status and perspective of ip telephony in...
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Telephony over IP, Algeria, 19 - 20 March 2007. 1
Status and Perspective of Status and Perspective of
IP TelephonyIP Telephony
in Koreain Korea
2007. 3. 19~202007. 3. 19~20
ChoonChoon KyuKyu KimKim
(([email protected]@kt.co.kr))
BcNBcN, KT, KT
Telephony over IP, Algeria, 19 - 20 March 2007. 2
Contents
� Background
� VoIP market – Worldwide/Japan
� PSTN/VoIP Market in Korea
� VoIP impact on PSTN/Broadband in KT
� IP-PBX in SME
� Regulation
� The incumbent’s challenges
Telephony over IP, Algeria, 19 - 20 March 2007. 3
Background
� “DialpadDialpad” Service
� by Serome Technology Co. (end of 1990s)
� Free IP Telephony Service
� PC-to-PC, PC-to-Phone
� Since “Dialpad” service, IP Telephony market has grown as a differentiated niche market
� Lots of IP Telephony Service Providers(ITSPs) emerged
� ITSPs don’t make Profit enough
� Teleco Networks evolve to IP-based Networks rapidlyin Korea due to BcN(Broadband Convergence Network) Project
Telephony over IP, Algeria, 19 - 20 March 2007. 4
Background (Cont.)
� Slow Deployment of IP Telephony Service in Korea
� Unstable Voice Quality
� No E.164 Number for receiving Call from PTSN and Mobile
� Unauthorized use of other E.164 Numbers such as 030, 050, and Private Numbers
� Number Allocation for receiving Call is Fundamental Requirement to promote IP Telephony Service
� Identification Number 050 for IP Telephony in Japan
�� RegulationRegulation is required to allocate E.164 Number to IP Telephony Service
Telephony over IP, Algeria, 19 - 20 March 2007. 5
Background (Cont.)
IP NetworkPSTN PSTN
Internet
Phase 1
( ~ 2002 )
� PC to PC VoIP
− Free
− Advertising
� Toll Bypassing
− Cheap international call
IP NetworkPhase 2
( 2002~ 2010 )
� Phone to Phone VoIP
− New category of IP telephony
− Gateway necessary
� VoIP + PSTN
− By network connection
− Assign VoIP number
GW/GK GW/GKGW/GKGW/GKGW/GK
IP Network PSTN
IP NetworkPSTN
GW/GK
GW/GKGW/GKGW/GKGW/GK
IP NetworkPhase 3
( 2010 ~ )
� MoIP (Multimedia over IP)
− Mainly multimedia traffic
− BcN based ALL IP Network
− video related revenue
IP PhoneIP PhoneIP PhoneIP Phone IP PhoneIP PhoneIP PhoneIP Phone
Telephony over IP, Algeria, 19 - 20 March 2007. 6
Share of
overall
value
(in %)
Wireless
WirelineTraditional Carriers
WirelineNon-Traditional Carriers
ISPs
Cable / Satellite
0%
20%
40%
60%
80%
100%
1990 1995 2000 2005 * Source: Mercer Value Migration Database
Exponential value in-flow in Wireless, Cable/Satellite and ISP industry
More 50% value out-flow in Wireline-traditional Carriers during recent 5 years
Communications global value migration
Telephony over IP, Algeria, 19 - 20 March 2007. 7
� VoIP subscribers in Korea : 4.4% of Broadband subscribers
� Market size : 1.1% of PSTN (2005)
� Worldwide VoIP forecast : annual 40 % growth until 2008
� VoIP subscribers in Korea : 4.4% of Broadband subscribers
� Market size : 1.1% of PSTN (2005)
� Worldwide VoIP forecast : annual 40 % growth until 2008
VoIP market - Worldwide
Worldwide Broadband/VoIP market
BB Subscribers VoIP subscribers
3,000 2,000 1,000 10,000 200 400 600
