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Migration to Next Generation Networks

Session IV: Interconnection in NGN

Martin Lundborg, Stephan Wirsing

Workshop on Migration to NGN, 29 / 30 November 2012

Disclaimer

Disclaimer
The opinions expressed in this presentation
are those of SBR and do not necessarily
reflect the views of TRAI.

Content

Session 1: Introduction to NGN


Session 2: Status of NGN in India

Day 1
Session 3: The migration strategies towards NGN
Session 4: Interconnection in NGN
Session 5: Quality of Service in NGN environment
Session 6: Licensing related issues in NGN

Day 2

Session 7: The International Experience in NGN

Background and current situation


Past/current situation

Future developments

Bilateral interconnection

NGN implies possibilities of

between all operators

multilateral interconnection,

TDM interconnection
Distributed points of
interconnection

fewer PoI, new VAS


services
se
ces e
etc.
c
Reduction in costs per
minute for voice traffic

Interconnection regulated for


operators based on CPP
Relevant OPEX of mobile
industry and relevant OPEX of
fixed operator as basis for tariff
determination
4

Relevant issues

Peering and transit vs.


TDM interconnection
TDM-interconnection

Service aware or
service unaware
interconnection

Interconnection for internet traffic is usually either


p
g or transit.
peering
Peering: only the destinations in the interconnected
network are advertised while transit means that an ISP
buys interconnection to all destinations in the internet.
P i is
Peering
i usually
ll restricted
t i t d tto networks
t
k where
h
th
the
amount of traffic in both directions is roughly equal.
Peering is usually being for free, but also Paid
Peering exists.
Peering
The charges for TDM interconnection depend on the
services while internet interconnection is not aware of
applications above layer 3.
The access network operator controls the services in
case on TDM networks and interconnection, while in
case of internet interconnection, it is the end-user.
5

Relevant issues

Public interconnection vs.


peer-to-peer

Charging
g g regimes
g
for interconnection

IInterconnection
i between
b
TDM networks
k iis generally
ll
implemented peer-to-peer between two networks.
In the internet, public Interconnection Exchanges
(IXP = Internet Exchange Points) have evolved
evolved.
An internet exchange is a separate entity, that provides
the necessary infrastructure for exchange of traffic
between ISPs.

In TDM interconnection a detailed charging per service


and per hierarchical level in the network is performed
performed.
In the internet charging is based on volume or capacity.

Relevant issues

Number of
interconnection
points

The number of interconnection points in the TDM


network is usually higher than interconnection points in
IP networks.
Due to the reduction of digital exchanges or the
p
implementation
of NGN networks,, the networks are
becoming more centralised and the number of
interconnection points will decrease.

The degree of
regulation

TDM interconnection has, especially with regard to


termination services, been regulated while internet
interconnection is not.

Development
p
towards NGN interconnection

Fewer network nodes implying

Networks transforming to

fewer POI

NGN to reduce costs


(CAPEX / OPEX)
NGN; Next generation
networks / Package
based transmission

No standardised quality

Bilateral and multilateral

defined for interconnection

interconnection possible

as in TDM
L
Layered
d network
t
k separating
ti
transport, control and
applications

Content

Session 4: Interconnection in NGN


Session 4a: Interconnection Architectures
Session 4b: Regulatory Regime
Session 4c: Number of POI
Session 4d: Routing, Roaming and QoS
Session 4e: Interconnection Charges

Architectures, Interfaces and Signalling


Technological changes

Policy implications

New architectures
(IMS,
(IMS softswitch,
ft it h
SBC)

Multilateral coordination regarding standards


for architectures,
architectures interfaces and signalling is
required.

New interfaces
(Ethernet)

Regulated interconnection offers may need


revision
i i tto safeguard
f
d any-to-any
t
communications

New signalling
(SIGTRAN H.284
(SIGTRAN,
H 284
btw. Media gateway
and MGWcontroller SIP
controller,
SIP,
H.323, Telephony
over IP: SIPI/Q1912 5
I/Q1912.5,
H.323/SIP)

Btw. IP networks and btw. IP and PSTN


networks
Regarding different services (emergency
calls,
access, roaming)
calls indirect access
Facilitation of new business models (e.g.
service providers providing the service
l tf
l )?
platform
only)?
10

Interconnection architectures
The NGN
architecture has
been defined by
ITU-T (in Rec.
Y 2012)
Y.2012)
The possible
connectivityy to an
NGN: UNI, NNI,
ANI, SNI

Source: ITU Rec. Y.2012

11

Interconnection architectures

User Network
Interface ((UNI))

Network
N
t
kN
Network
t
k
Interface (NNI)

The UNI connects terminal equipment, user networks


and corporate networks to the NGN.

