road to ngn

7/29/2019 Road to NGN

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I n t e r n a t i o n a l T e l e c o m m u n i c a t i o n U n i o n

reform

TRENDSINTELECOMMUN

ICATION

2007THEROADTO

NEXT-GENERATIO

N

NETWORK

S

( N G N )Summa

ry


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I n t e r n a t i o n a l T e l e c o m m u n i c a t i o n U n i o n

TRENDS IN TELECOMMUNICATION

REFORM 2007

The road to Next-Generation Networks (NGN)

Summary

September 2007


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Table of Contents

Page

1 Introduction.......................................................................................... 5

2 Market and regulatory trends............................................................... 8

3 Selected regulatory developments ..................................................... 17

4 What is NGN?.................................................................................... 21

5 Interconnection in an NGN environment........................................... 22

6 Universal access and NGN ................................................................ 24

7 Consumer protection and quality of service in NGN......................... 25

8 Creating an enabling environment for NGN...................................... 28

9 Conclusion ......................................................................................... 30


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Trends in Telecommunication Reform 2007 Summary

5

TRENDS IN TELECOMMUNICATION

REFORM 2007

The road to Next-Generation Networks (NGN)

Summary

1 INTRODUCTION

ITU/BDT is pleased to present the eighth edition of Trends in

Telecommunication Reform, a continuing part of our dialogue with the

worlds information and communication technology (ICT) policy-makers

and regulators. This years edition focuses on the move to next-

generation networks (NGN), which has captured the attention of the

information and communication technology (ICT) sector in 2007. The

sector has already seen the year of convergence, followed by the yearwhere broadband was on everyones 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.

Although the sector has faced many so-called revolutions, theconsensus, 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 todays 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 robustwireless coverage. Indeed in wealthier countries, fixed-line operators are


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deploying fibre closer and closer to the end-user, while mobile operators

are investing in third, and even fourth-generation mobile networks as

well as broadband wireless access (BWA). Both fixed and mobile

networks are being upgraded to offer ever higher-speed broadband.At first glance, it looks like the digital divide storm clouds are

brewing. European countries talk about tens of billions of euros of

investments needed to achieve NGN, sums that would go begging in the

developing world. But there is a silver lining. There is a growing range

of wireless technologies that offers ever-increasing broadband

capabilities. And national fibre backbone deployments are now within

financial reach of developing countries. Todays fibre backbones

coupled with wireless access technologies offer developing countries afar richer diet of ICT services than legacy Public Switched Telephone

Network (PSTN) and 2G mobile networks ever could and at lower cost.

Some developing countries, such as Argentina, Bangladesh, Bulgaria and

Pakistan are already experiencing NGN migration by focusing on cost-

effective solutions to enable affordable access to the widest base of end-

users possible.

Technology alone, however, is not the solution. Policy-makers

recognize the need to abandon regulatory practices designed for anearlier era that today stifle innovation and investment and lead to

arbitrage opportunities. Those countries that are witnessing the greatest

explosion of ICT growth and investment have designed regulatory

frameworks that enable and promote ICT development.

The emerging NGN environment poses significant challenges to all

market players who are developing new business models, as well as to

governments and regulators intent on creating future-proof regulatory

frameworks. This years Trends in Telecommunication Reform containsten chapters addressing each of the NGN-related challenges and

opportunities to enable regulators to harness the potential of NGN to

build an Information Society for all:

Chapter One provides an ICT market and regulatory overview to

set the stage for the following chapters;

Chapter Two provides an NGN overview to introduce the

discussion in the later chapters;


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Chapter Three focuses on NGN technology in an effort to

demystify the plethora of NGN terms under discussion;

Chapter Four looks at fixed-mobile convergence as one of the

trends leading to NGN deployments (the other major trend,VoIP, was explored in the 2006 edition ofTrends);

Chapter Five examines interconnection and access in an NGN

environment;

Chapter Six looks at international Internet interconnection,

which will take on increased importance as international

networks become increasingly IP-based;

Chapter Seven examines universal access and NGN;

Chapter Eight addresses Quality of Service (QoS), consumer

protection and cybersecurity in an NGN environment;

Chapter Nine provides discussion on an Enabling Environment

for NGN; and

Chapter Ten provides a conclusion and a look ahead.