USA
JAP
KOR
FR
UK
GER
3,170
1,763
1,192
570
510
450
110(3.5%)
530(30.1%)
52(4.4%)
22(3.9%)
5(1.0%)
11(2.4%)
( ITFACTS, Bitkom (2004,4Q)
Worldwide VoIP Market forecast
2004 2005 2006 2007 2008
250M$60,800M
VoIPrevinue(m$)
100,000
75,000
50,000
25,000
BB subscribers
VoIPRevenues
( IDC 2004)
130M$16,000M
Telephony over IP, Algeria, 19 - 20 March 2007. 8
VoIP market - Japan
VoIP growth after 050Broadband/VoIP growth
� Active VoIP Market
�2004 : sales $1.7 billion (7% of overall PSTN sales), subscribers 5.3 M
�2007 : sales $7.2 billion (30% of overall PSTN sales), subscribers 23 M
(IDC Japan, 2004)
� Supporting Factors �Market : VoIP bundling with Broadband
�Rate : Cheaper VoIP rate without city limit
�Policy : Early decision of the game of the rule
2002 : VoIP introduction/assigned the receiving number
2003 : VoIP-PSTN interconnection and rate
� Active VoIP Market
�2004 : sales $1.7 billion (7% of overall PSTN sales), subscribers 5.3 M
�2007 : sales $7.2 billion (30% of overall PSTN sales), subscribers 23 M
(IDC Japan, 2004)
� Supporting Factors �Market : VoIP bundling with Broadband
�Rate : Cheaper VoIP rate without city limit
�Policy : Early decision of the game of the rule
2002 : VoIP introduction/assigned the receiving number
2003 : VoIP-PSTN interconnection and rate
’02.09
1.52M
5.3M
’04.12
(Receiving number)
Subscribers (10,000)
2,000
1,500
1,000
500
2001 2002 2003 2004
BB
780
1,364
1,763
142
398530
284VoIP
Telephony over IP, Algeria, 19 - 20 March 2007. 9
PSTN market in Korea
Source : MIC (Ministry of Information and Communication) 2006.11
23,099Subscribers(unit: 1,000)
2000 2001 2002 2003 2004 2005 2006.11
Num of Subscriber CAGR (Percentage)
-2.61 -0.03
0.74
0
5,000
10,000
21,000
23,000
15,000
3.370.22
3.62
21,930
Hanaro Telecom(6.6%)
LG Dacom(0.2%)
KT(93.2%)
Source : MIC (Ministry of Information and Communication) 2006.11
Telephony over IP, Algeria, 19 - 20 March 2007. 10
Market Forecast of IP Telephony in Korea
� IP Telephony : expected to grow 60% per year and reach $767 mil. in 2008
� PSTN Market : expected to decrease 5% per year and reach $5,400 mil. in 2008
-4.9%5,3825,7446,0926,3696,595PSTN
66.3%767561349188103IP Tel.
CAGRCAGRCAGRCAGR20082008200820082007200720072007200620062006200620052005200520052004200420042004TypeTypeTypeType
(DATA: IDC, 2004)
(Unit: Million dollor)
Telephony over IP, Algeria, 19 - 20 March 2007. 11
Impact on PSTN Market in Korea
� Price Reduction followed by added competition will increase Consumer Surplus
� Substitution for existing PSTN Market
� IP Telephony Revenue is expected to take up 12.5% of the Fixed-Voice Market in 2008
98.5%98.5%98.5%98.5%
1.5%1.5%1.5%1.5%
97.1%97.1%97.1%97.1%
2.9%2.9%2.9%2.9%
94.6%94.6%94.6%94.6%
5.4%5.4%5.4%5.4%
91.1%91.1%91.1%91.1%
8.9%8.9%8.9%8.9%
87.5%87.5%87.5%87.5%
12.5%12.5%12.5%12.5%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008
PST NPST NPST NPST N Vo IPVo IPVo IPVo IP(DATA: IDC, 2004)
Telephony over IP, Algeria, 19 - 20 March 2007. 12
VoIP Market - Korea
Samsung NetworksSamsung NetworksSamsung NetworksSamsung Networks36.5%36.5%36.5%36.5%
KTKTKTKT9.9%9.9%9.9%9.9%
Anyuser.netAnyuser.netAnyuser.netAnyuser.net11.6%11.6%11.6%11.6%
