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The Road to NGN (ETE 521 L2)
The document discusses trends in telecommunication reforms and the transition to next-generation networks (NGN). Key points include: - Telecom sectors are evolving from service-specific networks to advanced IP-based networks capable of providing a full range of services. - While NGN will be an evolution, not a revolution, the move to all-IP networks is unstoppable. - Developed countries are more likely to adopt fixed NGN access like fiber, while wireless will remain important for mobility. Regulators aim to balance innovation and competition during the NGN transition.
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The Road to NGN (ETE 521 L2)
- 1. 1 ETE 521: Telecommunication Businessand Management Module 2: Trends in telecommunication reforms, the road to NGN Faculty: Dr. M. Rokonuzzaman [email protected] Trends in telecommunication reforms, 2007, ITU
- 2. 2 Introduction: The sectorhas already seen the year of “convergence”, followed by the year where “broadband” was on everyone’s lips, along with the more recent fascination with “Voice over Internet Protocol” (VoIP) and “fixed-mobile convergence” (FMC). Each of these recent buzz words represents part of the same evolutionary path in which individual service-specific networks are developing into advanced IP-based networks capable of providing a full range of services and applications accessible from a wide range of devices that can function from any location.
- 3. 3 Although thesector has faced many so-called “revolutions”, the consensus, with regard to NGN, is that the move will be more of an evolution than a revolution. Many observers expect that NGN and the Internet will co-exist for some time – although most would agree that the move to all IP-based networks is unstoppable. Even where NGN is deployed, it is also likely to include many variants as market players leverage their investments in today’s technology. In Europe, Japan, North America and the Republic of Korea, many equate NGN with fibre (FTTx) deployments coupled with a move to more ubiquitous and robust wireless coverage.
- 4. 4 Market and RegulatoryTrends: Buoyant ICT growth Developed countries, which have the majority of the world’s fixed and broadband lines, are more likely to migrate to fixed rather than wireless NGN access networks as they upgrade their existing fixed-line telephone and cable TV infrastructure. Wireless access will still play a key role in developed economies where users seek seamless or ubiquitous coverage, and are likely to use fixed lines while in a set location (home or work) and mobile while on the go.
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- 6. 6 Figure 1.1shows the buoyant growth in the ICT sector over the past decade, demonstrating the spectacular success of the mobile sector in particular. By the end of 2006, there were a total of nearly 4 billion mobile and fixed-line subscribers and over 1 billion Internet users. This includes 1.27 billion fixed-line subscribers and 2.68 billion mobile subscribers (61 per cent of which are located in developing countries) as well as some 1.13 billion Internet users.
- 7. 7 Broadband onthe rise While access to ICT continues to grow, countries are increasingly focusing on improving broadband use, in particular. Broadband is necessary in order to achieve the Information Society. Broadband enabled services have the potential to create economic and empowerment opportunities and improve lives. Indeed, some of the applications that are having the greatest impact on people and businesses are closely linked to broadband uptake. This is also reflected by the fact that since 2005 there were more fixed broadband subscribers than dialup Internet subscribers worldwide.
- 8. 8 Today, however,broadband penetration is dominated by the wealthy countries. Some 70 per cent, or nearly three-quarters, of broadband subscribers worldwide in 2006, were located in high-income countries which accounted for just 16 per cent of world population. Furthermore, two economies – India and Vietnam – accounted for more than 95 per cent of all broadband subscribers in low-income countries, while a single economy – China – accounted for 94 per cent of broadband subscribers in the lower-middle income group (Figure 1.2).
- 9. 9 The goodnews is that a number of developing countries are experiencing broadband growth. In Peru, for example, the number of broadband subscribers has grown by close to 80 per cent annually between 2001 and 2006, from 22’779 in 2001 to 484’899 at the end of 2006. In Europe, over half the Estonian population uses the Internet and the country has the highest penetration of both Internet and broadband in Central and Eastern Europe. But in Least Developed Countries (LDCs), there were merely 46’000 broadband subscribers in the 22 out of 50 LDCs with broadband service in 2006.
