Days without a government solution – 1534 days
Overview – There exists a small window of opportunity to move from government mandated network interconnection to an industry driven solution for IP-IP service interworking. The benefits in reducing uncertainty as well as avoiding the discount applied to the enterprise value in regulated sectors makes an industry solution preferred for all stakeholders. The challenge rises to Grand Challenge given the need to find common ground among a dozen or so different perspectives, the complexity of an industry generating over $2 trillion in revenue, and moving from a fragmented adversarial based regulatory system to a cooperative model. The goal of maximizing enterprise value can nonetheless motivate a new culture in telecom. The all-IP network will remain out of reach unless network operators find a way to reinvent network interconnection before regulators feel compelled to make legacy interconnection mandates apply to IP networks.
1. DO NO HARM – Failure of all-IP service interworking not an option:
Background – The transition to all-IP networks cannot tolerate any risk to the universality of network operator voice services. The network effects associated with the at least six billion end points provides the principal source of value network assets, so network interconnection rises to “bet the company” issue for operators. The benefits of universal voice service (and, for example, texting) represent the last measure of defense against still largely fragmented over-the-top communication services. A managed federation implemented by global network operators represents a powerful alternative to the chaos of the open federation associated with email and closed models like Skype. The adoption of all-IP networks gives network operators the opportunity to move managed federation beyond standard definition voice to HD voice, and, even, beyond voice to social networking and still to be invented communication services. It remains unknown the extent of government mandates required to preserve network interconnection, but the opportunity to test industry driven approaches seems unlikely to last long. The industry led options will need to proceed in parallel with government mandates until confidence builds through actual deployments. The IP data network interconnection underlying the Internet illustrates the potential for voluntary commercial agreements. However, voluntary VoIP service interworking initiatives managed very little momentum in the last decade. None of the efforts to implement quality of service models via the Internet achieved much traction. There may exist multiple approaches and certainly exist multiple perspectives regarding an all-IP transition, but there must remain zero tolerance of risk to the existing global federation of voice services generating two trillion dollars in network operator revenue worldwide.
2. STRUCTURE – Retain explicit separation of network and application layers associated with IP:
Background – The key benefits of internet protocol over circuit switched networks trace to the separation of network and application layers in IP. The roadmap to all-IP networks needs to explicitly preserve this separation in order for these benefits to survive. The implications extend well beyond technical to marketing, business, legal, and regulatory considerations. The data networking necessary to support VoIP connections may reflect a simple extension of already existing Internet data networking agreements. A separate service interworking agreement can address the scenarios for paid traffic exchange. The existence of over-the-top communication services creates a entirely new competitive landscape. The disconnect between connectivity and the software innovation driven application layer alters the the risks and rewards for network operators. End user willingness to pay reflects the value proposition generated by the communication free-for-all, but the application layer value proposition remains gated by the price, performance, and capacity of IP connectivity. A strategy of regular network upgrades creates a virtuous cycle expanding value of network assets. The complementary benefits of over-the-top and network operator IP provisioned services will allow both to coexist and prosper. A principle of governance reciprocity can prevail between over-the-services (e.g. Skype et al) and operator IP provisioned services (e.g. AT&T; Uverse voice). Network operators can embrace Internet OTT services in exchange for government granting commercial self determination with regard to non-Internet IP provisioned services. As a practical matter, the optimal return on capital invested in networks likely requires both OTT and IPS modes of service delivery.
3. SPEED – Date certain transition to all-IP networks and HD voice by June 15, 2018:
Background – There exists no prospect for necessary industry and government coordination without the discipline of a date certain completion. The already well advanced market forces make June 15, 2018 the last feasible end date. There exist arguments against a date certain in order to slow the transition, but network operators seeking to preserve the status quo invite hardship. The anxiety induced by a date certain forces government and industry to address the remaining transition uncertainties. The date certain can get adjusted as required to account for new information, but the failure to set a date certain is irresponsible given the already accumulating harms from delay. Slow progress toward IP-IP network interconnection limits the dramatic capital and operational expense benefits of all-IP networks. A orderly transition to all-IP networks needs to preserve the areas where network operators remain leaders (e.g. reliability, ease of use, universality), but these benefits already prove insufficient to address declining end user demand. The upgrade of core voice service to HD along with the flexibility of all-IP represents the only means for network operators to compete with the proliferation of over-the-top communication solutions. Absent IP-IP network interconnects, the bypass potential of smart phones threaten to turn the embrace of wireless over wireline into a sequel of the decade long wireline decline. Delay wins the information technology sector an increasing share of end user communication and awards the big infotech brands 4x the valuation of network operators for the same dollar of revenue. The opportunity to erase this valuation differential argues for speeding the transitioning to all-IP networks.