Transcript Slide 1

International Internet
Connectivity
Internet Governance Forum
Athens, Oct. 30 ~ Nov. 2, 2006
Kishik PARK / ETRI, Rep. of Korea
Chairman, ITU-T
Study Group 3
Agenda
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Current trends
The International Accounting Rate System
International Internet Connectivity (IIC)
Impact on Developing Countries
The Role of ITU
2/21
Number of Telephone Users has
more than quadrupled since 1990!
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Fixed-line networks
have more than doubled
2'500
in size

Mobile phone networks
have grown from 11
million users in 1990 to
2.2 billion in 2005
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Telephone and Internet Users
Telephone and Internet Users
World, Millions
World, Millions
2'000
Mobile
1'500
Fixed line
Mobile phones overtook 1'000
fixed lines during 2002
Internet
Users
500
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Only 27 countries had a
direct Internet
connection in 1990; now
all have one
0
1991
3/21
1995
1997
1999
2001
2003
2005
Internet Penetration Trails in the
Developing World
32.6
Internet penetration, 2005
(Internet users per 100 inhabitants)
30.2
10.5
7.2
2.5
Americas
Europe
Asia-Pacific
Arab States
Source: ITU World Telecommunication Indicators and World Telecommunication Regulatory Databases.
4/21
Africa
Mbps
International Internet Bandwidth
(1000 Mbps, end of 2004)
2.929
1.268
0.474
Europe
Americas
Asia
0.026
0.005
Oceania
Africa
Source: ITU World Telecommunication Indicators and World Telecommunication Regulatory Databases.
5/21
What are accounting and
settlement rates?
Collection charge
The amount charged to the
customer by the Public
Telecommunication Operator
(PTO)
Accounting rate
Internal price
between PTOs for
A jointly-provided
service
Settlement rate
Payment from one PTO
to another. Normally, half
the accounting rate
6/21
What the accounting rate covers
Country
International
Transmission Facility
X
International Switching
Facility (Gateway)
Call Termination
7/21
Traditional regime:
Joint provision of service
X
X
8/21
Trade-based regime:
Market entry and interconnection
X X
X
9/21
Accounting rates and international
interconnection rates: What Differences?
Accounting rates
International interconnection
rates
Normally symmetric
(accounting rate split 50/50)
Asymmetric (charges may
vary between countries)
Bilaterally negotiated
Set unilaterally, but subject to
trade discipline
Non-discriminatory (same
Discriminatory (different rates
reference interconnect offer
with different correspondents)
offered to all carriers)
Half-circuit regime (not
normally unbundled)
Full-circuit regime (can be
unbundled)
Status of Accounting Rate
System (ARS) Today:
Alive, but not very well
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Only 20% of international traffic today still
uses the accounting rate system
Developing Country
Developing Country
Developing Country
Developed Country
No traffic between developed countries uses
the ARS
11/21
What’s Wrong with this Picture?
Developing Countries Now Pay $3
billion to Developed Countries
Developing countries used to
receive $5 billion in settlement
payments
12/21
What happened?
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Accounting rates became more cost-oriented as
international traffic was opened to competition
Internet traffic from many developing countries to
internet backbone providers not “eligible” for peering
Instead developing countries pay internet backbone
providers full circuit
VoIP only last nail in the coffin
13/21
International internet connectivity
completely different from ARS
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Where traffic between ISPs is more or less balanced,
“peering”, or sender keeps all is applied. Either no
payments made or arrangements negotiated
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Tier 1 ISPs in developed countries peer to exchange
traffic
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Where traffic between ISPs is unequal, initiating
provider pays for the whole connection with the other
country (full-circuit cost)
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Many developing countries pay for the whole connection
14/21
ITU Efforts to Balance the
Payments
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ITU-T Study Group 3 Recommendation D. 50 calls for
arrangements to be negotiated and agreed upon on a
commercial basis when direct Internet links are
established internationally.
It requires only that the two providers involved reach a
mutual agreement. It does not prescribe any particular
formula or system, thus leaving to providers the
freedom to determine the forms or methodologies to be
used in implementing the principle.
http://www.itu.int/rec/recommendation.asp?type=folders&lang=e&parent=T-REC-D.50
15/21
Not everyone agreed
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Recommendation D.50 is voluntary, and suggests
that parties involved take into account the possible
need for compensation for elements such as traffic
flow, number of routes, geographical coverage and
the cost of international transmission among others
when negotiating such commercial arrangements.
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In addition, the WTSA agreed that while
international Internet connections remain subject to
commercial agreements between operating
agencies, there is a need for on-going studies in
this area.
16/21
Not everyone agreed(Cont’d)
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The Chairman recalled that the decision made in
Montreal provided a framework for future
discussions and was therefore only the beginning of
a process where issues would be further analyzed.
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Two countries - the US and Greece - made
reservations and stated that they would not apply it
in their international charging arrangements.
17/21
Current System Hard on Many
Developing Countries
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ITU-T Study Group 3 has agreed that the high costs of the
international circuit for Internet connectivity between least
developed countries and the Internet backbone networks
remains a serious problem for these countries.
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Solutions include efforts to facilitate the creation of traffic
aggregation within localities, countries or within regions in
developing countries in order to avoid sending this traffic
over satellite or cable links used for intercontinental traffic,
for example between Africa and Europe or North America.
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This effort would aim to maximize the retention of local and
national traffic within these regions and thus reduce the
dependence on international communications links.
18/21
Solutions to IIC Problem for
Developing Countries
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Self-provide – a few countries have succeeded here,
most developing countries can’t afford
Increase internet volume:
–
–
–
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Promote competition
Drive demand through local content and low-cost internet
access devices
Promote migration to all IP networks and NGN
Aggregate traffic through IXPs
Explore new avenues of negotiation
19/21
ITU Development Bureau (BDT)
Issued a report on IXPs in 2004
Increasingly African countries
are creating IXPs to keep local
traffic local. In the absence of IXPs
emails between African
users often transit through Europe
or North America, adding to costs
http://www.itu.int/ITU-D/treg/publications/index.html
20/21
Thank you!
21/21
Average settlement rate is only 1/15th of what it was
in 1998! It’s dropped by nearly 50% since 2001
Average settlement rates
in Special Drawing Rights
(SDRs):
1 SDR = $1.48 (September 2006)
1998
2001
2002
2003
1.06
0.258
0.229
0.195
2004
2005
2006
0.125
0.088
0.071
Sources of telecom revenue
Worldwide, in US$ billions
1'200
1'000
Data and other
800
600
Source: ITU
World Telecom
Indicators
Database.
Mobile
400
International fixed telephone
200
Domestic fixed telephone
0
1993
95
97
99
01
2003
Growth of Competition, selected
services
Local
International
Countries
Long distance
2G
160
140
120
100
80
Number of countries that
permit competition in
international services is twice
as many as in 1997
Source: ITU 60
Telecom
40
Regulatory
20
Database.
0
1995
1997
2000
2001
2002
2003
2004
2005
Level of Competition in Selected Services and Networks, World
Monopoly
100%
Competition
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Basic
services
Leased
lines
Mobile
cellular
(2G)
Internet
services
Wireless
local loop
VSAT
Source: ITU World Telecommunication Regulatory Database.
Cable TV
DSL
3G
Fixed
Wireless
Broadband