The NNI is used to provide connectivity to other NGN,


other IP-based networks and PSTN/ISDN.
The NNI supports both a control level type of
interaction and a media level type of interaction.
Transport interconnection: The border gateways of two
NGN networks are interconnected.
Control interconnection: This interface interconnects
the service control functions of both networks.

12

Interconnection architectures

Application
Network Interface
(ANI)

Service Network
Interface (SNI)

The ANI is an interface which provides a channel for


interactions
e ac o s a
and
de
exchanges
c a ges be
between
ee a
an NGN
G a
and
d
applications.

The SNI (Service


Th
(S i N
Network
t
k IInterface)
t f
) is
i an interface
i t f
which provides a channel for interactions and
exchanges between an NGN and other service
providers ((such as a content p
p
provider).
)
The SNI supports both a control plane level type of
interaction and a media level (or data plane) type of
interaction.

13

Circuit switched interconnection regime

14

Internal migration towards all-IP


PSTN
TE

Inte

rcon
nec

tion

TDM

Trunk
Gateway
PSTN
TE

Interconnection TDM

Softswitch/
IMS

Trunk
Gateway
LS
IP/MP

Core

TE ... transit exchange


AG ... access gateway

AG

AG

Access Gateway
Access

IP interconnection between two NGNs

Softswitch/
IMS

TG

SBC
IP/M

AG

Softswitch/
IMS

TG

IP based
Interconnection
SBC

IP/MP

PLS

AG

SBC ... session border controller


TG ... trunk gateway
g
y
AG ... access gateway

AG

LS

AG

16

Instances of Interconnection
Analysing the business models we find many instances where
interconnection is possible:
1. application layer application layer
2 service
2.
i llayer service
i llayer
3. transport layer transport layer
4. service layer application layer
5. transport layer service layer

17

Issues I
Do you agree on the described architectures, physical interfaces and signalling?
On which layers and planes is interconnection technically viable and commercially
interesting?

18

IP Exchange for Interconnection


The National Internet Exchange of India (NIXI) was set up to exchange the
national IP traffic among the ISPs.
Since in an NGN exchange of IP traffic is required, NIXI could play a role
in the exchange of NGN traffic.
It would be possible to require operators to exchange their IP traffic at NIXI
for all services, requiring a regulatory intervention.
It could be made mandatory for all operators to connect to NIXI.
A sharing model for the costs could be worked out.
An alternative would be to allow market forces to decide about the suitable
IP interconnection regime.

19

IP Exchange for Interconnection


The following list summarizes the pros and cons of the introduction of an
interconnection exchange for NGN traffic:
An interconnection exchange is an efficient way to exchange traffic,
since the costs are shared by all operators.
Depending on the number of interconnection exchanges the
connection of operators to the interconnection exchanges is a major
issue.
It could be envisaged to place interconnection exchanges in
every license service area and connect these exchanges via a
common backbone.
In that case the connection of the access providers would be
i il as iin ttoday's
d ' environment.
i
t
similar
20

Issues II
Do you see any role of NIXI in IP interconnection for NGN?

21

Content

Session 4: Interconnection in NGN


Session 4a: Interconnection architectures
Session 4b: Regulatory regime
Session 4c: Number of POI
Session 4d: Routing, Roaming and QoS
Session 4e: Interconnection Charges

22

Regulatory regime
In India, the service providers are obliged to interconnect with each other as
set out in the license conditions/ TRAIs regulation.
As set out by TRAI all service providers including UASL licensees, NLD
licensees and ILD licensees have to provide interconnection upon a request
from another service provider.
The directive and the rules do not include internet service providers.

23

Interconnection regime for IP traffic


Non-regulated interconnection and best-effort quality
Peering (public peering points) or IP
IP-Upstream/Transit
Upstream/Transit (bilaterally
negotiated PoI)
Compensation/charging regime based on capacity based charging or
volume based charging
Tier 1

Tier 2

Tier 3
Transit

Tier 1

Peering

Transit

Tier 2

Transit

Peering

Transit

Tier 3

Transit

Transit

Peering

24

Regulated voice interconnection


Considerations
p y for termination service will remain ((related to p
Monopoly
phone number or
termination network).
Interconnection is currently mandated for licensees and is required for
any-to-any communication to some extent, i.e. large operators remain
guarantee for any-to-any communication.
Currently QoS is set by standards, but for NGN, standards are either to
be regulated or negotiated.
M d t d iinterconnection
Mandated
t
ti requires
i
some sortt off tariff
t iff regulation
l ti to
t be
b
effective.