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- 12. 12 In thearea of broadband infrastructure, developed markets are intent on bringing fibre closer to the end user either as FTT Home (FTTH), where the fibre reaches the end-user’s premises, FTT Building (FTTB), where the fibre stops at the building; FTT Curb (FTTC) or FTT Kerb (FTTK), where fibre stops at a curb near a building or group of buildings; and FTT Node (FTTN) or FTT Cabinet (FTTCab), where fibre stops at a cabinet with telecommunication equipment that serves a nneighbourhood. Collectively, these variants are termed FTTx.
- 13. 13 The Asia-Pacificregion today has more FTTx services than any other part of the world. Japan was the first country to introduce a FTTH network in 1999. In 2005, the number of Japanese subscribers to FTTH services increased 88 per cent to surpass the 5 million mark (Figure 1.3).
- 14. 14 In developingcountries, the meteoric rise of mobile services has been fuelled by improved affordability, increased network coverage, and new service options. The same factors can promote wireless broadband Internet access in developing countries, even in countries with poorly developed fixed-line infrastructure, as mobile handsets that support both voice and Internet applications become more affordable (Box 1.1).
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- 17. 17 Privatization andcompetition trends: Despite the general slow-down in the sale of state-owned incumbent operators, privatization remains a priority for most countries that have not yet fully or partially privatized their incumbent operator. The objectives of privatization are to improve efficiency, productivity, and service quality, as well as to raise capital, improve management expertise and further develop the network.
- 18. 18 In addition,many countries have found that competition is often more fair when the state avoids being both a market player (as owner or part-owner of the incumbent) and a referee at the same time. Privatization sends the signal that policy decisions and regulations will be fair to all players. Between 1990 and 2006, some USD 83 billion was raised through privatizations of incumbent public telecommunication operators in developing countries.
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- 20. 20 During thesame period, the opening of markets to competition has remained steady. Mobile and Internet services continue to be the most competitive markets, while fixed-line services are also becoming increasingly competitive (see Figure 1.6). In the first part of 2007, the Gulf countries among the Arab States were very active in opening both their mobile and fixed markets. For example, in April 2007 the Supreme Council of Information and Communication Technology (ictQATAR) launched a formal selection process for the award of a mobile licence to a new entrant in the State of Qatar. The Telecommunication Regulatory Authority of Oman also announced its intention to license a second national operator.
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- 23. 23 A growing communityof regulators: The establishment of a separate regulator is one of the most visible signs of sector reform. Separate regulatory agencies lay the groundwork for a favourable investment climate and the promotion of market opportunities. Increasingly regulators seek to be ICT enablers and agents of change. This is usually best achieved where ICT regulators have a certain degree of autonomy from government and industry pressures.
- 24. 24 The worldnow has 148 national ICT-sector regulators (Figure 1.7). Over 75 per cent of ITU Member States have established a separate regulator, although differences remain between regions. Africa counts the highest percentage of countries with a separate sector regulator (91 per cent), followed by the Americas (89 per cent), and Europe (80 per cent). The Arab States and Asia-Pacific number 62 and 58 percent, respectively. Growth in the number of regulators is set to continue with more than five countries having indicated their intention to establish an ICT regulatory body in the near future.
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- 26. 26 SELECTED REGULATORY DEVELOPMENTS: Internationalmobile roaming The issue of mobile roaming charges is on the agenda of regulatory authorities and regional regulator associations worldwide, in an attempt to find solutions for the high international roaming charges paid by consumers using their mobile phones while travelling abroad. To date, most regional groups have taken a “soft- regulation” approach to international mobile roaming, focusing on publishing roaming rates. The European Commission, however, in a watershed measure, has decided to regulate roaming charges in the 27-country European Union block. This move may embolden other regional groups to take firmer action to cut mobile roaming charges.
