In addition, from 2002 onwards some larger operators who have hitherto provided only corporate services will use the opportunities of ADSL to move down into the SME and upper end of the residential markets. This is not shown in figure 33.
6.2 Telephony services types
Public telephony based on E.164 numbering is universal. Although many people consider numbers to be less memorable and user friendly than Internet names, they have the advantage of being used across all languages, alphabets and cultures, we think that E.164 numbering may continue as the basis for any-any public telephony for the indefinite future. In other words we think that for the foreseeable future it is unlikely that telephony users will cease to have E.164 numbers.
We think that Internet named telephony will grow rapidly as a service for informal closed user groups, but that the any-any capability that would make it a public service will develop mainly in the second half of the decade. Its growth will be dependent on:
In the long term we think that public telephony and Internet named telephony will exist in parallel.
Many people talk about multimedia, but there is no clear view of what new multimedia services will be. At present multimedia seems to be a assembly of various existing services with the addition of real time video.
6.3 Terminals
Currently almost all the residential market for telephony terminals is a combination of analogue wired telephones and cordless telephones. VoIP is supported only from PCs where users have proprietary software and use a headset.
As VoIP develops, we expect that PCs will be fitted with conventional style handsets. This will either be through the addition of sockets for analogue telephones or through new phones with USB interfaces. We think that USB handsets with matching non standard software in the PC are the more likely solution. These development may coincide with the introduction of better support for VoIP in Windows. The protocol choices made by Windows will have a significant effect on the market.
The next development will be the introduction of a standard self standing IP based telephone using either Ethernet or USB as the interface. This development will be driven by the move towards an integrated digital home system and the introduction of new network termination points for both public and Internet named telephony. This development will occur later than the USB handsets for PCs because it is more dependent on signalling and call control standards.
Figure 34 shows these developments. The aim is only to show trends and the graph is not to scale. The effect of increased use of mobiles as a substitute for fixed telephones is not included.
Figure 34: Trends in terminal use  6.4 Access
Nearly all residential users have analogue access lines; few have ISDN. BT is introducing ADSL, wholesaling ADSL access to its own ISP (BTInternet) and also to other ISPs.
We expect that the prices for ADSL access will fall and that user demand will be high. The experience of a colleague in UK, the author’s use of ADSL in a hotel in Japan and press reports all suggest that users find the “always on” capability and the improved access speeds26 very attractive, and once tried they would not be without them.
We are not so bullish about local loop unbundling which is starting very slowly and where the experience from the USA is that there can be significant operational difficulties. This may mean that BT operates most of the ADSL and resells the access to other ISPs.
Voice over DSL is a very promising technology that will enable Internet access and several voice circuits to be provided on a single exchange line. Its introduction is likely to start in 1-2 years time. Local loop unbundling would enable other operators to offer integrated voice and data services to small businesses through VoDSL. Such competition could put significant commercial pressure on BT, but it is not likely to affect residential users very much.
The next step for residential users is likely to be the presentation of services via a single standardised IP based network termination point (Ethernet and USB seem to be candidates at present) instead of the current situation of a combination of standardised analogue interfaces and a customised connection to ADSL that requires specific software to be used in the PC. The introduction of this interface will contribute to growth in IP based telephones. We expect that this new form of network termination point will start around 2005. We think that the development of standards will be the determining factor in the timescale.
Figure 35 summarises these developments.
 6.5 Networks 6.5.1 Network types
In terms of the services that they provide, there are three main types of packet network used for voice:
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Public Internet backbones, which are IP based and extensively interconnected at the IP level. They do not interact with any call control signalling applied by service providers at the edges.
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Managed IP networks, which are used mainly for VPN service to large corporates and have interconnection only with circuit switching. The call control protocols of the earlier networks are based on ISUP/BICC/H.323 but SIP based protocols are gradually being introduced. These networks typically use a mixture of IP and ATM for transport.
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PSTN replacement networks, which use ISUP/BICC and run over ATM without using IP for the PSTN replacement services. So far, these networks are mostly used at the transit rather than the local level.
The same underlying transmission system can support all three network types and some operators are running or planning to run all three types with partitioning based on MPLS.
The two major technological developments will be:
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Improved quality of service in managed IP networks through further development and implementation of MPLS and quality protocols such as RSVP27 and Diff Serv28, which can be used to give voice packets priority over other traffic.
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Further refinement and implementation of SIP, which is expected to be the main call control protocol for voice and other media services.
We think that these networks will develop in the following ways:
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The public Internet as a “best efforts” network will not change much in nature although it will continue to grow in capacity. Some of the traffic that is carried will migrate to managed IP networks.
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Operators of Internet backbones will add QoS features as soon as practicable in order to be able to increase their revenue by offering service level agreements. Improved QoS at the transport level will develop first based on traffic segregation using MPLS and more generous dimensioning to improve quality. This development is likely to take effect in 2003-2006. Secondly the new quality protocol techniques will be implemented in the 2005-2008 period.
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Network interconnection at the call control level using SIP over IP will not start before about 2005 because of the need for further standardisation.
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Improved firewalls for access control will be implemented from about 2003 onwards.
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Application service platforms will be introduced from about 2004 to facilitate service provision and development by third parties
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Nearly all procurement of new PSTN capacity will use PSTN replacement networks based largely or wholly on ATM. Transit networks will be replaced first, however for straightforward PSTN applications, operators will not be in a hurry to replace their local circuit switches, which can continue to be used at marginal cost. Where customers want advanced services, they will use an overlay of managed IP networks. In the longer term, ie towards the end of the decade, replacement may be justified on grounds of cost savings and difficulty in obtaining spare parts.
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Operators of managed networks who do not use ATM will have difficulty in avoiding increased transmission delays. Past work suggests that customers could be dissatisfied with these delays but they may adapt to accept some increase in delay compared to circuit switched networks.
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In the very long term, the managed IP and PSTN replacement networks may merge with SIP may become the dominant protocol for call control.
Figure 36 illustrates these changes.
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