25

Regulated voice interconnection


Considerations
p y for termination service will remain ((related to p
Monopoly
phone number or
termination network)
Interconnection is currently mandated for licensees and is required for
Regulated interconnection regime will remain
any-to-any
communication
some especially
extent, i.e. to
large
operators remain
relevant
to some to
extent,
guarantee
communications
guarantee any-to-any
for any-to-any
communication and QoS across
networks
Currently QoS is set by standards, but for NGN, standards are either to
be regulated or negotiated.
M d t d iinterconnection
Mandated
t
ti requires
i
some sortt off tariff
t iff regulation
l ti to
t be
b
effective.

26

Regulated interconnection

27

Mandating IP Interconnection?
Alternative 1: Mandate IP Interconnection is to oblige the access provider
to provide IP-based interconnection when the seeker of interconnection
requires
q
this to be done on an IP basis.
Ensure that the migration to IP would not be done before one or
several service providers are ready for IP interconnection and
therefore decided that they want to require it.
Alternative 2: Mandate IP interconnection only from a certain date in the
future
future.
Pro: Parallel regimes (TDM and IP) could be avoided and it would
give all stakeholders time to prepare.
Con: The IP-based interconnection would be forced between
operators who would both prefer the interconnection to be TDM
based
based.

28

Mandating IP Interconnection?
If IP interconnection becomes mandatory, the question arises if the
enforcement of interconnection agreements should rely on:
Bilateral agreements and dispute resolution (ex-post)
Mandatory reference offer (ex-ante)

29

Issues III
Do you think that TRAIs licensing regime is sufficient for NGN
interconnection?
Should IP interconnection be mandatory?
If interconnection based on IP is mandatory
mandatory, should it be mandatory for all
stakeholders or only when the seeker of interconnection requires this?
If IP-based interconnection is made mandatory,
y, should TRAI issue a
reference offer or leave the agreements to be negotiated between the
operators?

30

Content

Session 4: Interconnection in NGN


Session 4a: Interconnection architectures
Session 4b: Regulatory regime
Session 4c: Number of POI
Session 4d: Routing, Roaming and QoS
Session 4e: Interconnection Charges

31

NGN elements and CVR implies fewer sites


Policy implications
Multilateral coordination and/or regulation of the
points of interconnection (PoI)
Mandatory PoIs?
Establishment of centralised exchanges for
interconnection (NIXI)
Trend towards a
lower number of PoI

Development of migration rules for the decommission


of PoI and the migration to new PoI.
Compensation for disadvantaged operators?
Establishment of joint technical committees?
Development of a timeframe for migration.
Distribution of responsibilities and costs between
operators
operators.
32

Issues IV
What does a reduction of PoIs mean for India, in particular as regards the
division of India in 22 service areas?
What is the optimal number of PoIs in India and how should these be
structured?
From the respondents perspective is there any regulatory intervention
required regarding the number of PoIs in an NGN architecture?

33

Content

Session 4: Interconnection in NGN


Session 4a: Interconnection architectures
Session 4b: Regulatory regime
Session 4c: Number of POI
Session 4d: Routing, Roaming and QoS
Session 4e: Interconnection Charges

34

Routing and roaming


Routing: process of collecting and distributing topology-related
information, calculating the routes, establishing and maintaining the
routing table in the network (Y.2612).
Routing in IP-based networks is determined by information in the
individual routers. Between networks routing information is advertised with
the border gateway protocol (BGP).
I traditional
t diti
l networks
t
k routing
ti iis performed
f
d within
ithi a network.
t
k
In
If it is determined, that a specific address is not within the network the
connection is routed to an appropriate point of interconnection
interconnection.
Routing might also involve overflow or traffic management
mechanisms that take care of outages or congestion in the network.

35

Routing and roaming


According to GSM specifications calls towards a roaming subscriber are
routed via the home network, which determines the charge for the roaming
leg.
Calls by a subscriber are routed directly to the destination without using
the home network.
The visited operator records the CDR and sends them to the home
t
k via
i the
th so called
ll d ttransferred
f
d accountt procedure
d
(TAP)
hi h iis
network
(TAP), which
specified by the GSMA.
Mobile internet usage by roaming subscribers is routed to the home
network in all cases and the home network controls the access to the
internet.

36

Routing and roaming


Routing and roaming in next generation networks will use IP mechanisms.
It is expected that operators will maintain their influence on roaming
traffic and will be included in the call path to roaming subscribers.
The solution for the routing and exchange of this information is
included in the IMS specifications.
In an NGN routing
from the routing
g of the media stream is decoupled
p
g of
control information.
Control information is processed by the MGC and can be centralised.

