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Transcription:

Interconnection and Roaming Operator Business Slide 1

Importance of Interconnection Operator s perspective Connectivity =>Network effect => Customer satisfaction =>Revenue Slide 2

Types of interconnections Fixed (PSTN) - Mobile Mobile Mobile Fixed Fixed Fixed Internet Fixed Internet Slide 3

Access ISP Transit ISP 5 Direct peering connection Interconnection Business interfaces in Internet 1 9 6 4 2 Peering point/bilateral agreements (Network Access Point, NAP) Business interfaces are technically managed via announcements and withdrawals of destination routes (e.g. Border Gateway Protocol) Three types of agreement direct bilateral peering: non-transitive traffic exchanged without payment bilateral peering through NAP (matchmaker -> bandwidth broker) true transit traffic involving charging (typically per volume or port speed) Optimal business choice between peering and transit? 7 3 8 Source: Courcoubetis, Weber, 2003 Slide 4

Interconnection Charging schemes Calling-party s network pays (CPNP) calling operator pays to called operator for call termination (e.g. telephony) terminating operator is a de-facto monopolist high termination charges lock-in creates an opportunity for disruptive technologies such as IP telephony Sender Keep All (SKA, Bill-and-keep) appears as peering agreements in Internet network effect discouraging to big operators cost sharing e.g. facility-based interconnection cost charging equal customer prices Revenue sharing typically new entrant pays to incumbent simple but potentially anti-competitive Interconnect charges based on retail prices retail prices sometimes used as reference for inter-operator discounts sometimes enforced by regulator Source: Courcoubetis, Weber, 2003 Slide 5

Interconnection Regulation EU Relevant Markets include wholesale interconnection: Call origination/termination in an individual PSTN Transit services in the fixed PSTN Access and call origination in public mobile networks (often SMPs) Voice call termination in public mobile networks (always SMPs) GSM call termination monopoly implies that regulator adjusts the termination prices according to operator size Virtual Mobile Network Operators (VMNO) can survive if they get access capacity from MNOs (SMP decisions if necessary) their call termination prices do not need to be cost-oriented Slide 6

Interconnection Case Finland, 2007-2008 Impact of regulator s threat (Significant Market Power identification for mobile operators) on termination charges for GSM mobile-to-mobile calls 2007 TeliaSonera to reduce from 6.8 to 6.6 cents per min. Elisa to reduce from 8.4 to 7 cents per min. DNA to reduce from 10 to 8.2 cents per min. 2008 TeliaSonera and Elisa to charge 5.1 cents per min. DNA to charge 6 cents per min. Source: FICORA Expected to increase competition and reduce distortion between the wholesale and retail charges Slide 7

Interconnection Case Finland, ISPs National ISP interconnection is handled via FICIX ry Non-profit organization (membership and port fees only) No transit traffic allowed Bilateral agreements required but without charging settlements Slide 8

What next for Interconnection? Convergence and its impact Separation of network and service layer Non-IP models => IP models? Impact on telecom operator s business? Slide 9

Roaming Ability of subscriber A to reach or be reached by subscriber B over a visited network. National Mobile Roaming : Visited network in the same country. International Mobile Roaming (IMR): Visited network in another country. Slide 10

Global IMR Market N u m b e r o f T o u r is t a r r iv a ls (m illio n ) 1000 800 600 400 200 International Tourist Arrivals (in million) 0 1990 1995 2000 2001 2002 Year 2003 2004 Total Leisure, recreation and holidays Business and professional Health, religion, other Not specified 207 million subscribers in 2004 13% of global subscriber base USD 78.5 billion revenue in 2004. Expected to have 850 million subscribers by 2010. Currently dominated by postpaid Prepaid expected to grow in future Business customers generate major share of revenue Over 2 % of the total traffic High profit margins for operators. Source: Informa Telecoms & Media 2005, World Tourism Organization, 2005 Slide 11

Mobile Roaming Relationships (past, present and future) Subscribers Subscribers Retail Retail SO/MVNO SO/MVNO Wholesale National Wholesale National NO NO Wholesale International Home Visited Dominant in the past and present: Vertically integrated. Future: Separation of network and service operations Wholesale National :between service operator (SO) or MVNO with the national network operator (NO) Wholesale International : between NOs (home and visited) Source: Renjish Kaleelazhicathu, 2005 which is typically international in nature. Slide 12

