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Circuit capacity (56/64 kbit/s, 000s)
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Figure 8-1 Example of the decreasing importance of bandwidth constraints Source: ITU, adapted from FCC
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Addressing constraints: Increased trans-Atlantic bandwidth 10,000 100,000
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To advance the VoP cause, there should be less emphasis on standards development and more emphasis on delivering products that cut the equipment cost by 100 percent and the operations cost by 50 percent It is only at these levels that carriers can begin to consider alternatives to the present mode of operation (PMO) from a financial viability standpoint (for a simple replacement of an existing system with a new one that performs equally) Alternatively, a slew of new revenue-generating applications are needed You might be tempted to add toll quality as a mandatory requirement to the list of characteristics (given previously) that have to be taken into account However, considering the usual low quality of cellular telephony services, which people have gotten used to lately, quality is perhaps a negotiable parameter As noted in 1, the opportunities for VoP have to be in the telephone-to-telephone solution Only a small subset of people in the world can afford a $2,000 PC just to make and receive telephone calls, as illustrated in Figure 8-2 The perspective market is represented by the total
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Figure 8-2 Opportunities for VoP/VoMPLS Source: ITU World Telecommunication Indicators Database
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Current market size Market growth projections Impact on telephony network usage Service access requirements
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Computer to Computer < 15 million users Poor None High
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Computer to Phone < 15 million users Poor None High
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Phone to Phone > 800 million users Good High None
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
280 million
490 million
912 million
6 billion 15% High income Upper-mid income Lower-mid income
58% 69% 82%
Low income
Internet users
Mobile users
Telephone lines
Population
Public Network Issues for VoMPLS
number of telephone users, which was 800 million in 1999 The VoIP/VoMPLS market will have its best expansion when it will enable (likely in the next few years) telephone terminals to transmit straight over the Internet or over an IP/MPLS carrier network, sparing the use of a PC Figure 8-3 reinforces the point on the telephone-to-telephone VoMPLS advantages and opportunities when compared with PC-to-PC opportunities3 Furthermore, only about 2 percent of all consumer expenditures are devoted to telephone service This percentage has remained virtually unchanged over the past 15 years, despite major changes in the telephone industry and telephone usage (see Table 8-1)4 Therefore, new services are required to address new revenues Most public telecommunication operators in the world are still heavily dependent on voice revenues Mobile revenues (largely voice) represent the current area of growth Price erosion of Internet revenues is offsetting volume gains (for example, falling leasedline prices) Some, on the other hand, paint the following optimistic picture for the future: (1) mobile Internet is likely to be a major area of future revenue growth; (2) there is a possible future shift of broadcast entertainment (TV, music, and pay per view) to telecom-type networks (broadband Internet); and (3) PSTN voice traffic will likely shift to IP-based networks Economics must be the engine driving the introduction of VoP Table 8-1 depicts annual expenditures on telephone services in the United States on the part of consumers Notice that this represents a 5 percent compound annual growth rate (CAGR) Considering inflation, this is an annual growth of perhaps 1 to 2 percent Since these voice telephone revenues are not growing significantly, the only hope for VoP/VoMPLS is to bring out new desirable features afforded by computer-telephony integration that will entice consumers to spend more money
Figure 8-3 Telephone-totelephone VoMPLS opportunities compared with PC-toPC opportunities Source: ITU projections
Yearly Minutes of use
Voume of IP Telephony Traffic
200 B
Telephone to Telephone
100 B Computer to Computer
Table 8-1 Annual Expenditures (Average for All Households)
Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Telephone Expenditures $325 $360 $375 $415 $435 $455 $471 $499 $537 $567 $592 $618 $623 $658 $690 $708 $772 $809 Percentage of Total Expenditures 19 21 21 21 20 19 20 20 21 20 21 21 21 21 22 22 23 23
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