37

Issues V
Do you regard the IMS specifications to be appropriate for the routing in NGN?
Are there any other issues relevant with regard to routing and NGN?

38

Content

Session 4: Interconnection in NGN


Session 4a: Interconnection architectures
Session 4b: Regulatory regime
Session 4c: Number of POI
Session 4d: Routing, Roaming and QoS
Session 4e: Interconnection Charges

39

Changing economic conditions


NGNs affect the way costs are calculated because of new cost drivers and
cost/volume relationships (CVR).
With increased data traffic in all-IP networks and with multiple services
sharing one network, the fixed costs are distributed to a lesser extent to
voice services
services.
The costs for transmission are reduced while the costs for the control layer
and the service platforms are increased.
increased
If different QoS classes should be enabled for interconnection traffic, then
the tariffs and the charging
g g regime
g
must be able to differentiate according
g
to QoS and service classes.

40

Retail charge control


The charging regimes were developed for voice markets and products and
now increasingly are being applied for data products and broadband.
In India today, these issues are regulated under forbearance and the
service providers.
With regard to NGN no or little impact on the retail tariff regulation is
identified.

41

Circuit switched interconnection regime


Charging regime

Operators
p
((SMP/incumbents):
) regulated
g
charging
g g regime
g
typically
yp
y
based on CPP/EBC
Time based charging
Cost oriented pricing set by regulator
Symmetric
Different rates for mobile and fixed networks

42

Alternative Charging Methods for NGN-IC

IP Peering

Charging regime for interconnection of networks in


the WWW
Free exchange
g of traffic between equal
q
networks
Transit usually paid for

43

Alternative charging methods for NGN-IC


CPP/EBC

Bill & Keep

Capacity based charging

Volume based charging

CPP
Cost based per minute rates
Typically different symmetric rates for fixed and
mobile networks (India as an exception)
Removal of interconnection rates for all exchange of
traffic or for exchange of traffic at the local level
(COBAK)
Sometimes with limits for asymmetric traffic
Charging based on actually exchanged amount of
capacity or booked amount of capacity
Charging unit: bits or links
E.g.
E g typically used for bitstream access,
access
interconnection joining links and managed capacity
Charging based on volumes
Comparable
C
bl tto th
the currentt regime
i
b
butt with
ith b
bytes
t as
charging unit
44

CPP vs. B&K and Pure LRIC

CPP/EBC

B&K

Pros
Well established
Investment incentives
QoS

Less regulation
g
required
q
Investment incentives
No on-net/off-net pricing
Close to marginal costs
Fixed-mobileconvergence?
No cross-subsidisation
from fixed to mobile

Cons
Competition problems
Lock-in effects (networks)
Off-net-/on-net pricing
Suboptimal network utilisation
based on per minute charging
Higher end user charges
Network utilisation ((hot
potatoe routing)
Waterbed effects
QoS
Legal uncertainty
How to deal with asymmetric
traffic

45

Other alternatives

Capacity based
charging
h
i

Volume based
charging

Peering

Pros
Mirrors real cost
drivers in IP/NGN
networks
Investment
incentives
Guaranteed QoS

Cons
Negative for new entrants if
capactiy must be booked in
advance
Competition problems / monopoly
problems remain
Call externalities

Investment
incentives
Guaranteed QoS

Does not reflect real costs (bad


network utilisation and investment
incentives)
Competition problems / monopoly
problems remain
Call externalities

Comparable to B&K but able to handle differences in QoS


((Paid Peering)
g ) and asymmetric
y
traffic less arbitration
possibilities
46

Outcomes from different charging regimes

Cases
In France,
France B&K has been used for mobile networks Enabled
the third entrant to gain more market shares.
In US, MPP (Mobile Party Pays) has been used Lower
penetration rates but higher usage per customer and higher
ARPUs.
Capacity based charging for interconnection used e.g. in Spain
and for bitstream access.

08.01.2013

47

Which charging regime is optimal?


Higher tariff levels lead to:
On
net/off net pricing
On-net/off-net
Higher retail prices but lower usage; some research suggests higher
fixed subscription fees
Cash flows from countries with lower tariffs to those with higher tariffs
Cash flows from operators with more outcoming than incoming traffic
(typically smaller operators and new entrants) to typically established
larger operators
Important for operators are especially the tariff levels
High for large and dominant operators
Low for small operators and new entrants

48

How to deal with migration costs?


