Voice over Internt Protocol Regulation in Japan

Voice over Internet Protocol Voice over Internet Protocol regulation in Japanregulation in Japan

Michiko FukahoriMichiko Fukahori

United Nations Economic and Social United Nations Economic and Social Commission for Asia and the PacificCommission for Asia and the Pacific

(UNESCAP)(UNESCAP)

22

VoIP regulation in JapanVoIP regulation in Japan

What is VoIP?What is VoIP?

Overview of the Japanese marketOverview of the Japanese market

VoIP regulation in JapanVoIP regulation in Japan– VoIP number (050)VoIP number (050)– Fixed telephone numberFixed telephone number– OthersOthers

PerspectivePerspective

33

What is VoIP?What is VoIP?

44

What is VoIP? (1)What is VoIP? (1)

Voice communication realized on Voice communication realized on

IP networkIP network

Type of IP networkType of IP network Private managed networkOperator’s networkInternet

•Packet-base•Best effort

55

What is VoIP? (2)What is VoIP? (2)Difference from PSTNDifference from PSTN

Quality of Service (QoS)Quality of Service (QoS)– IP technology is packet-based & best-IP technology is packet-based & best-

effort (not always good for real-time effort (not always good for real-time communication)communication)

– Constant band width, latency and packet Constant band width, latency and packet loss within certain range, packets arriving loss within certain range, packets arriving at the same interval, etc.at the same interval, etc.

– Methods to measure and evaluate quality:Methods to measure and evaluate quality:R value based on E-model (ITU-T Rec.G.107)R value based on E-model (ITU-T Rec.G.107)

– End-to-end quality (simple network & End-to-end quality (simple network & intelligent terminal)intelligent terminal)

66

What is VoIP? (3)What is VoIP? (3)

Call routingCall routing– PSTN: telephone number on signaling PSTN: telephone number on signaling

network (SS7)network (SS7)– VoIP: IP address on IP network (SIP, H.323)VoIP: IP address on IP network (SIP, H.323)

Terminal location and emergency callTerminal location and emergency call– PSTN: bound to the subscriber’s linePSTN: bound to the subscriber’s line– VoIP: could exist anywhere on the network VoIP: could exist anywhere on the network

(nomadic)(nomadic)

> could impede realization of emergency call> could impede realization of emergency call

77

What is VoIP? (4)What is VoIP? (4)InteroperabilityInteroperability– Not always guaranteed (standardization)Not always guaranteed (standardization)

InterconnectionInterconnection– Telephone number is essential to receive Telephone number is essential to receive

call from PSTNcall from PSTN

OthersOthers– Power supplyPower supply– Congestion controlCongestion control– Security and lawful interceptSecurity and lawful intercept– Various services (toll-free, directory Various services (toll-free, directory

service, etc.)service, etc.)

88

Overview of the Japanese marketOverview of the Japanese market

99

Overview of the Japanese market (1)Overview of the Japanese market (1)

Competition was introduced in 1985 Competition was introduced in 1985 (privatization of NTT)(privatization of NTT)

Competition policyCompetition policy– Market size has increased Market size has increased – Price has lowered largelyPrice has lowered largely

Current major trends: Current major trends: – ““Fixed to mobile” Fixed to mobile” – ““Telephony to IP”Telephony to IP”

1010


Telephony to IPTelephony to IP– The number of ISPs: The number of ISPs:

9,1119,111– The number of Internet The number of Internet

user: 79 million (62% of user: 79 million (62% of population)population)

BroadbandBroadband– ADSL has become ADSL has become

common in many areas common in many areas (high-speed at low (high-speed at low price)price)

– Recently FTTH is Recently FTTH is growing in urban areagrowing in urban area

7 21 46 89 176 243 341 464330565

8261,027

1,2121,333

1,4081,448

163

196

222

248

267287

306323

0

500

1000

1500

2000

2500

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

10,0

00 s

ubsc

riber

s

CATV

ADSL

FTTH

1111


Transition of the legacy networksTransition of the legacy networks– KDDIKDDIReplace all the networks to IP by the end of Replace all the networks to IP by the end of

20072007– NTTNTTReplace 30 million metal subscriber’s lines Replace 30 million metal subscriber’s lines

(half of all the subscriber’s lines) by FTTH (half of all the subscriber’s lines) by FTTH by 2010by 2010

>> Total cost would decrease by providing >> Total cost would decrease by providing both data and voice on the same IP both data and voice on the same IP networknetwork

