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IP
Telephony: Service Revenue and OSS Expenditures for Voice over
Packet Networks
2002-2007
a market research report
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The telecom industry
has been banking, quite literally, on strong growth of packet networks
to handle the burgeoning growth of Internet traffic, and to provide a
platform for creating new multimedia services. Unlike the fiber
glut, where network capacity literally outran the amount of traffic
generated by revenue-producing services, voice over packet (VoP) was a
success.
But the increasing
amount of revenue-generating voice traffic that is migrating to packet
networks is a double-edged sword, making the very success of VoP a
problem with which the telecom industry must now deal. So why is
VoP still considered a success?
Service providers are
looking for ways to generate new revenue, or improve their cost
structure by deploying VoP technology in selective portions of their
networks. With VoP, large enterprises with sufficient data network
capacity and voice traffic patterns can avoid service charges and
implement conferencing, messaging, and other enhanced services more cost
effectively.
For another group of service
providers, however, most of the VoP revenue they reap is displacing a larger
amount of circuit-switched revenue, given overall pricing declines for
voice. The newer services (and revenue opportunities) are just beginning
to be defined. Insight's
study of VoP is our contribution to a critical debate at a critical
juncture in the history of the telecommunications industry. The
question that this study attempts to answer is whether traditional
service providers can create and deploy new voice services based on
packet technology, which will counteract the overall decline in voice
pricing, and become the engine for new revenue growth.
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Report Excerpt
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As
industry pundits examine the detritus of the telecom implosion, the slow
deployment of converged networks is often cited as an important factor
in the industry’s crash. The
telecom industry was banking, quite literally, on continued strong
growth of packet networks to handle the burgeoning growth of Internet
traffic, and to provide a platform for creating new multimedia services.
However, unlike the “fiber glut,” where network capacity
literally outran the amount of traffic generated by revenue-bearing
services, voice services over packet networks (VoP) was a success. Increasing amounts of revenue-generating voice traffic are
migrating to packet networks—making the very success of VoP a problem
with which the telecom industry must now deal.
Converging
voice with data on a single network means that carriers will ultimately
be able to reduce operating expenses, even as they create new multimedia
services. Yet the
data-centric nature of today’s converged voice traffic is displacing
carriers’ larger circuit-switched revenue stream before such new
multimedia services can be offered.
The
rationale behind converging traditional circuit-switched, voice-oriented
networks with the new packet networks is as strong as ever.
There are many ways to measure communications volumes, such as
connections, lines, bits, and dollars.
All of these measures are subject to interpretation and dispute,
but there is no question that data communications is growing much more
rapidly than voice. Voice
traffic has been growing at 10 to 15 percent per year, and this growth
rate is slowing. Data
traffic, on the other hand, has been growing at an annual percentage
rate in the triple digits since the early 1990s.
Over the same period of time, the cost of transporting a megabyte
of data has declined.
If
the cost of transporting data declines as volumes increase, why is voice
still handled as a separate form of media requiring its own network,
rather than as just another form of data?
The answer to this question is a surprise to no one— the
investment of hundreds of billions of dollars sunk into the embedded
circuit-switched infrastructure cannot be migrated overnight.
It is difficult to justify investments in new converged
technology when that technology will deliver the same services (at least
initially) that are already offered.
Moreover,
the price erosion of voice service makes it even more difficult to
achieve the required return on investment (ROI) in the short time
periods required by the economic environment of 2002. For some
service providers ...
Click here for the
complete Executive Summary.
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Market Segmentation
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- Total Telecom Revenue by Service