- 27. 27 Regulating localloop unbundling and infrastructure sharing Countries like the United States, with inter-modal broadband competition between cable TV and ADSL broadband providers, may place less emphasis on local loop unbundling, and even view unbundling as a barrier to innovation and the development of infrastructure. Countries with limited inter-modal competition, such as many European countries, have found it necessary to embrace local loop unbundling to encourage ADSL provision and are now planning to extend LLU to FTTx deployments. Regulators in Europe have vigorously enforced LLU regulation as a means of boosting broadband deployment, and the number of unbundled lines currently available in Europe has risen dramatically, by nearly 80 per cent from 2005 to 2006. Many developing countries, in initial stages of sector reform, have focused primarily on increasing the number of voice users, and have principally concentrated on raising the number of voice subscribers on mobile networks. They also had far fewer fixed local loops to unbundle.
- 28. 28 In additionto LLU, other regulatory measures are being developed to ensure smooth competition and market access for new entrants such as mandatory passive infrastructure sharing and in-site sharing. According to ITU World Telecommunication Regulatory Database, a majority of countries who completed the 2006 survey indicated that infrastructure sharing is required while nearly half indicated that in-site sharing is mandatory. This is the case for example in Bulgaria, Colombia, Jordan, Madagascar, Mali, Morocco, Poland and Turkey.
- 29. 29 Interconnection Aclear and transparent interconnection regulatory framework is key to a sustained competitive environment. Providing public access to reference interconnection offers, agreements, and prices is one tool regulators can use to promote transparency, raise competitor awareness and ensure a level playing field among competitors.
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- 31. 31 VoIP regulation Voice over Internet Protocol (VoIP) subscribers continue to grow, fuelled primarily by the demand for lower cost services as well as the fact that VoIP is being integrated into a number of new services offered on IP networks. Despite obvious benefits, VoIP also challenges traditional telecommunication business models, leading some countries to try to ban or limit VoIP. In many countries, incumbents have resisted offering VoIP services to protect their lucrative long-distance and international call revenues. In the process they have tried to convince regulators and policy- makers to ban or restrict other service providers from doing so. Today, however, the number of countries in which VoIP has been legalized is greater than the number of countries where it is banned.
- 32. 32 Indeed thestate of VoIP regulation is changing so quickly it is almost impossible to keep pace. Until recently, for example, VoIP was banned in many African and Arab State countries. Today, a growing number of countries have or are about to legalize VoIP, including, Algeria, Ghana, Kenya, Mauritius, Nigeria, Somalia, South Africa, Tanzania and Uganda (Figure 1.9).
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- 34. 34 WHAT IS NGN? There are numerous views of what constitutes NGN. Different operators that have begun the process of NGN migration refer to their next-generation networks differently. For some, NGN simply means migration from a PSTN to an IP-based network. For others, it is a more specific reference to advances such as international call IP trunking and IP in the local loop. From a technology perspective, NGN is based on a new architecture that modifies both the core and access parts of a telecommunication network, changing the way it delivers services to end-users (Box 1.2).
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- 38. 38 Creating an EnablingEnvironment for NGN: The transition to NGN has demonstrated the importance of regulatory clarity when dealing with essential facilities controlled by the incumbent. Without clarity, current and future investment by competitive providers may be disrupted, as their investment decisions are highly dependent on the incumbent’s future plans.
- 39. 39 In general,regulators are mindful of the risks associated with NGN deployment so as not to stifle innovation. They seek to balance this goal with that of fostering robust, competitive markets. Although it is not necessarily the role of the regulator to protect investments made by competitive providers against market risks, it is still important to consider their interests in terms of ensuring the continued availability of current wholesale inputs to their products during the lifetime of the assets in which they have invested. Similarly, suitable migration paths for existing infrastructure investments following the deployment of new technologies must be ensured.