1212


Reform of the Telecommunications Reform of the Telecommunications Business LawBusiness Law– From ex-ante to ex-postFrom ex-ante to ex-post – Relaxation of market entry/withdrawal Relaxation of market entry/withdrawal

(from approval to registration/notification) (from approval to registration/notification) – Abolishment of the classification of Abolishment of the classification of

telecommunications carriers by facilitiestelecommunications carriers by facilities– Strengthening of rules for user protectionStrengthening of rules for user protection

1313

VoIP regulation in JapanVoIP regulation in Japan

1414

VoIP regulation in Japan (1)VoIP regulation in Japan (1)

Rapidly increasing VoIPRapidly increasing VoIP

Telephone number used for VoIP : Telephone number used for VoIP :

10.6 million (December 2005)10.6 million (December 2005) VoIP number (050): 97.5 millionVoIP number (050): 97.5 million

Fixed phone number: 8.5 millionFixed phone number: 8.5 million

– Light-touch regulationLight-touch regulation

– Mainly regulated by numberingMainly regulated by numbering

1515


Classification of VoIP serviceClassification of VoIP service

1. Telecommunications service 1. Telecommunications service – Fixed telephone number Fixed telephone number – VoIP number (050)VoIP number (050)– Without telephone numberWithout telephone number

2. Non–telecommunications service2. Non–telecommunications service– P-to-P application on the InternetP-to-P application on the Internet

1616


VoIP number (050-XXXX-XXXX)VoIP number (050-XXXX-XXXX)– Since September 2002Since September 2002– Receiving call from PSTN was realizedReceiving call from PSTN was realized– Minimum QoSMinimum QoS

R value>50, latency <400ms, controlled networkR value>50, latency <400ms, controlled network

– Minimum facilities installationMinimum facilities installationInstallation of facility and network being controlled by Installation of facility and network being controlled by service providerservice provider

– Interconnection with PSTN dominant carriers Interconnection with PSTN dominant carriers (NTT regional)(NTT regional)

– No constraint on terminal locationNo constraint on terminal location– No duty to provide emergency callNo duty to provide emergency call

1717


050 VoIP market050 VoIP market– Provided as adjunct service of ADSLProvided as adjunct service of ADSL– Mainly used as secondary telephoneMainly used as secondary telephone

service (not as a substitute for PSTN)service (not as a substitute for PSTN)– 29 carriers (March 2006)29 carriers (March 2006)

– Some providers offer free call service Some providers offer free call service among usersamong users

– However, impact on PSTN is limitedHowever, impact on PSTN is limited Incomplete interconnectivity Incomplete interconnectivity Lack of emergency callLack of emergency call

1818


050 VoIP market050 VoIP market– Light touch regulation > smaller Light touch regulation > smaller

investment to start businessinvestment to start business– Increased competition in ADSL marketIncreased competition in ADSL market

World fastest and cheapest ADSL service for World fastest and cheapest ADSL service for usersusers

Less profit for carriers (some carriers move to Less profit for carriers (some carriers move to FTTH market for profit)FTTH market for profit)

– New innovative service using nomadic New innovative service using nomadic nature is expectednature is expected

1919


VoIP with fixed phone number VoIP with fixed phone number – Since September 2004Since September 2004– Service equivalent to PSTNService equivalent to PSTN

PSTN equivalent QoS (R value>80, PSTN equivalent QoS (R value>80, latency<150ms)latency<150ms)Installation of facility and network being Installation of facility and network being controlled by service providercontrolled by service provider

– Interconnection with PSTN dominant Interconnection with PSTN dominant carriers (NTT regional)carriers (NTT regional)

– Location-fixed Location-fixed – Emergency call Emergency call – Facsimile sending and receiving, etc.Facsimile sending and receiving, etc.

2020


Fixed phone number VoIP marketFixed phone number VoIP market– Provided as adjunct service of FTTHProvided as adjunct service of FTTH– Used as primary telephoneUsed as primary telephone (as a (as a

substitute for PSTN)substitute for PSTN)– 13 carriers (March 2006)13 carriers (March 2006)

– Becoming popular lately as FTTH expandsBecoming popular lately as FTTH expands– So-called “triple play” serviceSo-called “triple play” service

Primary telephone servicePrimary telephone serviceHigh-speed Internet connectionHigh-speed Internet connectionVideo streaming (television program) Video streaming (television program)

2121


Major difference from 050 VoIPMajor difference from 050 VoIP– PSTN equivalent telephone service PSTN equivalent telephone service

(including emergency call, facsimile (including emergency call, facsimile sending and receiving) sending and receiving)

– Number portability (allows users to Number portability (allows users to change service provider while retaining change service provider while retaining number)number)