Provider Type
- North American
- ILECs
(RBOCs/Independents)
- CLECs
- IXCs
- Cable MSOs
- Internet Service Providers
- Cellular/PCS
- Total Telecom Revenue
by Region
- Wireline and Wireless
- Asia/Pacific
- Europe/Middle East/Africa
-
Latin
America/Caribbean
- Voice Revenue by Service
Provider Type
- North American
- ILECs
(RBOCs/Independents)
- CLECs
- Traditional IXCs
- NexGen IXCs
- Cable MSOs
- Internet Service Providers
- Cellular/PCS
- Voice Revenue by Region
- Wireline and Wireless
- Asia/Pacific
- Europe/Middle East/Africa
-
Latin
America/Caribbean
- Worldwide VoP Revenues
- VoP Revenues by Segment
- North America
- ILECs
(RBOCs/Independents)
- CLECs
- Traditional IXCs
- NexGen IXCs
- Cable MSOs
- Internet Service Providers
- Cellular/PCS
- International (Rest of World)
- Worldwide OSS Expenditures for VoP by
Application
- North America
- Wireline and Wireless
- Call Center Operations
- Billing
- Planning &
Engineering
- Provisioning
- Trouble/Repair
- Network
Management
- Element Management
- Business Management
- Workforce Management
- International (Rest of World)
- Wireline vs. Wireless
- Call Center Operations
- Billing
- Planning &
Engineering
- Provisioning
- Trouble/Repair
- Network
Management
- Element Management
- Business Management
- Workforce Management
- VoP OSS Expenditures as % of Total OSS
Expenditures
- North American
- International (Rest of World)
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Table of Contents
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Chapter I
EXECUTIVE SUMMARY
1.1 Overview
1.2 The Technology
1.3 The Market
Chapter II
OVERVIEW
2.1 Introduction
2.2 Definitions
2.3 How It All Started
2.4 How Data Growth Impacts Voice
2.5 VoP Changes Everything
Chapter III
PACKET TELEPHONY TECHNOLOGY
3.1 Fundamentals
of Network Design
3.1.1 Packet
Switching vs. Circuit Switching
3.1.2 Standards,
Protocols, and Architectures
3.1.3 The IP Suite of Protocols
3.1.3.1 IP
Protocol Details
3.1.3.2 Media
Protocols
3.1.3.2.1 RTP
3.1.3.2.2 RTCP
3.1.3.2.3 RTSP
3.1.3.3 Signaling
Protocols
3.1.3.4 Gateway
Protocols
3.1.3.4.1 MGCP/Megaco
Overview
3.1.3.4.2 MGCP
Functionality
3.1.3.5 H.323
3.1.3.5.1 Overview
3.1.3.5.2 Architecture
3.1.3.5.3 Protocols
3.1.3.5.4 Call
Procedure
3.1.3.5.5 Network
Element Protocol Support
3.1.3.6 SIP
3.1.3.6.1 Overview
3.1.3.6.2 Architecture
3.1.3.6.3 Protocols
3.1.3.6.4 Call
Procedure
3.1.3.6.5 Network
Element Protocol Support
3.1.3.7 Softswitch
Architecture
3.1.3.7.1 Softswitch/Media
Gateway Controllers
3.1.3.7.2 Media
and Signaling Gateways
3.1.3.8 Media
Servers
3.2 ATM
3.2.1 Frame
Relay
3.3 Existing
Network Structure
3.3.1 Voice
Network Structure
3.3.1.1 Central
Offices
3.3.1.2 Local
Distribution Network
3.3.1.3 Interoffice
Networks
3.3.1.4 IntraLATA
and InterLATA Networks
3.3.1.5 POTS
Signaling Network
3.3.2 Data
Networks Structure (Frame Relay Example)
3.3.2.1 How
Frame Relay Works
3.3.2.2 Committed
Information Rates and Traffic Management
3.3.3 Internet
Structure
3.3.4 Physical
Access Methods
3.3.4.1 xDSL
3.3.4.2 Cable Modem
3.3.4.3 Mobile and Fixed Wireless
3.4 Merging Network Architectures
3.5 Voice in a Packet
3.5.1 Compression and Packetization
3.5.2 Problems with Packetization and Compression
3.6 Voice over Packet Architecture Scenarios
3.6.1 Network Components
3.6.2 Using Different Customer Premises Equipment
3.6.2.1 PC-to-PC
3.6.2.2 PC-to-Phone
3.6.2.3 Phone-to-Phone
3.6.3 Using Different Networks
3.6.3.1 Voice over the Internet
3.6.3.2 Voice over Private IP Network
3.6.3.3 Voice over ATM
3.6.3.4 Voice over Frame Relay
3.6.3.5 Voice over DSL
3.6.3.6 Voice over Cable
3.6.3.7 Voice over Packet Wireless
3.7 Summary
Chapter IV
DEMAND AND SUPPLY
4.1 Market Trends
4.1.1 Tariff Avoidance
4.1.2 Business and Residential Internet Services Demand
4.1.2.1 E-Commerce Applications
4.1.2.2 Unified Messaging
4.1.2.3 Conferencing
4.1.2.4 Mobility Management
4.1.2.5 Instant Messaging
4.1.3 The Future Network Structure
4.2 Service Provider Implementations.
4.2.1 IXCs.
4.2.2 NexGen IXCs
4.2.3 ILECs
4.2.4 CLECs
4.2.5 ISPs
4.2.6 Cable TV MSOs
4.2.7 Wireless
4.2.8 Enterprises
Chapter V
CARRIER AND
VENDOR MARKET STRATEGIES
5.1 Service Providers
5.2 Platform Providers
5.3 Middleware Vendors
5.4 Voice over Broadband Gateway Vendors
Chapter VI
VOICE OVER PACKET MARKET FORECAST
6.1 Overview
6.1.1 Definitions
6.1.2 Methodology Overview
6.1.3 Special Notes
6.2 VoP Market Assumptions
6.2.1 Telecommunications and Voice Revenue
Forecasts
6.2.2 OSS Addressable Market Forecasting
6.2.2.1 Methodology Algorithm
6.2.2.2 VoP OSS Expenditues Methodology
6.3 VoP Service Revenue
6.3.1 North American VoP Revenue
6.3.2 International VoP Service Revenue
6.4 VoP OSS Expenditures
6.4.1 North American Wireline VoP OSS
Expenditures
6.4.2 North American Wireless VoP OSS
Expenditures.