etcetcetcetc42.0%42.0%42.0%42.0%
Enterprise Enterprise Enterprise Enterprise
VoIP wholesale/retail market trendsVoIP wholesale/retail market trendsVoIP wholesale/retail market trendsVoIP wholesale/retail market trends
3333333322222222
11111111
48484848164164164164204204204204
182182182182
430430430430
250250250250
789789789789
386386386386retailretailretailretail
wholesalewholesalewholesalewholesale
326326326326
463463463463
residentialresidentialresidentialresidential
businessbusinessbusinessbusiness
(≈ \100 Million )
� Annual growth rate of 2001~2004 : 77% (Wholesale : 33%, retail: 154%)
� Wholesale market
led by Hanaro Telecom
KT and Hanaro share 1/3 each in 2004
� Retail market
major incumbents lead the market instead start-ups
enterprise : samsung networks, anyuser.net
household : Hanaro telecom
2001 2002 2003 2004
Telephony over IP, Algeria, 19 - 20 March 2007. 13
VoIP impact on PSTN in KT
� VoIP will be the major factor of PSTN sales decrease after 2006
� Share of VoIP revenue in terms of the PSTN revenue : 12% in 2008
� VoIP will be the major factor of PSTN sales decrease after 2006
� Share of VoIP revenue in terms of the PSTN revenue : 12% in 2008
PSTN revenue (KT) VoIP transitions
68
2003 2004
Residential
212156
2003 2004
Business
194224
2003 2004
Total
408
2002(E) 2003(E)
58,881
2004(E)
55.604
50,177
3,053224
5,021408
� VoIP
■ Others
Major business customer11
� Enterprises with heavy telephone traffic
� VoIP ARPU > PSTN ARPU (Business part)
\ 31,000 \ 28,459
Bundling service by HanaroTelecom22
� Hanaro takes most residential subscribers
� Prepaid cards
� In this case, ARPU� \\\\ 10,836 (VoIP) vs. \\\\ 18,319 (PSTN)
(≈ \100 Million )
Telephony over IP, Algeria, 19 - 20 March 2007. 14
VoIP impact on Broadband in KT
Without VoIP
34%4.03Hanaro
51%6.08KT
-
7%
Market
share
-
0.86
Subscriber
s
LGP
SO
2004
28%3.6Hanaro
52%6.7KT
6%
14%
Market
share
0.7
1.75
Subscribers
LGP
SO
2008
With VoIP
26~28%3.3~3.5Hanaro
48~50%6.1~6.3KT
7~9%
15~17%
Market
share
0.95~1.15
2~2.2
Subscribers
LGP
SO
2008
� Assume 1 million new
broadband subscribers until
2008
� New subscribers transition to
cheaper VoIP bundle market
� Subscribers transition : 0.5M
� Transition rate : 7 ~ 8 %
Assumptions / Impact
(Million subscribers)
� Broadband market share forecast in 2008 is 46~48 %
26%3.6Hanaro
45.5%6.3KT
7.4%
16%
Market
share
0.7
2.2
Subscribers
LGP
SO
2006.10
Telephony over IP, Algeria, 19 - 20 March 2007. 15
IP-PBX in SME� PBX replacement forecast
4%
18%
12%
8%
1%
58%
Within 6 months
Within 6~12 months
Within1-2 years
Within 2-3 years
After 3 years
No plan
� Legacy PBX replacement : 10 ~ 20% / year� Coexist IP enabled PBX � Expect rapid IP-PBX market transition
( Cisco Analysis, 2003)
Telephony over IP, Algeria, 19 - 20 March 2007. 16
IP-PBX in SME
?
PBXsales
Year
PBX sales drop from 2004
( 2002년 Ovum )
100%
2001
2002
2003
2004
2005
2007
2006
2010
� IP-PBX sales decrease revenue by 30%
� PBX/IP-PBX sales cross in 2005
� Need new application services
100%PBXsales
2001
2002
2003
2004
2005
2007
Year
PBX/IP-PBX sales cross in 2005
2006
( 2002년 Ovum )
IP-PBXsales
70%
200%
new revenue
2010
?
