSTN, GSM networks…
Access
IP-based
Networks
Applications
–Terrestrial TVR broadcasting,
Cable TV networks…
Source:ITU.
5 psl
When voice becomes data… Services
Yesterday
Today and Tomorrow
•clearly distinct services
–Voice calls mobile
–Radio listening
–TV watching
–Text typing, calculation
•one – service providing devices
–Simple radios and simple TV sets
–Simple phones
–Earlier generations of PCs
Source: Alcatel, Surf-com
6 psl
When voice becomes data… Identification
systems
Yesterday
Today and Tomorrow
Fax.: +370 5 210 5664
E-mail: tlamanauskas@rrt.lt
ENUM!
Tel.: +370 5 210 5627
Tel.: +370 5 210 5627
• While traditional telephony takes account of
geography, distance, and state boundaries,VOIP
shatters all three…
7 psl
When voice becomes data… Business modes
Yesterday
Pipe provider
Typical business model – incumbent telco:
• Voice services
• Basic connectivity
Service provider
Typical business model – ISP
• E-mail
• Internet content
• Other services
Today and Tomorrow
Converged provider
• The provider of voice services does not need to have
its own access infrastructure.
• Bundled services - the transition to IP would create
new applications and business models for voice, which
would often be bundled with other services in flexible
combination.
• The "per minute" model is disappearing, and the
concept of minutes and distance is "losing the
meaning."
•Three pre-requisites voice service providers would
need for their future success:
• quality,
• interoperability, and
• flexibility
8 psl
When voice becomes data… Consumers choice
Consumers want
Communication
experience adapted to
their lifestyles
•Personalization
•Interactivity
•Accessibility
•Mobility
Any services, anytime, anywhere
Enterprises want
Communication that
increases productivity,
improves efficiencies
and reduces costs
•Productivity
•Simplicity
•Security
•Reliability
Efficient communications
9 psl
When voice becomes data… Consumers choice
For end users and business users VoIP offers:
– Cost savings


VoIP made available cheaper calls all around the
world;
As competition becomes fiercer across all
industries, enterprises are pressured to control –
if not decrease – costs. VOIP has already shifted
from an emerging technology to a critical
business solution, which offers significant cost
savings from reduced network maintenance.
– Greater flexibility and advanced features
that IP-based telephony supports
VoIP adoption, thousands of users

mail, videos, IM conversations and ect. Consumers
get “all together now”.
Source:IPC
Estimates say that in the beginning of
2005 there ware around:
• 4.9 million VoIP customers in Japan;
• 1 million in the USA;
• 110.000 in Germany, 220.000 in France
and 50.000 in the UK.
Voice goes along with other services, such as e-

By business users the move to converged IP
networks has also been facilitated by
improvements in quality of service and by the
broader shift from circuit-switched to IP-based
systems in the telecommunications industry.
Source: EC
10 psl
When voice becomes data…
100%
2,1
2,8
90%
3,7
4,7
6,2
6,9
6,4
 Does voice have any future?
6,8
7,6
8,6
Definitely yes, voice remains to be the main
revenue source for operators…
80%
70%
60%
50%
31,6
27,9
40%
27,1
28,4
26,8
26,3
24,8
24,3
23,8
23,3
30%
20%
10%
0%
2000
2001
2002
2003
2004
ARPU Voice
2005
2006
2007
2008
2009
ARPU Data
ARPU growth hypothesis for Western Europe
Source:IDATE
…the rapid development of VoIP suggests the
death of traditional pricing and business models,
rather that the real death of traditional telephony
…people are going to make calls and
communicate in a traditional way and voice
services seams to remain as a basic utility still
for a long time
…voice still remains the king with another
clothes only …
 The real value of VoIP is that it allows voice to become nothing more than another
application in the data network. Therefore we should start thinking of voice services (no matter
how they are provided) as a regular ICT service…and apply the same common regulatory
principles…
11 psl
Regulators response to the changing environment principles
 No barriers to entry
For appropriate response to undergoing changes
we (regulators) have to answer the main question:
 do we have to try running on the neck of
the market changes? or
 do we have to revise our thinking about
this high-tech market dynamism?
I prefer the second option:
 the issue is not the changes, but our
attitude to any changes…
 are we – regulators - open?
 non-discriminatory?
 walls’ removers?
 legal certainty providers?
 or … do we think, we are better
experts than the market?
IP has already lowered barriers to
entry, enabling broader and
stronger competition, therefore the
regulatory regime should be the
one that not disturb, but encourage
the trends…
Adopt general authorisation regime for
services
 Easy access to the market
 Ensure the consistency and neutrality
of regulation over any technology
 Neutrality of the framework
 Remove restrictions based on
establishment
 Cross border services
12 psl
Regulators response to the changing environment principles
 Effective competition

Some telecoms carriers, realizing their
vulnerability to VoIP, as voice accounts for
over 80% of their revenues, are currently
building next-generation networks based
on internet technologies to be able to offer
VoIP services themselves, bundled with
other offerings. The others try to push for
traffic differentiation for certain service
providers, thus trying to subsidize access
costs and to preserve their power in
service markets though access provision.