>> Enable users to switch from PSTN plus >> Enable users to switch from PSTN plus ADSL to FTTHADSL to FTTH

2222


UsersUsers – PSTN equivalent telephone service PSTN equivalent telephone service

(without changing number)(without changing number)– Higher speed Internet connection (than Higher speed Internet connection (than

ADSL) ADSL) – Reasonable cost by canceling existing Reasonable cost by canceling existing

PSTN (price of FTTH is decreasing PSTN (price of FTTH is decreasing gradually through competition)gradually through competition)

OperatorsOperators– Seek profit in FTTH market by integrating Seek profit in FTTH market by integrating

plural services (ADSL market becomes plural services (ADSL market becomes competitive)competitive)

2323


VoIP service without numberVoIP service without number1. Telecommunications Business 1. Telecommunications Business

PC-to-phone or PC-to-PC service without PC-to-phone or PC-to-PC service without numbernumber

>> Common duties of telecommunication >> Common duties of telecommunication serviceservice are appliedare applied

2. Non-telecommunications Business2. Non-telecommunications BusinessP-to-P application on the Internet (Skype)P-to-P application on the Internet (Skype)

>> Announcement (to caller) in case of >> Announcement (to caller) in case of forwarding call from public network to P-forwarding call from public network to P-to-Pto-P

2424

PerspectivePerspective

2525

Perspective (1)Perspective (1)

VoIPVoIP– VoIP could provide voice communication VoIP could provide voice communication

at a much lower cost than PSTNat a much lower cost than PSTN VoIP could largely enhance socio-economic VoIP could largely enhance socio-economic development development

– VoIP has a potential to give a large impact VoIP has a potential to give a large impact on the current telecom market and to on the current telecom market and to change the market structure drasticallychange the market structure drastically

However, transition of the existing network to However, transition of the existing network to IP is a global trend and would be required in IP is a global trend and would be required in future eventuallyfuture eventually

2626


Light-touch regulationLight-touch regulation– It took many years to develop PSTN with It took many years to develop PSTN with

various different features various different features Technical nature (location-fixed)Technical nature (location-fixed)Social requirement (universal service Social requirement (universal service provision, congestion control, intercept, etc.) provision, congestion control, intercept, etc.)

– VoIP is not mature technology compared VoIP is not mature technology compared to PSTN (under development) to PSTN (under development)

>> Light touch regulation seems reasonable >> Light touch regulation seems reasonable to enhance the development of VoIP to enhance the development of VoIP technology and markettechnology and market

2727


Importance of regulationImportance of regulation– On the other hand, certain level of On the other hand, certain level of

regulation is essential for orderly regulation is essential for orderly development of market and customer development of market and customer protection protection

– Especially regulation for primary Especially regulation for primary telephone service would require careful telephone service would require careful considerationconsideration

– In case of Japan, regulation of VoIP with In case of Japan, regulation of VoIP with fixed number is based on technological fixed number is based on technological neutrality as substitute for PSTNneutrality as substitute for PSTN

2828


From legacy network to IPFrom legacy network to IP– Transition is challenge for many countriesTransition is challenge for many countries– VoIP might take on important positionVoIP might take on important position– Infrastructure deployment and Infrastructure deployment and

maintenance of legacy network during maintenance of legacy network during transition is requiredtransition is required

Various financing options including public Various financing options including public private partnershipprivate partnership

Financial capacity of PSTN carriers or Financial capacity of PSTN carriers or assistance from Universal Service Fundassistance from Universal Service Fund

2929

Perspective (5)Perspective (5)ICT market trendICT market trend– Competition is useful to increase Competition is useful to increase

productivityproductivity– However, considerable amount of However, considerable amount of

investment is required for network investment is required for network transitiontransition

– ICT is a network industry with the ICT is a network industry with the characteristics of network externality and characteristics of network externality and economy of scaleeconomy of scale

Consolidation of telecom carriers is taking Consolidation of telecom carriers is taking place in the worldplace in the world

3030


ICT: socio-economic infrastructureICT: socio-economic infrastructure– Reliable, affordable and universal ICT Reliable, affordable and universal ICT

access is important for balanced socio-access is important for balanced socio-economic developmenteconomic development

– Adequate balance between market Adequate balance between market economy and government policy would be economy and government policy would be necessarynecessary

Effective national dialoguesEffective national dialogues

Cooperation among stakeholders Cooperation among stakeholders (government, private sector, civil society, etc.)(government, private sector, civil society, etc.)

3131

Thank you !Thank you !

Documents

Voice over Internt Protocol Regulation in Japan