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2 MARKET AND REGULATORY TRENDS

Buoyant ICT growthIn order to understand the likely migration paths toward IP-enabled

and next-generation networks, it is essential to evaluate the current state

of ICT infrastructure deployment. Developed countries, which have the

majority of the worlds 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 fixedlines while in a set location (home or work) and mobile while on the go.

Figure 1.1 Growth in fixed lines, mobile cellular subscribers

and Internet users, in billions, world (1996-2006)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

billi

ons

Internet users

Mobile subscribers

Fixed lines

Source:ITU World Telecommunication/ICT Indicators Database.


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Figure 1.1 shows 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 andfixed-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.

Broadband on the rise

While access to ICT continues to grow, countries are increasinglyfocusing 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.

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).

The good news 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 22779 in 2001 to 484899 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 46000 broadband subscribers in the 22 out of 50 LDCs with

broadband service in 2006.


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Figure 1.2 Broadband worldwide

Number of countries with broadband

commercially available

81

113

133145

166 170

0

20

40

60

80

100

120

140

160

180

2002 2003 2004 2005 2006 start

2007

Top 25 broadband economies by total number of subscribers, 2006

0

10

20

30

40

50

60

70

United

States

China

Japan

Ge

rmany

Korea

(Rep.)

U

nited

Kingdom

France

Italy

C

anada

Spain

Brazil

Nethe

rlands

Taiwan,

China

Au

stralia

M

exico

Russia

Turkey

Poland

Belgium

Sweden

India

Switz

erland

Hong

Kong,

Ch

ina

De

nmark

Arg

entina

millions

Source:ITU World Telecommunication/ICT Indicators Database.

In the area 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-users premises, FTT Building

(FTTB), where the fibre stops at the building; FTT Curb (FTTC) or FTTKerb (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

neighbourhood. Collectively, these variants are termed FTTx.

The Asia-Pacific region 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).


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A positive trend in FTTx deployment worldwide is the increasing

number of developing countries launching FTTx networks. In Asia,

UTStarcom in India, and in Latin America, Telesp (the Brazilian fixed-

line unit of Telefnica) are planning FTTx deployments for 2007.

Figure 1.3 FTTH homes connected, Japan, 2000-2005

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

FTTHDSLCATV

Source:MIC Japan.

In developing countries, 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 broadbandInternet 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). In

Kenya, for example, one ISP has announced that it will provide Internet

access, instant messaging, and push e-mail and attachment support to

mobile users through a handheld device, in conjunction with its partner,

a mobile operator. Nearby in Zambia, a mobile operator is introducing

the countrys first mobile Internet access facility to provide customerswith quick access through their mobile handsets or laptops. Still, because


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of high prices, these services remain beyond the reach of most customers

in developing countries and are targeted to high-end and business

customers. It is hoped that operators will eventually find pricing plans

that make these services more affordable to a full range of users. (SeeFigure 1.4 showing deployments of mobile technologies).

Figure 1.4 Map of mobile technologies worldwide, May 2007

Note: The map shows networks commercially launched as of May 2007. For some

countries where more than one technology has been commercially deployed, the most

advanced technology is represented.

Legend: 2G = Second-generation wireless telephone technology

CDMA2000 1x = Code Division Multiple Access

CDMA2000 1x EV-DO = Code Division Multiple Access Evolution-

Data Optimized

WCDMA = Wideband Code Division Multiple AccessHSDPA = High-Speed Downlink Packet Access

Disclaimer: The designations employed and the presentation of material in this map do

not imply any opinion whatsoever on the part of ITU concerning the legal or other

status of any country, territory or area or any endorsement or acceptance of any

boundary.

