Satyaspeak Everything Over IP (EOIP)-All you wanted to know about NGN Next Generation Regulatory Ecosystem for Emerging Markets- Reforms Ver2.0

Satya N Gupta Hon. Secretary General NGN Forum, India Joint-Secretary General ITU-APT Foundation, India

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Agenda

Next Generation Ecosystem – Introduction

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Telecom Institutional Framework -India

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Regulatory Regime India - SWOT Analysis

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Regulatory Challenges for NGN-India

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Way forward

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Unified Licensing

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Functional Separation

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Spectrum “Issues” Management

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Functional Separation – A Regulated Wholesale Concept

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Regulatory Ecosystem for Emerging Markets

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NTP 2012- Salient Features

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NGN Vision for India 2

NGN - Introduction

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Next Generation Networks as the name suggests are the networks of future, based on emerging technology of IP which is leading to convergence of networks, services and markets and providing efficiency and flexibility.

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NGN are based on the layered approach wherein services provision is separated from the underlying network infrastructure .

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These are enabling the operators to increase their depleting ARPU by providing advanced value added services in addition to plain (vanilla) voice.

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The incumbent operators are going for NGN by replacing their existing networks to compete on the technology front and being able to provide innovative value added services, cut down on Opex as well as to make their network future-proof.

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NGN–layered architecture (distributed intelligence)

Application Layer Application Services Control Bearer Internet Service Control Layer Softswitch Control IP Service Switching Transport Layer (core and access) PSTN Broadband Access RAS DSLAM GbE Frame/ ATM CPE ACCESS NETWORK Wireless Media Gateways X X Metro Optical X X Multiservice Packet Switching X X X National Optical X CORE NETWORKS X X

Voice over IP Primary line Second line IP Centrex Voice VPN HD Voice

EOIP-Laundry List of NGN Services

Unified Messaging Content Delivery Games Downloads (MP3) Gambling BB - High Speed Internet PC to Phone Phone to PC IP VPN (data) BW- on-demand IP offload Multimedia Conferencing IPTV HDTV Video on demand TV on demand Cinema of the future Long distance bypass Presence management Tele Presence (TP) Remote lab QOS on demand Quad play Instant messaging MMS on fixed network Location Based Services (LBS) FMC (Fixed Mobile Con.) Distance learning 4G & beyond applications

What is NGN Ecosystem?

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Next Generation Services – Converged (Quad-play-VOIP, data, video, mobile) Next Generation Access – High speed (Broadband) IP based connectivity (ADSL, VDSL, WiMax, Digital Cable TV, FTTH, PLC) Next Generation Transport – Carrier Ethernet, PTN Next Generation Architecture – Service oriented (SOA), Layered (transport, control, application) Next Generation Mobile – 3G+ Next Generation Internet – IPv6 Next Generation Interconnect – Cost of Capacity and Quality based Next Generation Licensing – Unified & Class, technology-neutral and service agnostic Next Generation Regulation – Converged, Differentiated/Asymmetric, Facilitating, Light-handed 6

Driving forces for NGN

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Emerging Markets Motivation

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Operational cost savings, new services for increased ARPU

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Predominantly mobile users, less investment in legacy infrastructure, Greenfield Environment

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Low Teledensity and Broadband penetration

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Address space limitations,

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Government’s / Regulator’s NGN initiatives

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Roll-out of networks by more new entrants 7

NGN- A Regulatory Opportunity

As per ITU:-

“The move to NGNs represents an opportunity to establish in advance

ground rules for ensuring the continued passage to effective competition

and minimise damage during transition”.

It is in contrast to the regulation of the legacy network, which came after the networks were actually in place. That is why, NGN is different.

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Security Regulation of “Plain Old Telephone Service (POTS)” Numbering Consumer protection Interconnection Quality of Service Emergency Access Privacy Competition Interconnection

“Next Generation” Long term issues

Regulatory implications of NGN

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Core policy areas: Competition (level-playing field) Interconnection Consumer (QOS, Privacy, Emergency

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Access) Security & Legal Interception 9

Institutional Framework for the Indian Telecommunication-Fragmentation

Act/ Legislation

Parliament of India

Recommendation Policy

Competition Commission of India (CCI)

Spectrum Management

Govt. of India (MOCIT,MHA) Wireless Planning & Coordination Wing (WPC) TRAI TDSAT

Regulation (Tariff, Dispute Resolution & Interconnection, QOS) Appeal for DOT & TRAI Directives

DOT/ Telecom Commission/TERM Cell/ USO Fund

Policy Implementation,

Agencies

Licensing,Rural, Security

Security

Standardization & Technical Inspection Equipment and Network

Telecom Engineering Centre (TEC)

Interface Approval

Manufacturers and System Integrators Centre for Development of Telematics (C-DOT)

Telecom R&D

Operators Subscribers

Service Provision End Usage

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Promoting Competition in Phases

0 Mobile Fixed

Monopoly

VAS 1 2 3 4 Duopoly Duopoly in Access, Monopoly in Long distance Nation wide Duopoly Monopoly in Access, competition in Long distance 3-4 operators Unified Access