6.4.3 International Wireline VoP OSS Expenditures
6.4.4 International Wireless VoP OSS
Expenditures
Appendix
Glossary
Companies Cited
(Back to Top)
Table
of Figures
Chapter I
I-1 Pros of Converged Networks
I-2 Worldwide Voice Revenues, VoP vs Circuit, Wireline vs. Wireless,
2007-2007 ($Millions)
Chapter II
II-1 Circuit vs. Packet Switching
II-2 Voice/Data Traffic Growth, 2002-2007 (Gbp/s)
Chapter III
III-1 Protocols for Real-Time Communications
III-2 Typical IP Header Format for a Packet
III-3 MGCP Architecture
III-4 Typical H.323 Network Architecture
III-5 Example of an H.323 Call Flow
III-6 Basic Components of a SIP Network
III-7 Example of a SIP Call Flow in Proxy Mode
III-8 SIP Network Interconnection with the PSTN
III-9 Softswitch Architecture
III-10 Virtual Paths and Circuits within a Transmission Link
III-11 ATM Cell Format
III-12 ATM Protocol Stack
III-13 Frame Relay’s Frame Structure
III-14 National PSTN Elements
III-15 Local Distribution Network Architecture
III-16 Local Connections to Interexchange Networks
III-17 Signaling System #7 Network
III-18 Permanent Virtual Circuits in a Meshed Frame Relay Network
III-19 Converged Networks
III-20 Three
Different Types of IP Telephony Services
III-21 Voice over DSL Generic Architecture
III-22 Cable Frequency Spectrum Allocation
III-23 VoP over a 3G Packet Network
Chapter V
V-1 Genuity’s US VoIP Nodes and Fiber Networking
V-2 CopperCom’s
Voice over Broadband Solution
V-3 NMS Communications’ Voice over Broadband Architecture
Chapter VI
VI-1 Voice/Data Traffic Growth, 2002-2007
(Gbp/s)
VI-2 Comparison of Voice and Data Revenue, 2002
VI-3 Components
of IT Budget in 2002
VI-4 OSS Component Mix, 2002 and 2007
VI-5 Worldwide Voice Revenues, VoP vs. Circuit, Wireline vs. Wireless
($Millions)
VI-6 North American VoP Revenue Shares by Service Provider Segment,
2002 and. 2007
VI-7 VoP OSS and Total OSS Expenditures vs. VoP and Total Service
Revenue, 2002-2007
VI-8 OSS Expenditures for VoP by OSS Application Type, 2002 and 2007
VI-9 VoP OSS Expenditues Growth as a Percentage of Total OSS
Expenditures, 2002-2007
Table of Tables
Chapter III
III-1 Conversion Steps from Requesting to
Receiving Data from a Web Page.
III-2 Types of DSL
III-3 Mobile Wireless Standards (First,
Second, and Third Generation)
III-4 Voice vs. Data Network Technology
Development
III-5 Types of Voice Coding Delays
III-6 Latency, Packet Loss, and Reachability
Statistics of Large ISPs, August 2002
III-7 Number of Circuit Equivalents
Achievable with Various Voice over DSL Connections
III-8 Percentage of Two-Way Capable Homes,
Largest Cable Operators, 2000 and 2001
Chapter IV
IV-1 Service Parameters for a Follow-Me Service
Chapter VI
VI-1 Geography Definitions
VI-2 Service Provider Definitions
VI-3 Systems Component Categories
VI-4 Total Telecom Revenue by Service Provider Type, North America,
2002-2007 ($Millions)
VI-5 Total Telecom Revenue by Region, International Wireline and
Wireless, 2002-2007 ($Millions)
VI-6 Worldwide Telecom Revenue, Wireline and Wireless, 2002-2007
($Millions) VI-7 Voice Revenue by Service Provider Type, North America, 2002-2007
($Millions)
VI-8 Voice Revenue by Region, International Wireline and Wireless,
2002-2007 ($Millions)
VI-9 Worldwide Voice Revenue, Wireline and Wireless, 2002-2007
($Millions) VI-10 Investment
Payback Horizons by Market Segment
VI-11 Worldwide OSS Expenditure Distribution by OSS Type, 2002 and 2007
VI-12 Worldwide VoP Revenue, Wireline and Wireless Service Providers,
2002-2007 ($Millions)
VI-13 North American VoP Revenue by Service Provider Segment, 2002-2007
($Millions)
VI-14 International VoP Revenue, Wireline and Wireless, 2002-2007
($Millions)
VI-15 Worldwide OSS Expenditures for VoP by Application, 2002-2007
($Millions) VI-16 North American OSS Expenditures for VoP, Wireline Applications,
2002-2007 ($Millions)
VI-17 North American OSS Expenditures for VoP, Wireless Applications,
2002-2007 ($Millions)
VI-18 International OSS Expenditures for VoP, Wireline Applications,
2002-2007 ($Millions)
VI-19 International OSS Expenditures for VoP, Wireless Applications,
2002-2007 ($Millions)
VI-20 VoP OSS
Expenditures as a Percentage of Total OSS Expenditures, 2002-2007
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