Nortel Response to Ofcom Regulation of VoIP Services Consultation

Introductory Summary

Nortel welcomes this opportunity to respond to the Ofcom consultation ‘Regulation of VoIP Services’. In responding to the consultation Nortel draws on over a century of experience and innovation in delivering communication networking solutions.

From Graham Bell's original patents to the anywhere, anytime connections of today, Nortel has been at the forefront of innovation in the ever evolving history of communications. Since its 1895 founding as Northern Electric and Manufacturing, supplying equipment for Canada's fledgling telephone system, Nortel has grown to become a global leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel today delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP (VoIP), services and applications, and broadband designed to help people solve the world's greatest challenges.

The Nortel position on regulation of VoIP services is clear and based on the key differential of whether VoIP services are subject to the Publicly Available Telephone Service (PATS) or whether they are defined as a non-PATS Public Electronic Communications Services (PECS). Nortel welcomes regulatory certainty.

It is unfortunate that Ofcom have had to discontinue their interim forbearance policy which allowed PECS VoIP services to deliver PATS like services. As a result of the change of policy, VoIP services that meet the four gating criteria of PATS1 will also automatically be considered as PATS and will be required to meet all the regulatory criteria for PATS. While this does ensure clear differentiation between PATS and PECS services, which will assist consumers in making informed choices about the available services, it is likely to establish investment hurdles that will inhibit the evolution of PECS services to PATS

1 PATS gating criteria are ‘a service available to the public’; ‘for originating and receiving national and international calls and’; ‘access to emergency service’; and ‘through a number or numbers in a national or international ’.

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services and will consequently inhibit the adoption of emerging technologies by operators with the strategic intent of delivering a PATS service.

Nortel believes it is in the interests of innovation and of the consumer that PECS VoIP services should be able to flourish in a transparent, stable, technology neutral regime with minimal regulation, including having the flexibility to offer PATS like services, but with consumer empowerment as detailed in this consultation.

¾ Developing VoIP Policy

Question 1: Given recent developments, do you agree that Ofcom’s focus should be on the following three objectives in developing our policy for VoIP services, namely (in so far as is possible) (i) enabling innovation in a technological neutral way, (ii) ensuring consumers are well informed, and (iii) ensuring maximum availability of 999 services?

Nortel agrees with the three objectives identified by Ofcom and stresses the need for these aims not to be country specific but to be shared with other National Regulatory Authorities (NRAs). Nortel believes that technology and service neutral regulation drives innovation. Nortel supports methodologies for consumers to be well informed about communications services and specifically a co-regulatory approach for PECS VoIP services which would help ensure that consumers are fully aware of whether their VoIP services includes access to emergency numbers on a best efforts basis. Nortel believes that many consumers value access to emergency services and that the type of available services will grow according to consumer demand.

¾ Service Levels

Question 2: Do respondents agree with this approach for the interaction between network providers and PATS providers?

Nortel agrees that it may not be practical for PATS VoIP providers to negotiate Service Level Agreements (SLA) with the full range of network providers that are used to deliver their service but that a VoIP provider should endeavour to put in place Service Level Agreements (SLA) if at all possible. In addition, documentation available to end customers by VoIP providers could also include information explaining service limitation to customers as a result of lack of control of the underlying network.

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¾ General Conditions

Question 3: Do you agree that the limitation of GC 3 obligation to providers of service at a ‘fixed location’ is not sustainable in the long term? What views do you have on how this may be addressed? Question 4: In of the other measures proposed in this document, are there particular issues in relation to VOIP services that should be addressed in this review? Question 5: Are there particular issues in relation to VoIP services that should be addressed in this review? Question 29: Do you have any other comments on the proposed approach to investigating the application of the GCs applicable to providers of PATS in the context of VoIP? Question 30: Do you have any comments on Ofcom’s views on the meaning of abovementioned terms and legal concepts?

The of innovation in VoIP services is that a restricted fixed service may become a communication service of the past. Regulatory frameworks that are limited to one type of service will quickly become obsolete. Next Generation Networks (NGNs) increasingly being rolled out enable services to be provided from anywhere in the network and anywhere in the world. Mobility is a key feature offered by VoIP - IP providing PECS will be easily portable offering the consumer complete mobility and flexibility. Such telephones may not look like traditional telephones but no more than soft phones on desktops, laptops and PDAs.

Nortel welcomes Ofcom’s decision to commence a broader review of the effectiveness of General Conditions (GCs) focusing on network integrity, location, disaster/emergency planning, numbering and number portability. Incredibly fast moving innovation in communications technology and usage means that regulation could be left behind and therefore Nortel supports Ofcom’s work in ensuring that regulatory rules do not hold back new services whilst at the same time ensuring that consumers are empowered.

¾ Number Portability

Question 6: Do you have any comments on Ofcom’s proposed modification to the PATS definition in GC 18?

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Nortel welcomes the decision to discontinue the interim policy with respect to number portability which will help to ensure effective competition develops between all types of PATS providers to the benefit and protection of consumers.

¾ Consumer Protection

Question 7: Do you agree with the proposed application of the code? Question 8: Do you agree with the proposed approach for informing consumers that services may cease to function if the broadband connection fails or there is a power cut or failure? Question 9: Do you agree with the proposed approach for informing customers where access to emergency calls is not available? Question 10: Do you agree with the proposed approach for informing consumers that access to emergency calls may cease to function if the Data Network fails or there is a power cut/failure? Question 11: Should the code be extended to point of signature acknowledgement in respect of reliability of access to emergency calls? Question 12: Do you agree with the proposed approach to location information providers where the service does provide access to emergency calls? In particular, do you believe that subscribers should be required to register their main location prior to activation of the service? Question 13: Do you agree with the proposed approach to informing consumers where services do not provide emergency location information? Question 14: Do you agree with the proposed approach to informing customers where services do not provide number portability? Question 15: Do you agree with the proposed approach to informing consumers about the types of facilities that might not be available, but which they have come to expect from a telephone service? Question 16: Do you agree with Ofcom’s view that all aspects of the code of practice should be mandatory? Question 17: Do you consider that the overall programme of activities is appropriate? Question 18: In light of Ofcom’s Consumer Policy Review, are there other consumer education measures that Ofcom should consider? Question 19: Do you have comments on this proposed enforcement approach?