Telephony over IP, Algeria, 19 - 20 March 2007. 17
IP-PBX in SME
Centrex
Tie
Line
IP
Centrex
IP-PBXPBX
Hosted
IPCC
Toll Bypass
VPN
Key System
IP Key System
ACD IPCC
Added services
Carrie
rs contro
l
lowhigh
high ASP
Managed
IP-PBX
2006 ~(IP-PBX)2003~2005(IP enabled PBX)~ 2002(PBX)
� IP-PBX Market trends
Telephony over IP, Algeria, 19 - 20 March 2007. 18
Regulation
� Purpose of the Regulation
� Prepare IP Telephony Regulation for Smooth Transition to IP-based Networks
� Avoid ambiguous interpretations
� Create New Opportunities for the Telecommunications Industry
� Encouraging Incumbents to provide Innovative Services and Upgrade Networks
� Induce Fair Competition and provision of Enhanced Services(QoS, Innovation)
� Prepare Pro-Competitive Environment by improving related Regulations (e.g. Entry regulation, Number allocation, Minimum QoS, etc.)
� Create Positive Effects on related Industries
� e.g. Equipment, S/W, Digital contents, etc.
Telephony over IP, Algeria, 19 - 20 March 2007. 19
Regulation – Definition & Licensing
� Clarify Legal DefinitionLegal Definition of IP Telephony
� a Telecommunication Service which transmits (send or receive) Voice through IP Networks using Telecommunications Equipment, without dividing Call Areas (Local, Long distance)
� Except for PC-to-PC Call
� Classified as a Value-Added Service
� Entry Regulation (Licensing ConditionsLicensing Conditions)
� A FacilityFacility--based ITSPbased ITSP needs to obtain License
� Required to own IP Network (National Backbone Network, Subscriber Line) and Equipment (Server, G/W, G/K, etc.)
� A ServiceService--based ITSPbased ITSP dose not need a License
� Registration required
Telephony over IP, Algeria, 19 - 20 March 2007. 20
Status of ITSP Licensing
�� 9 9 FacilityFacility--based based ITSPsITSPs (nationwide) (nationwide) Licensed (12. 2006)
� KT
� Hanaro Telecom.
� LG DACOM …
�� 8 8 ServiceService--based based ITSPsITSPs (nationwide) registered(nationwide) registered
� More than 100 service-based IPSPs (reginalproviders)
Telephony over IP, Algeria, 19 - 20 March 2007. 21
Regulation – Number Allocation
� Allocate 070 Prefix070 Prefix and Eight-digit numbers for IP Telephony� 070-XXXX-YYYY
�� Minimum Minimum QoSQoS RequirementsRequirements for 070 Number� R-Value ≥70 (ITU-T E.107 E-model)� End-to-end delay ≤150ms� Call success ratio ≥95%
� Different numbers � Facility-based ITSP : ABxxABxx--yyyyyyyy� Service-based ITSP : ABCxABCx--yyyyyyyy
� Service-based ITSP who owns VoIP Network Equipments such as G/W and G/K, has two options� Numbers from MIC (ABCx-yyyy) / Own POIs (Point of
Interconnections) � Request connection to Facility-based ITSP and resell numbers (ABxx-
yyyy)
Telephony over IP, Algeria, 19 - 20 March 2007. 22
Regulation – Interconnection
� Direct Interconnection Principle
� Facility-based ITSP should directly interconnect with PSTN and Mobile Networks
�� Construction of POI(Point of Interconnection)Construction of POI(Point of Interconnection)
� Min. Number of POI with PSTN and Mobile Networks are required
� Facility-based ITSP
� 40-60 POIs with PSTN & Mobile Networks
� Service-based ITSP who received 070 Numbers directly from MIC
� 12 POIs with PSTN and 1 POI with Mobile Networks
� Service-based ITSP who received 070 Numbers from Facility-based ITSP
� No POI is required
Telephony over IP, Algeria, 19 - 20 March 2007. 23
Regulation – Interconnection (Cont.)
