International Telecommunication Union Helping the world communicate Telecom Sector on the Edge: Driving the Future of IPTV The Future of Voice .

InternationalTelecommunicationUnion

Helping the world communicate

Telecom Sector on the Edge:Driving the Future of IPTV

The Future of VoiceThe Future of Voicewww.itu.int/spu/voicewww.itu.int/spu/voice

15-16 January 2007ITU Headquarters

Geneva, Switzerland

Jaroslaw K. PonderPolicy Analyst

ITU Strategy and Policy Unit

The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU or its Membership.

2international telecommunication union


15-16 January 2007 / The Future of Voice / Geneva

Socio-economic development

Investment Innovation

Catch-up Ongoing

regulatory r. Competitivness

Starting points

Migration to the IP-environ-ment

Convergence of three worlds

Evolving regulatory environment

TelecomTelecom

Broadc.Broadc.InternetInternet




Telecom and BroadcastingMonopolyMonopolyMonopolyMonopoly CompetitionCompetitionCompetitionCompetition

NarrowbandNarrowbandNarrowbandNarrowband BroadbandBroadbandBroadbandBroadband

TraditionalTraditionalnetworksnetworks

TraditionalTraditionalnetworksnetworks NGNsNGNsNGNsNGNs

TelecomsTelecomsTelecomsTelecoms Telecoms/ITTelecoms/ITConvergenceConvergenceTelecoms/ITTelecoms/ITConvergenceConvergence

WirelineWirelineWirelineWireline ConvergenceConvergenceConvergenceConvergenceWirelessWirelessWirelessWireless

VoiceVoiceVoiceVoice Triple PlayTriple PlayTriple PlayTriple PlayDataData / Video / VideoDataData / Video / Video

NationalNationalNationalNational GlobalGlobalGlobalGlobal

Pasive Pasive Pasive Pasive InteractivityInteractivityInteractivityInteractivity

GeneralGeneralGeneralGeneral PersonalisedPersonalisedPersonalisedPersonalised

Telc

o S

ecto

r V

ideo

Serv

ices

Ubiq

uit

ous,

pers

onaliz

ed a

nd

inte

ract

ive s

erv

ice




Three Times VoIP

Voice over IPVoice over IPVideo over IPVideo over IP

Velocity on IPVelocity on IP

•IPTV (QoS)•VoD •Interactive MS•Web TV •Mobile TV

•VoIP / PSTN•IP Telephony•VoB•VPN

Fixed InfrastructureFixed Infrastructure•xDSL•FTTx•Cable TV

Mobile and WirelessMobile and Wireless•2G, 3G, 4G•WiFi•WiMAX (d,e)•Satelite

Inte

rnet

Internet




Broadband Access, 2005

Source: ITU (2006), World Information Society Report 2006, www.itu.int/wisr




Telecom Sector in Transition

Fixed: PSTNMobile: 2G

VoIPQoSUSOReg. Int.

NGNSimulationEmulation

MultimediaGeneralized mobility Convergence IntegrityMulti-layer orientationOpen character

IP-environment

Broadband/Mobility

Next Generation Services QoS, Mobility, Interactivity,Personalization, N-play

Now

Service A Service B Service C

Net. A Net. B Net. C

FutureServices A, B, C

IP Platform(QoS)

Access Networks

Interconnection / Emerging markets / Universal services / CompetitionNumbering / Quality of Services / Emergency Access / Consumer Protection

VideoVoice

Data

SoD

Interactivity




Note: historically, the main service provided over the access platform

Converging Markets

Broadcasting/

Satelite

Fixed Telec.

Cable-TV

Mobile Telec.

Wireless

Infr. less

s. prov.

Voice

Internet

Television/Radio

Services on Demand (VoD…)




NGN Considerations…

NGN will lead to re-monopolizationre-monopolization in the telecommunication sector?Less Bottlenecks / New bottlenecksDynamic efficiencies

CompetitionCompetition?? NGN as an effect of competition NGN enhances level of competition

New interconnection regimeinterconnection regime?




NGN Considerations…

NGN will enable structural separation?structural separation?Networks / Services / Applications

VoiceVoice loses meaning?Tech: IP protocol Business: Voice plus Content

Present regulatory frameworkregulatory framework remains relevant?Evolution is unavoidable Convergence (T+B+C)

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international telecommunication union



New challenge for telecom sector

Driving the Future of IPTVDriving the Future of IPTV Chairman Report from

Executive Round Table Market, Regulatory Trends and

Policy Options in EuropeMarket, Regulatory Trends and

Policy Options in Asia / Pacific

IPTV Global Technical WorkshopIPTV Global Technical Workshop12-13 October 2006 / www.iptv-ws.com

11




IPTV: Implications Infrastructure requirements

6-16 MBit/s for HDTV / Narrow Band TV Bandwidth / Generalized mobility ADSL2+/VDSL/FTTx/3G/4G/WiFi/WiMAX

Standardization process (Arch., STB) Compression Methods Business Model

Value Creation Chain / True margin redistribution

Triple-play Distribution platforms /Interaction

Broadcasting /One way communication

Regulatory reform

Users

Revenues

Margin

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IPTV: Market Trends Beijing RIC Information Consulting (2005):

Global2006: the global revenue of IPTV service

$8 billion with over 8 million subscribers. Users: 2004: 2.19 million 2008: 20.44 million

21st Century Communications World Forum : 2006: 2-3 Million U.