Unlimited Open competition

Unrestricted entry in all segments e.g. India

Unified Licensing/ Authorization (Class licensing)

Single service-agnostic license for all telecom services and class license (authorization) for all value added services 11

Service specific licensing in India

Type of Service ILD NLD Unified Access (Fixed and Mobile) (UASP) VSAT Service Area International National Circle National Internet Service Providers Public Mobile Radio Trunked Service Infrastructure Providers Cat I OSP (Other Service Providers) National, Circle wise City wise and Circle wise National Site Specific Connectivity with PSTN Full PSTN/PLMN Interconnection -do -do Entry Fee Rs.25 million Annual License Fee (% revenue share) 6% Rs. 25 million 6% Different for each Circle ( Rs. 16 billion for all India) Type A - 10% Type B - 8% Type C 6% 6% No Interconnection -do Limited One way Rs. 3 million Rs. 2 Million (All India) Nil NA Nil Nil (6% for Internet Telephony) 5% Nil Application services Nil Nil 12

Salient features of existing regime- India

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Unified Access (Technology-neutral) – Coexistence of Mobile (GSM/ CDMA), Fixed, Voice, Data Very low termination rates (< 0.5 cent/min) (same for fixed and mobile) Very low carriage charges (0.5-2 cent/min) Very low mobile tariff (1 cent/min) Very low long distance tariff (2 cent/min) Very low voice ARPU (4 US$/month) Low Broadband charges (5 US$/month) Low rural tele-density (< 40%) Highest Mobile additions per month- (> 12 million) Overcapacity for international bandwidth (17 Tbps/ 500 Gbps) Wide spread national backbone (12 lakhs Km) Dominance of wireless access (950 million mobiles vis-à-vis 35 million wire lines) Large cable TV homes population - (110 million) 13

Regulatory Regime India – A SWOT Analysis

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Strength/Drivers

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Weaknesses/Challenges

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Opportunity/ Benefits

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Threats/ Risks 14

Strength of present licensing framework

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Open unrestricted competition in all segments (including mobile) Access service provision unified (broadband, triple play, internet telephony permitted in addition to voice, fixed/ mobile/ WLL) General technology-neutrality (technology option left to operators) General tariff forbearance (except leased lines where competition is not enough) National Broadband Plan in place (Govt. mission to accelerate broadband,NOFN) More than 12 million mobiles additions per month 110 million cable TV homes and 35 million wirelines Spectrum for 3G and 4G allocated through transparent e-auctions Proactive regulator (initiatives on emerging issues like IP based NGNs,IPv6,UnifiedLicensing,Resale in IPLC, VOIP, MVNO, MNP, CPS through Calling cards, Abolition of ADC, Cost based MTC,CPNP etc.) Forward -looking NTP 2012 in place.

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Weaknesses/Challenges

Multiple regulatory agencies - licensor (DOT), spectrum management (WPC), USOF admn, technical regulation (TEC), interconnection, tariff & QOS regulation (TRAI), dispute settlement (TDSAT), TERM Cell and Security Agencies, Competition Commission- “ Problem of Plenty”

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All the bodies manned by Govt./Incumbents officers on Secondment or ex-Civil Servants- Case of “ Regulatory Capture”

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Both policy making and its implementation in Govt. domain – Autonomous Regulatory Body only a policy recommending agency

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Legacy interconnection regime (Minutes of Usage, MOU based), CPNP (Calling Party Network Pays)

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General Resellers (non-facility based operators) not permitted

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Value-added service providers (ISPs) not treated as interconnection entity

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Unrestricted VoIP not permitted yet for ISPs

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No Functional Separation and Active Infrastructure Sharing Regime 16

Opportunity/ Benefits

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Large unmet demand for telecom services (Rural tele-density< 40%, Broadband penetration - 1%)

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Mobile coverage still 75% (Rural environment to expand)

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Rationalization of network resulting into simplicity and reduced OPEX

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Network expansion by using future- proof technology (NGN)

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EX-ANTE regulation for NGN to remove uncertainties

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Involvement of industry in various issues fully in a pro-active manner

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Bring Quad- play services to rural area (bridge digital divide)

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Next Generation Access through Green Technology ( FTTX) 17

Threats/ Risks

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Standards and interoperability issues yet to be settled

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Technical challenges in Emergency access/ Security monitoring

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High CAPEX without guaranteed corresponding increase in ARPU

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Project oriented risks due to huge scope and costs in migration

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Regulatory Uncertainties, ROW issues, High Licence fee, high spectrum cost ( Winners Curse) 18

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NGN Regulatory Challenges- India

Death of distance and blurring of the traditional boundaries between Access (local) providers and long distance carriers.

VOIP as a “disruptive technology” putting a challenge for the regulators to perform a balancing act.

On-going technological developments causing drastic impact on the telecom scenario forcing a re-look at the service based licensing and geographical area based regulatory regime including Numbering systems.

Level playing field issue between the licensed telecom operators and value added service providers.

Need for new interconnect products based on capacity and quality (V&V) in place of those based on distance and duration (miles & minutes).