Source: ITU, based on data adapted from 3Gtoday


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Box 1.1: Mobile broadband for developing countries

The demand for affordable IMT-2000 services is rising in developing

countries. One opportunity for developing nations, particularly thosewith large rural populations, is the commercialization of low-

frequency mobile technologies. These enable wider coverage with

fewer base stations, and hence reduce the cost of mobile infrastruc-

ture significantly. CDMA450 is a 3G solution combining next-gene-

ration CDMA2000 wireless communication services with wide

network coverage using the 450-MHz frequency band. Its wide

adoption throughout the developing world is indicative of the benefits

it can bring in low-cost connectivity. In a number of countries,

services licensed in the 450 MHz frequency are used for delivering

mobile or fixed wireless access to remote rural areas, helping to

bridge the rural-urban digital divide (e.g. in Argentina, Belize, Benin,

China, the Czech Republic, Estonia, Indonesia, Libya, Mexico, Peru,

Russia and Venezuela).

Source: ITU, adapted from Telegeography, Global Insight and operators reports.

Privatization and competition 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. 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.

By the middle of 2007, 123 ITU member countries had a private or

privatized national fixed-line incumbent (Figure 1.5). Several other

countries have announced their intention to privatize. The government of

the Ukraine has the green light to move on its plans to sell Ukrtelecom.The Kyrgyz government also plans to further privatize the fixed-line


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incumbent, Kyrgyztelecom, and Slovenias Finance Ministry has

announced the international tender for the further sale of a minority stake

in Telekom Slovenije by the end of August 2007.

Figure 1.5 Public/private ownership of national fixed-line

incumbents, 1991-2007, WorldAs of 1 June 2007

0

20

40

60

80

100

120

140

160

1991 1993 1995 1999 2001 2005 2007

Private State-owned

Countries

Source:ITU World Telecommunication Regulatory Database.

During the same 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. The second


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operator will compete with Omantel which is currently the monopoly

provider of fixed-line services.

Figure 1.6 Growth of competition in basic services and cellularmobile services worldwide, 1995-2006, and competition in selected

service areas, 2006

0

20

40

60

80

100

120

140

160

1995 1997 2000 2001 2002 2003 2004 2005 2006

Basic services Mobile

CountriesGrow th of c ompetition, 1995 to 2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%100%

Basic

services

Leased

lines

Mobile

cellular(2G)

Internet

services

Wireless

local loop

VSAT Cable TV DSL 3G

Monopoly Competit ion


A growing community of regulators

The establishment of a separate regulator is one of the most visible

signs of sector reform. Separate regulatory agencies lay the groundworkfor a favourable investment climate and the promotion of market


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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.

The world now 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.

Figure 1.7 Growth of regulators worldwide, 1990 - mid-2007

14

43

86

106

124

137148

1990 1995 1998 2000 2002 2004 2007

Regulatory agencies,

world (cumulative)



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3 SELECTED REGULATORY DEVELOPMENTS

International mobile roamingThe 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. Thismove may embolden other regional groups to take firmer action to cut

mobile roaming charges.

Regulating local loop unbundling and infrastructure sharing

Local loop unbundling (LLU) has generated a lot of debate

worldwide, with countries and regions taking a variety of approaches.

The different approaches taken to unbundling often reflect the balance

countries seek to strike between addressing competitive bottlenecks and

encouraging investment in infrastructure. 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 inEurope 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.


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In addition to 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 ofcountries 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.

Interconnection

A clear and transparent interconnection regulatory framework is

key to a sustained competitive environment. Providing public access toreference 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.