Roaming Agreements Case: TeliaSonera, 2007 International roaming coverage GSM in over 100 countries (over 220 operator partners) GPRS in over 50 countries (over 90 operator partners) WLAN in over 16 countries (3500 hotspots) Member of the Freemove alliance (28 countries with over 295 million customers worldwide) TeliaSonera GRX service connects e.g. all Finnish mobile operators to each others and to foreign networks TeliaSonera has over 25,000 hotspots worldwide through roaming partners. Slide 13

Roaming Financials Revenue and cost structures Revenue Inbound and outbound Function of: Number of visits Duration of days per visit Usage of services per day Price per unit usage of service Cost Inter-operator tariff (Outbound) Network cost (inbound) Signaling cost Data clearing and financial settlement cost Fraud management Slide 14

Roaming Regulation EU Relevant Markets include wholesale roaming: Wholesale national market for international roaming on public mobile National regulators have difficulty in guiding international roaming prices because of its inherent cross-border nature. EU s parliament is currently debating on the proposals by EC. European Home Market Approach proposal to enforce wholesale and retail price caps! Decision expected this year! Internet-based access-independent approaches of solving the roaming problem (e.g. Voice-over-Internet by Skype) are likely to push roaming prices down Slide 15

GPRS/IMS Roaming Home network-based roaming Source: GSMA Slide 16

GPRS/IMS Roaming Visited network-based roaming Source: GSMA Slide 17

GPRS Roaming Exchange (GRX) Slide 18

GPRS/IMS Roaming Business Interfaces between Players (Transport) IOT Volume Clearing House (optional) Home Network GRX Operator 1 GRX Operator 2 Visited Network Monthly and volume charges Free exchange Monthly and volume charges Roaming charges Volume Bilateral roaming agreements between GPRS operators Settlement of inter-operator tariffs (IOT) via clearing houses Transport agreements via GPRS Roaming exchange (GRX) operators Slide 19

IP Packet Exchange (IPX) (Enhanced GRX) SIP proxies Charging data record creation IP version conversions Traffic control/policing Source: GSMA Separation of network and service layers Slide 20

Roaming industry evolution Business Model Scenarios: Bilateral, Clustered, Centralized Triggers\Models Bilateral Clustered Centralized Number of contracts High Medium Low Complexity of single contract High High Low Management structure Distributed Centralized Centralized Vertical bundling Yes Yes No Control of standards spec GSMA Operator Non-commercial Competition in roaming features No Yes No Price regulations No No Yes Cost per operator High Medium Low Profit opportunity Medium High Low Bilateral model has dominated so far Clustered model will develop, driven mainly by global operators Centralized model may emerge from regulatory needs Slide 21

WLAN Roaming System Architecture using RADIUS Internet CLEARING HOUSE (RADIUS) ISP DB operator.fi (RADIUS) enterprise.net (RADIUS) Access Controller User DB User DB Authentication based on RADIUS protocol (DIAMETER) WLAN charging and settlement handled by Clearing House Slide 22

WLAN usage (includes non-roaming usage) Top 10 countries (stats based on ipass customers) 1 United States DAY SESSIONS 692,332 % OF WORLDWIDE TOTAL 59% AVERAGE SESSION LENGTH (minutes) 65 GROWTH FROM 1H06 33% 2 United Kingdom 131,546 11% 78 75% 3 Germany 63,496 5% 106 112% 4 Switzerland 37,443 3% 64 96% 5 Netherlands 36,342 3% 109 37% 6 Japan 33,887 3% 43 18% 7 France 20,712 2% 57 49% 8 Singapore 17,984 2% 42 1% 9 Australia 12,346 1% 68 271% 10 Denmark 12,106 1% 49 32% Source: ipass, 2006 Slide 23

WLAN vs. GPRS/IMS Roaming GPRS/IMS roaming being deployed based on homenetwork routing WLAN roaming being deployed based on visited network routing (direct local acces to Internet) strong trust required between operators Roll-out of WLAN in handsets is likely to increase the use of SIM/HLR authentication for roaming GRX enables end-to-end quality of service (QoS) control MMS uses GRX for both interconnect and roaming traffic Voice-over-IP on public WLAN could use GRX for QoS WLAN roaming: Threat or complement to GPRS/IMS roaming? Slide 24