Gartner (2006): Europe2006: 3.3 million users2010: more than 16 Million UsersAdditional revenues generated will

grow from 336 Million to 3 BillionSource: Gartner (2006)

IPTV Users in Europe

13




Case Study on Hong Kong: PCCWStrong Demand for

InstalledPay channel customers

Residential

Commercial

Installed pay channel services

2003 2004

29

106

147

269

H2 H1 H2

361

182

10

10

192

441

H1

254

17

17

271

H2

2005

549

369

39122

22

(’000)+38% y

-o-y

+38% y-o

-y608

444

2006

H1

26

26

418

Reached

654,000 at end of

August

Reached

654,000 at end of

August

Pay Channel Customers & ARPU

Pay channel customers as % of total installed (HK$/ month)

2003 2004 2005

Steadily rising ARPU as new content introduced

2006

Mini Packs launched

73%71%61%

53%

39%

20%

118114110105

7057

0%

100%

H2 H1 H2 H1 H2 H1

0

30

60

90

120

Source: ITU-T IPTV Global Workshop, KT Case Study, Mr Berriman

14




Case Study on Hong Kong: PCCWGrowing penetration rate of among

consumer NETVIGATOR

Maintained low churn rate of consumer NETVIGATOR since launch

Dropped by half

Jun-05Before launch

H2’03 H1’04 H2’04 H1’05

28%

48%

59%53%

68%

Broadband Lines

460

5863

68

8894

840

517558

660715

798

8074

H1 H2 H1 H2 H1 H2 H1

629703

753796

2003 2004 2005

857

Wholesale

Business

Consumer

953+16% y-o-y

+16% y-o-y(’000)

998

2006

Source: ITU-T IPTV Global Workshop, KT Case Study, Mr Berriman

15




IPTV: Drivers and ObstaclesDrivers

Telecom competition Inter-modal comp. Pricing and sell

strategies Broadband

deployment Content providers

New ubiquitous distribution platform

Convergence Bundling strategies

User Switching behavior

Obstacles Regulatory environment Standardization process Margin redistribution New form of service

Interactivity User

Cost of the STB / Hardware providers / Operators

Willingness to migrate Willingness to pay for: TV

Services / Video on Demand / Next generation services

Consumer protection

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IPTV: Regulatory considerationsPolicy/Regulatory Goals Socio-economic goals Investment Innovation

Regulatory Focus Static and dynamic

efficiences Monopolistic bottlenecks Market failures Ex-post r. v. ex-ante r.

IPTV Application and service

New markets Fosters competition

New architecture and bottlenecks

New cost models Market analysis Cross-subsidies

Boundaries between infrastructure and the content

Cross-ownerships

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IPTV regulatory requirements Infrastructure

From legacy infrastructure to investment Inter-modal competitionLocal loop unbundling Interconnection Universal service Net neutrality

Symmetric regulation Quality of services

Consumer protection Definition of IPTV in legal systems

IP Hybrid-service / Information service / Broadcast service / Linear versus non-linear services

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Meaningful concepts Neutrality

Technological neutralityNet-neutrality

Universality Universal service New platforms…

Interoperability Standardization

Asymmetric regulationEx-ante versus Ex-post approaches

Unbundling and access pricing

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Conclusions All-IP environment accelerates

convergence process of telecom and broadcasting industry Required strict distinction of transport and content

regulation Imposing old regulatory schemes to the new

technologies may weaken growth dynamics Regulatory forbearance will impact growth dynamics

of the IPTV market

Institutional issues New dimension of regulatory reform

Competition issues All-IP environment fosters competition

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International Telecommunication

Union

Thank you for your attention!

Jaroslaw K. PonderPolicy Analyst

<[email protected]>ITU Strategy and Policy Unit

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Useful Links

Full version of presentation:www.itu.int/spu/presentations

ITU work on NGN and IPTV:www.itu.int/spu/ngnwww.iptv-ws.com

Strategy and Policy Unit:www.itu.int/spu

Shaping Tomorrow’s Networkswww.itu.int/stn

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NGN and the ITURegulatory considerations New Initiatives Programme

What rules for IP-enabled NGNs? The Regulatory Environment for Future Mobile Multimedia Services The Future of Voice

ITU Study Groups Question 6-2/1: Regulatory impact of NGNs on interconnection Question 12-2/1: Tariff policies, tariff models and methods of determining the costs of services on national telecommunication

networks including NGNs Question 19-1/2: Strategy for migration from existing networks to NGNs for developing countries

WTDC 2007 in Doha Trends in Telecommunication Reform 2007 Global Symposium for Regulators 2007

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NGN and the ITU: IPTV

IPTV Focus Group Created in 2006 to deal with the

standardization issues related to IPTV and link between IPTV and NGN

Meetings and first outcomes July 2006, Geneva, Switzerland October 2006, Busan, Korea

ITU Global IPTV Technical Workshop Regulation / Market / Technologies October 2006, Seoul, Korea

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ITU New Initiatives Programme

Focus ICT innovations New market developments Emerging regulatory challenges

Three main outcomes :Research programmesInternational expert workshops Publications

www.itu.int/niwww.itu.int/ni

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The Future of Voice Research Programme Background Materials Page Three Background Papers Three Regional Studies

Asia Africa South Eastern Europe Latin America

Workshop: January 2007

www.itu.int/spu/voicewww.itu.int/spu/voice

New Initiatives New Initiatives ProgrammeProgramme

www.itu.int/niwww.itu.int/ni

International Telecommunication Union Helping the world communicate Telecom Sector on the Edge: Driving the Future of IPTV The Future of Voice .

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