Worldwide trends show that only 32 per cent of countries require

the publication of interconnection agreements. In contrast, interconnec-

tion pricing information is made publicly available in 59 per cent of

countries around the world. Europe is taking the lead with 72 per cent of

countries requiring interconnection prices to be made public, while in the

Americas, only 46 per cent of countries require operators to publish this

information (Figure 1.8). The Arab States have the highest percentage of

countries mandating operators to publish reference interconnection

offers, followed by Europe and the Asia-Pacific regions. The require-

ment to publish reference interconnection offers is mainly imposed on

the incumbent operator or operators with significant market power.


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Figure 1.8 What interconnection information is made publicly

available?

0%

10%

20%30%

40%

50%

60%

70%

80%

90%

100%

Africa Americas Arab States Asia-Pacific Europe

Interconnection prices RIO Interconnection agreements

Note: RIO refers to reference interconnection offer. The percentages shown in the

figure are based on the number of countries that answered positively to the relevant

questions in the 2005 and 2006 annual telecommunication regulatory surveys.

Source: ITU World Telecommunication RegulatoryDatabase.

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 challengestraditional 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.


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Indeed the state 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).

Figure 1.9 The spectrum of regulatory treatment of VoIP, 2006

Source: ITU World Telecommunication Regulatory Database and ITU, The state of

VoIP worldwide 2006


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4 WHAT IS NGN?

There are numerous views of what constitutes NGN. Different

operators that have begun the process of NGN migration refer to theirnext-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).

At the network core level, the major innovation associated with

NGN is the introduction of a packet-based transport level that is separate

from the network control layer. This packet-based transport is generally

based on Internet Protocol, which is the current universal transport

technology capable of handling any type of service. However, this

transport is enriched with Multi Protocol Label Switching (MPLS) to

ensure Quality of Service (QoS). At the end-user NGN access level,

access is provided through packet-based broadband capable of handling

the provision of voice, data, and other content-based services. Broadbandaccess can be either delivered through fixed-line technology such as

Digital Subscriber Line (DSL), fibre-optic and cable TV, or wireless

technology such as broadband wireless access (BWA).

Box 1.2: ITU definition of NGN

A Next Generation Network is defined by ITU as a packet-based

network able to provide telecommunication services and able to makeuse of multiple broadband, QoS-enabled transport technologies and in

which service-related functions are independent from underlying

transport-related technologies. It enables unfettered access for users

to networks and to competing service providers and/or services of

their choice. It supports generalized mobility that will allow

consistent and ubiquitous provision of services to users.

Source: ITU-T Recommendation Y.2001


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5 INTERCONNECTION IN AN NGN

ENVIRONMENT

Domestic interconnection

Regulation is frequently needed in support of access and

interconnection. A key question that is considered in this eighth edition

of Trends in Telecommunication Reform is the degree to which

regulation of access and interconnection will be necessary in the

emerging world of NGN and in particular how the emergence of NGN

alters market power and market entry.

In particular, the relative merits of different wholesale inter-

connection charging arrangements are explored in the NGN context.

Most of the world uses a system known as Calling Partys Network Pays

(CPNP); however, a less widely used system known as Bill and Keep

offers a number of advantages, particularly for countries where adoption

of ICT services is already well advanced. Migration to an NGN environ-

ment is a natural time for a country to consider whether wholesale

interconnection arrangements could profitably evolve.

International interconnection

On an international level, the subject of interconnection has been

dominated for some time by issues related to the accounting rate system

and the cost of international Internet connectivity. While these issues

have been with us for some time, a greater sense of urgency to resolve

them has been brought about by the transition to NGN. This transition is

expected to lead to further declines in the amount of PSTN traffic thatgoes through the accounting rate system, in turn reducing the amounts of

foreign exchange developing countries receive through settlement

payments. At the same time, this transition is also expected to place a

greater burden on developing countries in the form of costs related to

international Internet connectivity. For a variety of reasons, developing

countries have had to bear high costs for international connectivity to the

Internet. This burden is expected to increase as more traffic migrates to

NGN.