Access to emergency services like police control room, fire services, medical help etc. (PSAP, E 911 (US), 999 (UK), 100 (India)) Security monitoring like legal interception & monitoring (LIM), Wiretap, CLI etc. 19

Unified Licensing Regime – One Licence:All Services

Three categories of licences : (Separated from Radio Spectrum) 1. Unified Licence - All Public networks including switched networks, irrespective of media and technology, capable of offering voice and/or non-voice (data services) including internet telephony. Examples: Unified Access Service, NLDO, ILDO, IPTV 2. Class Licence- All services including satellite services (VSAT) which do not have both way connectivity with Public network. (The concept of “niche operators” was included earlier to promote growth of telecom services in rural/remote/backward areas from tele-density point of view).

3. Licensing through Authorisation - Services for provision of passive infrastructure and VAS, IT/ITES services , OSPs, Application services etc..

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Functional Separation – A Regulated Wholesale Concept

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Spectrum “Issues” Management

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First Principle -“ If a Telecom service can be provided through wireline means, no radio spectrum should be allocated for this” Public Goods Doctrine, Commons Distribution of Natural Resources – Auctions, Beauty Contest, FCFS,AIP “Winner’s Curse” in Spectrum Auction “Sweet- spot” in Radio Spectrum- 900 Mhz, Digital Dividend Technology Neutrality – Liberalization of Spectrum ( Technology is not Spectrum -Neutral) Spectrum Information carrying Capacity- Shannon Limit Trade-off between Spectrum quantity and no. of Towers- Freqency reuse Refarming of Spectrum, Spectrum Sharing – Capex Issues Licence Exempt Spectrum- “NINENP”, White Spaces, Cognitive Radio Fixed Mobile Convergence (FMC), UMA, FemtoCells Balancing Act-Maximization of Societal Welfare Versus State Revenue Autonomy for Spectrum Manager, Spectrum Act 22

Next Generation Regulatory Ecosystem for Emerging Markets- Regulatory Reforms Ver 2.0

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A converged regulator for ICE (single independent and empowered regulator for Telecom, IT & Broadcasting, Spectrum and Licensing, manned by Professionals selected from all classes of stakeholders i.e. Govt., Public Sector, Academicia, Industry, Consumers)- Autonomy and Professionalism in Policy implementation A Unified technology-neutral, service-agnostic licence (one licence - one network – all services) to facilitate Efficiencies and Convergence.

A Class Licensing Regime (Authorisation/Registration) for Value Added Services , ISPs, Niche Operators, MVNOs, Infrastructure Providers to facilitate easy entry and Innovation A cost of capacity based, open access (PSTN-IP) interconnect regime and light handed regulation to promote Competition and Investments Functional Separation of SMPs to encourage full infrastructure sharing in open manner and to unlock the potential of existing assets to promote Co- Opetition and Collaborations and Turn-around.

Removing restrictions for VOIP on ISPs to reduce costs Making more spectrum unlicenced as per international norms and permitting Spectrum sharing.

Facilitation of National Broadband Backbone through USO Fund/PPP at a faster pace, executed by professionals in a time-bound manner.

Permitting Active Infrastructure sharing and facilitating ROW,FTTH 23

National Telecom Policy (NTP) 2012 Salient Features

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NTP – 2012 released on 12-06-2012 by the Govt. is a revision of NTP – 1999 to take cognizance of emerging scenario in telecom Technologies, Networks & Services leading towards Convergence and Unification.

Salient focus of policy is delinking of Spectrum from Licensing, facilitation of Unified Licensing Regime, special emphasis for Broadband, encouraging next generation technologies and domestic R & D and Manufecturing & treating telecom as Infrastructure.

This policy is mainly a long – term, forward looking, all – encompassing vision statement of the Govt. to provide requisite policy impetus to take Telecom sector in India to next level and to rural areas to bridge the Digital-Divide, without detailing the implementation strategy & timelines.

Though it is a great initiative, lot of efforts will be required by the executive arms of the Govt. & the Regulator to Operationalise and Impliment it through various legislation amendments, guidelines & regulations .

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Major operator’s approach towards NGN

Five-fold Migration Approach

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Create nationwide Packetisation) IP-MPLS backbone network (Fiber-based,

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Create access agnostic Metro Area Networks (MAN) (subscriber access capable of convergent voice, video and data services over DSL, Optical Ethernet and Wireless technologies) Implementation of VOIP based Class 4 services (Packetize Trunk Switches) Implementation of Class 5 services over packet network (Packetise Access Switches) Offer Multimedia/ Triple play services including VOIP and IPTV to Broadband subscribers 25

Next Generation Network Vision- India

2005 2007 2010 PSTN/ PLMN

Phones: 125 million

IP CONVERGED NETWORK

PSTN / PLMN Phones: 250 million 5 million PSTN/ PLMN

IP CONVERGED NETWORK

Phones: 750 million 20 million

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Next Generation Network Vision-India

2012 PSTN/ PLMN IP CONVERGED NETWORK

Phones: 925 million 75 million

2015 IP CONVERGED NETWORK (NGN)

IAD: >1 billion

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