NGN requires investments in the initial years Additional costs of
migration
Alternative regulatory solutions:
Alternative 1: No consideration of these costs?
Alternative 2: Considerung higher costs for legacy interconnection?
Alternative 3: Consider costs of NGN plus mark-up during transition
period?
Implementation
I l
t ti off cost+
t+ IUCs
IUC might
i ht iincrease incentives
i
ti
tto invest
i
t att the
th
cost of other operators and consumers, but effect is limited due to low
propotion of costs related to interconnection.

49

Likely outcomes
The choice is mainly between charging regimes with tariffs (most typically
CPP/EBC) and those without (typically B&K and Peering).
In countries with a CPP/EBC regime, the regulated CPP tariffs set the cap
for tariffs for non regulated interconnection.
The difference between charging regimes have less impact than they
used to have due to sinking costs.
Depending on the asymmetry of traffic and the importance of the
amount of traffic as a cost driver, negotiated interconnection will more
and more be B&K or Peering.
A change in charging units for NGN to volume based charges is rational,
but the low net payments might rather lead to a voluntary implementation
instead
of B&K instead.

50

Issues VI
Do you regard the current regulatory regime for retail tariffs to be
appropriate?
Which wholesale charging regime, e.g. CPNP or bill and keep, do you
regard to be optimal to facilitate the migration to NGN?

51

Development regarding charging unit

Cost driver in NGN networks are bits in


peak and not minutes

1
1.

A change in charging unit to bits/s would better reflect the costs than minutes.
minutes

2.

Due to generally low net payments (low rates combined with reasonably
symmetric traffic) and the effort needed to change charging unit (regulatory
procedure, negotiations), removing the compensation for traffic (B&K) is a
viable alternative.

3
3.

Migration scenarios

08.01.2013

SBR Master Layout Prsentation

52

Charging of different QoS


An implementation of different prices for different quality would reflect the
cost drivers with regard to the underlying network capacity required.
The quality differentiated prices theoretically lead to more efficient usage
of the networks.
Is quality a significant cost driver?
The increased complexity
quality
higher
costs of
p
y of q
y based charges
g implies
p
g
regulation and more extensive negotiations between operators.

53

Issues VII
Do you agree that if the CPNP regime remains in place, it will have to be
adopted with regard to the charging units, i.e. by implementing capacity
based charging?
How should the CPNP regime be adapted with regard to different quality
of service for different interconnection traffic?
If different service classes or QoS is charged differently, which service
classes
l
or QoS
Q S parameters
t
are relevant
l
t for
f such
h a regime?
i ?

54

Content charges
As NGN interconnection evolves, it will be possible to interconnect for the
exchange of content.
As content services will be packet based, the capacity based charges will
probably be the most suitable charging regime.
Before the charges for interconnection with regard to content services will
be regulated, a market failure and/or competition problems need to be
id tifi d
identified.
If and when IP interconnection for content services are implemented and
regulated,
regulated the charging will have to be aligned towards different service
classes.

55

Issues VIII
How should the charging regime be adapted with regard to different
quality of service for different interconnection traffic?
If different service classes or QoS are charged differently, which service
classes or QoS parameters are relevant for such a regime?
Do you recall for more regulatory interventions when it comes to
interconnection of data and other NGN related non-voice services? If yes,
which
hich kind of reg
regulatory
lator meas
measures
res are preferred and why?
h ?

56

Alternatives to assess costs to approve tariffs


Tariff approval can be made in different ways:
Cost modelling based on actual costs (FDC/FAC) or economic costs
(LRIC)
Benchmarking with other countries or networks
Retail minus
In India tariffs have been approved based on only relevant actual cost
data derived from the operators.
International
I t
ti
l trend
t d towards
t
d costt models
d l for
f NGN ((e.g. EU including
i l di
Sweden, the Netherlands, Germany, Austria etc.)

57

Cost assessments
On a total for India, higher interconnection usage charges (especially for
termination rates) will:
Create financial streams from some service areas (mostly high
income areas) to other service areas (mostly low income areas).
Create financial streams from those operators with much outgoing
traffic to those with less.
Increase the revenues from international incoming traffic without
increasing the cost for outgoing traffic.
The wholesale charges tend to set the floor for retail charges.

58

Issues IX
Which cost methodology is preferable and which level of the tariffs would
optimally promote the migration to NGN?

59

Summary
Interconnection needs to be modified in order to cope with the migration
within the networks
The interconnection architectures will change and interconnection will be
able at different layers in the network
Regulatory obligations for NGN interconnection is a relevant issue
The number of PoIs will be reduced
The migration to NGN interconnection has outcomes on the regulatory
regime for IUC

60

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