PowerPointPrsentation

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Interconnection Tarifing - Conceptual
considerations from the perspective of an IP
based service offering
Dr. Alwin Mahler, VP Strategy Presentation
Session Industry ViewsInt. Workshop Bill
Keep a new model fror intercarrier compensation
agreements Königswinter, 5th of April 2006
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Background Characteristics of Internet based
Telephony and Termination/IC Model (I/II)
Content / Voice
SIP-Server of application service provider
Network Provider, demanding termination services
to A
Internet
signaling
CPE of A

• IP based Telephony (application) becomes
  independent from the network
• The network operator is not necessarily the same
  as the application provider
• gt QoS can not be guaranteed

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Background Characteristics of Internet based
Telephony and Termination/IC Model (I/II)
SIP-Server of application service provider
signaling
Network Provider, demanding termination services
to A
IP-Network
phys. Interconnection, dedicated for VoIP
Content / Voice
CPE of A

• but if application service provider and network
  operator work together
• QoS can be guaranteed via IC agreement securing
  quality of signaling/data
• Several scenarios arise traffic via dedicated
  IC agreement (yes/no), transport included
  (yes/no), level of quality
• ? The advent of Internet based Telephony is one
  of (or) the factor(s) to stipulate the question
  for the appropriate model for intercarrier
  compensation agreements

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Possible Tariff Scheme Differentiated Tariffs?

• Introduction of differentiated IC termination
  tariffs (in existing CPP/EBC system)
• Differentiation corresponding to QoS / underlying
  components (for example QoS VoIP equals PSTN IC
  fees)
• Differentiation QoS yes/no may be unsufficient
  more dimensions
• ? Problem complexity / implementation (a priori
  category determination)
• ( also keep in mind costs for differentiated
  routing and billing)
• Bill Keep
• Simplicity efficiency of system
• Change of system necessary
• Keeping the existing system (without
  differentiated tariffs)
• Arbitrage-problems
• vs. stability and easy planning
• Systems migrate to similar solutions over time
• Question Which path with which tariff scheme?

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Introduction of a bill keep regime (I/II)?

• Background
• Bill Keep Interconnection on lowest network
  level
• different approach for termination tariffs
• Therefore No more termination fees and no need
  for regulation
• Instead End customers regulate the market by
  their demand
• Advantages
• Bill Keep could be a way to reduce complexity
• Simple system in principle with positive
  incentive effects
• Basic assumption rational customers that are
  willing to change, they chose the best supplier
  and thereby punish other suppliers
• Incentive effects on companies are
  efficient(suppliers with low costs can offer the
  product at market conditions, other suppliers -
  who are terminating connections too expensive -
  will not be able to pass on these extra costs)

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Introduction of a bill keep regime (II/II)?

• Prerequisites for efficient bill keep
• Experience many end customers feel bound to a
  certain company or they change companies only
  after months/years. Regulative effect of end
  customers potentially to be complemented by
  actions of regulatory authority
• ? could lead to shift of (ex ante price)
  regulation of termination fees to (ex ante)
  end customer price regulation
• Potential disadvantages for companies that do not
  supply access and connection
• ? introduction of a stand-alone bitstream access
  necessary
• High distortions by uni-directional payments if
  bill keep is not implemented universally for
  all companies (VoIP, PSTN, mobile)
• ? introduction to all areas at the same time
• A way has to be found to insure a frictionless
  introduction without possibility of long lasting
  discrimination of single business models
• Furthermore it has to be decided how a bill
  keep scheme will deal with origination tariffs
  and interconnection at higher network levels
• ? Bill keep potential regime but a change of
  system may cause great risks and its
  preconditions are difficult to realize

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Keeping the existing CPP/EBC based regime?

• Background
• proven system with KeL-orientation (KeL costs of
  efficient production)
• KeL are oriented at efficient production
  (Remark only one technology can be efficient at
  a certain point of time)
• VoIP is the efficient technology
• Considerations
• Possibility of arbitrage by Internet-telephony
• With (currently) lower number of VoIP minutes
  unit cost gt PSTN
• Possibilities for solutions/reduction of
  arbitrage potentials
• Pushing a QoS VoIP basis for commercial IC
  agreement
• End customers decide may lead to differentiated
  systems
• ( also within intra-carrier-payments, see
  commercial basis)
• Migration path with a gradual shift towards the
  efficient technology
• Accepting (decreasing) possibilities for
  arbitrage to receive stability
• Converging the existing system towards bill
  keep by stepwise reduction of IC-tariffs for local

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Summary Outlook (I/II)

• VoIP QoS depends on collaboration of application
  and network provider
• Dedicated interconnection via SBC allows QoS
  guaranties (gt PSTN)
• VoIP can be envisaged in may possibilities/qualiti
  es
• ? need to be consistently mapped into tariff
  schemes and fees
• Problem complex tariff schemes may become too
  high because of complexity of
  VoIP-products
• Bill keep is a possible approach if the
  following conditions are met
• Pot. extension of regulation to end customer
  level
• Parallel introduction to VoIP, PSTN and mobile
• Existence of a stand-alone bitstream that is
  acceptable to market
• Consistent fees for origination and
  interconnection at higher network levels

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Summary Outlook (II/II)

• Possible Approach Modification and improvement
  of the existing system
• If the conditions for BK cannot be met and the
  risk of a system change be avoided
• Orientation at KeL and efficient technology
• Reduction of arbitrage (potentials) by QoS
  differentiation and decreasing IC-fees
• Tariffs
• At sufficiently large amounts VoIP is the
  efficient technology, with current utilization
  PSTN is less costly
• Migration path with gradual, symmetric adoption
  of IC fees
• ? Convergence of systems, based on proven regime?

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