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While the decline of the accounting rate system appears

unstoppable, developing countries are taking a multi-pronged approach

to ensure that access to ICT services becomes more affordable and

available. This includes deploying international fibre cable networks, tolower costs for international Internet connectivity and concerted

domestic sector reform such as liberalizing the international gateway and

promoting competition in international leased lines. At the same time,

local and regional traffic aggregation and exchange initiatives are

attracting increased support.


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6 UNIVERSAL ACCESS AND NGN

On the one hand, NGN promises to benefit universal access efforts

by expanding the range of services that can be made available through asingle network. On the other, NGN also brings along with it a number of

significant challenges that include the erosion of traditional revenue

bases used to fund universal access programmes and the possibility of an

even widening digital divide stemming from an uneven distribution of

NGN-related benefits.

In all cases, it is necessary for sufficient importance to be given to

sector reform in expanding ICT access. A systematic review of a

countrys universal access policies should first and foremost include arevision of its sector policies and regulations concerning licensing,

spectrum management, interconnection, VoIP and price regulation with a

view towards lowering barriers to market entry in rural and remote areas.

In the event that universal access funding becomes necessary, the

following issues are raised in an NGN environment:

How should the scope of universal access be defined? Should

broadband be included? Should it apply only to transport or toservices?

How should funds used to support universal access be collected

given the decline in incumbent voice revenues?

How should funds for universal access be distributed to take

advantage of new technologies that allow economies of scale to

be more easily attained?

In deciding between the different options available for regulatorsand policy-makers, it should be recalled that the transition to NGN is

ongoing with markets still adjusting to changes. With future

developments being hard to predict, greater reliance in general must be

placed on market forces in the provision of universal access.


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7 CONSUMER PROTECTION AND QUALITY OF

SERVICE IN NGN

NGN offers the possibility of delivering real benefits to citizens andconsumers in terms of innovative new services and greater choice.

However, the convergence of different services onto a single network

raises important issues concerning quality of service, consumer

awareness and consumer protection. For example, although consumers

may perceive new voice services like VoIP to be identical to traditional

voice services, they may not be able to deliver traditional features such

as access to emergency services.

The level of regulatory intervention required to protect consumerswill depend in part on the structure of the market concerned and the

commercial incentives for service providers. Where there are effective

competition and commercial incentives for service providers the focus is

likely to remain on consumer empowerment, which can be enforced

where necessary through transparency requirements. Where competition

or commercial incentives are weak, regulators may need to take a more

interventionist approach such as the setting and monitoring of minimum

QoS standards that are appropriate to the NGN environment.Today, QoS monitoring is mandatory in a vast majority of

countries. Regulators can be mandated to address a range of activities

from defining and setting QoS measurements, to monitoring and

enforcing QoS. Sometimes these duties are also shared with the sector

ministry, consumer protection associations, and national standardization

agencies (Figure 1.10).

The migration to NGN has also led to a growing debate concerning

net neutrality. The expression net neutrality usually refers to the

debate around whether there should be an overarching principle of non-

discrimination regarding different forms of Internet traffic carried across

networks. The debate is most controversial where it relates to

differentiation between application providers. For example, network

operators in the United States have argued that they need to be able to

charge application providers for high priority traffic in order to support

the business case for investment in higher capacity networks that such

applications require. The counter argument by those who favour net


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neutrality is that end users have already paid the operators for access and

that prioritization by ISPs effectively constitutes charging twice for the

same network.

Figure 1.10 Who sets the standards? Who monitors service

quality?Entities responsible for setting quality of service standards by percentage

Sector

Ministry

21%

Operators

8%

Other

7%

Regulator

64%

Setting QoS

Standards

Entities responsible for service quality monitoring by percentage

Regulator

64%Sector

Ministry

14%

Operators

17%

Other

5%

Monitoring

Service Quality

Note: In some countries, more than one entity can be responsible for setting and

monitoring QoS standards.