�� Payment Settlement for Call InterconnectionPayment Settlement for Call Interconnection between Facility-based Service Providers� IP Phone-to-PSTN (or Mobile)
� ITSP pays for the Interconnection Charge to the Called Network Operator
� ≒¢1.7/min for PSTN and ¢3.9/min for Mobile
� X-to-IP Phone
� The Caller (PSTN, Mobile) pays for the IP Telephony Equipment Interconnection Charge to the called ITSP
� ≒ ¢0.44/min for G/K and ¢0.08/min for G/W
�� Interconnection Charge for IP Telephony EquipmentInterconnection Charge for IP Telephony Equipment(Between Facility-based Service Providers)� G/K≒ US ¢0.44/min (\4.65/min)
� 80% of local switch interconnection charge� G/W≒ US ¢0.08/min (\0.84/min)
� 80% of toll switch interconnection charge
Telephony over IP, Algeria, 19 - 20 March 2007. 24
Regulation – Interconnection (Cont.)
�� Payment Settlement for Internet Access Payment Settlement for Internet Access between Facility-based Service Providers
�� IPIP--Network Access FeeNetwork Access Fee
� An ITSP who does not own IP-network has to pay Access Fee for the use of Subscriber Line and Backbone Network to the IP-Network Owner
� ≒ US $1.42/Month (\1,500/Month)
� ≒ 5% of Average Broadband Internet Service Charge
�� Interconnection Charge for ServiceInterconnection Charge for Service--based ITSPbased ITSP is determined by Private Agreement between Telecommunications Service Providers
� No Regulation on Retail Charge
� ITSPs determine their Retail Charges
Telephony over IP, Algeria, 19 - 20 March 2007. 25
Status in summary
� KT participated in market transition aggressively
� Wholesale / enterprise mainly
� Major in residential market
� Secondary many (Hanaro, Dacom)
� Expand wire line market with bundling
� Cable TV Service Providers are preparing 070 IP Telephony Service – Cable Phone
� TPS : Cable TV, Internet, IP Telephony
� Major Portal Sites based Messenger Service
� Daum Communications Corp. : Skype Messenger
� NHN Corp. : Naver Phone (with DACOM)
� Yahoo Korea : Yahoo Voice Messenger 7.0
Telephony over IP, Algeria, 19 - 20 March 2007. 26
The incumbent’s challenges
� retaining of subscribers
maintaining profitability and retaining customer loyalty
Voice applications
VoIP enabled IT applications
Integrated service of voice and the internet (web)
�making rich services for ARPU increase
Segmentation, Branding, & service bundles
Telephony over IP, Algeria, 19 - 20 March 2007. 27
The incumbent’s challenges
A Killer App. Of VoIP
VoIP over Wireless Ethernet
Wireless VoIP for Local Area : Residential, Enterprise, Hot Spot
A Key Technology for Voice/Data/Wired/Wireless convergence (QPS)
�WiFi + VoIP = Powerful Wireless VoIP Solution
Telephony over IP, Algeria, 19 - 20 March 2007. 28
The incumbent’s challenges
ManagedManaged
FunctionFunction
/Platform/Platform
QoSQoSPersonalizationPersonalization BroadBroad
BWBWSecuritySecurity
MangedManged
NetworkNetwork FTTHFTTH WiBroWiBro BcNBcNHomeNetworkHomeNetwork
RGWRGW
Personalized &Personalized &
DifferentiatedDifferentiated
ServicesServices
Convergence services with multiConvergence services with multi--WindowsWindows
Telephony over IP, Algeria, 19 - 20 March 2007. 29
Work in progress
� NGN as the next generation IT infrastructure (BcN)� Enable converged multimedia services at any time, any places.� Aim 50 ~ 100 Mbps broadband access to 20 m. subscribers by
2010� Replace PSTN voice Telephone with S/W and access gateway� Decided to adapt IMS in parallel� Accommodate both PSTN and IP Subscribers� Provide voice /video telephony as default and other application
services� Standdard-based terminal equipment� Business model for BcN� Enhancement of the platform to fulfill the service requirement
Telephony over IP, Algeria, 19 - 20 March 2007. 30
Thank you for your attention
82-2-526-5760