The real separation of access and
other services together with full tariff
rebalancing, even if this cause the growth
of access prices, is the main contributor to
development of competitive voice services
markets.
 Another important contributor is promotion of real/ infrastructure competition
in access markets, supported by applying
basic principles:
• Sufficient access to the inputs,
administrated by the state (esp. radio
frequencies)
• Regulatory neutrality and certainty
• Appropriate remedies to the market
failures
• Appropriate pricing regulation,
providing for the right signals to the
market and promoting ladder of
investment while decently employing
economies for scale and scope for
general benefit
13 psl
Regulators response to the changing environment principles
 Competition neutral universal services
VoIPocalype encourages us to rethink social
issues, such us universal services and their
compensation mechanisms, accessibility of
emergency services…
Traditionally, access and services have
been provided together. But with VoIP it is not
necessary the case.
Today ubiquitous universal service provider
usually is the market player which has SMP in
access markets. Is it still viable and for how
long?…
 Ideally the universal services should be a
part of common social payouts and
compensations policy
…everyone could decide what is the most
important to him/her,
 But if it is really necessary - the
universal services compensation
mechanisms should be
…neutral in the context of competition
development, i.e. no competitive advantage to
anyone.
…implemented on demand side, i.e. allowing
consumers to decide which service by which
service provider supplied is necessary and the
most beneficial for him/her
 Accessibility of emergency services
Is it still a feasible obligation for service
providers? Or maybe it should be implemented
by access providers or emergency centers
themselves?
… government shows the advantages of choices
14 psl
Regulators response to the changing environment principles
 Incentives to creativity
 Service convergence, vertical integration
between transport and content, triple or even
quadruple play bundles are increasingly
common around the globe... What this really
means:
• Move beyond mere pipeline operator…
• Creation of “walled garden”…
• Discrimination of traffic…
• or just costs (thus and prices)
minimisation and new innovative services
to users?
Proprietary platforms versus open platforms
 Just a few examples:
 Probably it is consumer choice, which
makes certain business models and
platforms more successful than others…
 Therefore regulation should
 react to market failures but not to
build barriers for creativity straight from
the birth of the idea;
 create incentives for interoperability
among networks, technologies,
equipment, devices and services.
15 psl
Regulators response to the changing environment principles
 Ubiquitous identification systems
VoIP expansion:
has not only undermined the business and
pricing models of industry making most of its
money from voice calls,
made available cheaper calls all around the
world…
but has also raised the “diffusion of nationality
of resources” issue as well...
VoIP make a mockery of geographical
conventions such as area codes…
The information society is becoming a
“ubiquitous” information society - more
and more a part of our everyday lives,
where everyone can be connected with
everything whenever and wherever;
In this context, ubiquitous identification
systems (less linked to geographical
location) are becoming more and more
important:
 Managing and balancing
between users identity and privacy
The move from number portability to
identificators, owned by users and
separated from services and service
provider probably is another consequent
step forward
16 psl
Regulators response to the changing environment principles
 Users trust
For many years VoIP was considered too
unreliable for general use by all but a few
early adopters…
VoIP is a subject to all (maybe even more)
the risks and vulnerabilities that affect Internet
data networks, therefore privacy, security and
trust is becoming a crucial issue.
 We can create the most competitive and
innovative ICT markets, but nobody will
benefit from them without users capacity and
willingness to use ICT.
Ensuring trust in digital space:
 Protection of economic rights, including
right to information
 Privacy and data protection
 Network and information security and
protection against cyber-crimes and
cyber-terrorism
Education and awareness rising
Rapid development of ICT and
globalisation also lessens regulators
possibilities to protect every user
directly, therefore evolution of
educated and selective user
seams the only true way out.
17 psl
Choice of appropriate approaches

Technological neutrality
For service regulations it does (should) not matter what is the technology behind a
service. The “technology neutral” approach to all infrastructure is the only way to
encourage companies to engage in infrastructure-based competition for the delivery of
competing services.
Otherwise we will (if will) have regulatory enforced ICT’s, but not users utility
maximising ICT’s. Regulatory regime should allow technologies to evolve and regulator
to respond where and when it is necessary…

International – global approach
With globalisation and convergence we cannot address the situation in a piecemeal and
national fashion. As market players expand their business boundaries and makes their
markets more global, regulation cannot be geographically isolated.
18 psl
Choice of appropriate approaches
 More reliance on market
The development of VoIP is driven by market forces, it is the choice of market and
we can not deny its success. Therefore we, regulators, probably should place more
reliance on market decisions – allow more self-regulation processes and care about
the transparency in the market rather than being involved in direct regulation.
While analyzing voice services market trends, technology developments, trying to
predict the future and to chose the best regulatory instruments, it sometimes seems
that we've forgotten that the purpose of the telephone call, internet call, e-mailing and
ect. is to allow people to communicate. It is a simple goal and it is necessary for us to
make it happen in a way that market needs…
19 psl
Thank you !
Tomas Lamanauskas
Communications Regulatory Authority,
Algirdo 27, Vilnius, Lithuania
Phone: +370 5 210 5627
e-mail: tlamanauskas@rrt.lt
20 psl