Source: ITU World Telecommunication Regulatory Database


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In essence the issue of net neutrality is all about the future of

commercial relationships, payment flows and access to markets.

Concerns about net neutrality are greatest where an operator with

significant market power (SMP) in the relevant market undertakes toprioritize delivery of its own services over those of its competitors for

anti-competitive purposes.


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8 CREATING AN ENABLING ENVIRONMENT

FOR NGN

The transition to NGN has demonstrated the importance ofregulatory 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 incumbents future plans. In the Netherlands, for

example, the Dutch regulator OPTA has identified the lack of clarity and

certainty regarding access alternatives in the wake of incumbent KPNs

NGN migration, as a factor leading to low levels of investment in Digital

Subscriber Line (DSL) networks by competitive providers during thefirst semester of 2006.

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 theassets in which they have invested. Similarly, suitable migration paths

for existing infrastructure investments following the deployment of new

technologies must be ensured.

In order to arrive at the best result, it is important for governments

to build in mechanisms for collaboration among regulators, policy

makers and industry, as they grapple with the issue of how best to

address the transition to an NGN environment. Regulators in Costa Rica,

Lithuania and the United Kingdom, for example, have acknowledgedthat they should play a supervisory role rather than attempt to manage

the migration to NGN, recognizing that industry stakeholders, who better

understand the requirements and potential of NGN, are more likely to

develop effective solutions than regulators. The involvement of

stakeholders in the regulatory process can take a number of forms,

including a consultative process, hearings, seminars, forums, community

meetings, as well as establishing technology expert groups and industry-

led groups. The goal of such collaboration is to ensure that the regulatory

framework does not become so restrictive that it thwarts investment in


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NGN and, at the same time, it does not act too late to encourage

competition.

These objectives, designed to facilitate the migration to NGN are

enshrined in the best practice guidelines agreed by regulatory authoritiesfrom around the world that participated in the 2007 ITU Global

Symposium for Regulators (GSR). The 38-point roadmap is designed to

encourage regulatory frameworks that foster innovation, investment and

affordable access to NGN. The 2007 GSR Best Practice Guidelines

underscore the importance of embracing the principles of a clear and

transparent regulatory process, including the adoption and enforcement

of rules; technology-neutral and competitive network provision under a

coherent approach, that address the issues raised by convergence. Theguidelines also call on regulators to adopt forward-looking regimes

subjected to regular reassessments to ensure that undue regulatory

barriers to competition and innovation are removed. This on-going

monitoring would also ensure that users and providers are able to

migrate to future networks whenever market conditions are met. The full

text of the 2007 GSR Best Practice Guidelines is available at

www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR07/consultation.html


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9 CONCLUSION

While it is simply too early to determine the precise regulations to

apply in an NGN environment, it is nevertheless certain that thetransition to NGN is underway and that it promises to fundamentally

alter the ICT landscape. It will bring opportunities for operators and

benefits for consumers, while at the same time posing challenges for

regulators and policy-makers. Regulation in this regard is a true work in

progress. There is much to be learned from those countries that have

gone further down the road of technological development and policy

analysis. As is the case in all ICT developments, there will be world

leaders in NGN development and regulation. Those countries that are at

less developed stages will have the opportunity to benefit from the

experiences, mistakes and successes experienced by those leading

countries. At a minimum, there is clear guiding value in the established

principles of regulation that seek to foster competition and investment. In

most cases, there is yet to be a convincing case to depart from these tried

and tested principles. Where necessary, departure from these principles

should be capable of justification and be modelled to promote

competition, investment certainty and consumer welfare.


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Regulatory information is available on the ITUs onlineICT Eye portal

The worlds unique one-stop-shop for Telecom/ICT data collection

and dissemination!

www.itu.int/ITU-D/icteye/


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For more information on this report and other ITU regulatory

activities, consult www.itu.int/ITU-D/treg/

For ordering information, contact:

International Telecommunication Union

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