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Question 20: Are their other areas of research activity that Ofcom should consider to ensure it understands market developments? Question 21: In relation to ensuring high availability of 999 access, are their other measures that Ofcom could consider?

Nortel does not supply services directly to residential customers. However, Nortel does supply services to small businesses with its Enterprise range of products. As a result, Nortel has decided to respond to the consumer related questions (numbered 7-21) en bloc and as applicable.

Nortel supports the co-regulatory approach outlined by Ofcom and the mandatory code developed by industry and Ofcom in partnership to ensure that consumers are fully informed of the service level of their chosen VoIP services including whether best efforts access to emergency services is included. VoIP services have the potential to deliver significant benefits to all consumers including competitive pricing of existing services and the delivery of new interactive services such as but not limited to nomadic instant messaging, presence and video.

¾ Naked DSL

Question 22: Do you agree with Ofcom’s approach to naked DSL?

Digital Subscriber Loop (DSL) is likely to continue as a key broadband access technology for some considerable time, and it is considered that third party service providers will increasingly demand access to it in its ‘naked’ form in order to compete. Nortel believes that it is appropriate for operators to first discuss commercial demand for naked DSL with BT rather than support any regulatory intervention at this time.

¾ Blocking of VoIP Calls/ Routing /termination

Question 23: Do you agree a cross industry meeting would be a useful approach to move this issue forward? What other steps could be taken to provide support for 056 numbers?

Nortel supports appropriate approaches that deliver sustainable competition and innovation in the market.

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Large-scale investment in NGNs and in broadband networks is allowing network operators to provide innovative services and applications. Whilst the network providers will expect to be able to manage a profitable business model the was designed to maximize consumer choice and innovation and has lead to an explosion in consumer benefits. The use of layered architecture and a ubiquitous IP standard allows for a decentralized and open internet.

Nortel feels that it is important to maintain a competitive market which is sustainable and allows for new technologies to flourish. Nortel hopes to see further deregulation in the market in Europe but agrees that there is a need for minimum regulation to ensure an appropriate level of interoperability in the networks to allow for non-discriminatory access.

¾ Nuisance Calls / Malware / DOS

Question 24: How can a VoIP call be traced for detection and prevention of malicious and nuisance calls? How could a suitable call screening service work in a VoIP network? Question 25: Do you agree that SPIT could be a potential problem and what techniques can be used to minimise the impact of SPIT on consumers of VoIP services. Question 26: Have there been any instances of a VoIP service being compromised or used to deliver malware or a DoS attack?

Ofcom is correct to recognize that many of the problems associated with email could affect the provision of VoIP services if steps are not taken to address those issues. One of the key issues associated with email is that it is relatively easy for users to forge the apparent identity of the . This significantly weakens the ability of consumers to filter out unwanted email and compromises the ability of service providers or other authorities to trace the originators of such email.

However, the latest releases of the relevant standards for architectural frameworks, notably 3GPP IMS and ETSI TISPAN, include the provision of a subscriber database (the HSS or UPSF) which can provide the essential basis for ensuring that all users of a network are authenticated before they can access the services.

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Clearly, this is only useful if the calling party is using a service with such a level of authentication. However, facilities to allow subscribers to block calls from unauthenticated networks/callers could be provided by service providers and malicious or nuisance calls made by authenticated callers are readily traced.

Furthermore, these models of subscriber authentication may be transferable to other services, including email, where a common identity is used to access a range of services.

Nortel believes that further consultation on the adoption of Identity Management techniques would be a worthwhile exercise.

¾ Extraterritoriality of VoIP Service Providers

Question 27: Are there any other considerations that need to be taken into account when a provider does not have a UK entity?

As previously discussed, voice services delivered by NGNs mean that a server can be located anywhere in the world. They enable tunnels to be constructed to connect an end user to any server. As discussed in the consultation any communications provider offering VoIP services in the UK is subject to the general authorisation and general conditions of entitlement regime. Enforcement is the issue rather than the details. As regardless of who provides the service, the server hosting it can be located in another country, it is crucial that VoIP regulation is harmonised across the European Union. Country specific regulatory variants only increase cost and hold back the benefits of a future network.

¾ Privacy and Encryption

Question 28: Is it reasonable to ask VoIP service providers to participate in schemes designed for e-commerce?

As noted above, the latest architectural frameworks for next generation networks include an HSS / UPSF that provides some of the key elements necessary to underpin the provision of secure communications, such as authentication of the parties.

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VoIP service providers that do not offer such capabilities may well find themselves at a competitive disadvantage to those that do.

¾ Network Integrity

Question 31: Are there any other steps that a VoIP service provider could consider in respect of the IP network layer and service application layers to ensure network integrity? Question 32: Are there any other steps that a VoIP service provider could consider in respect of parts of the underlying network that they do not control? Question 33: What additional steps could a VoIP service provider take to support nomadic users with regard to maintaining network integrity?

In the interests of consumer protection in the delivery of PATS a consumer single point of contact is required to meet any challenges posed by network integrity. However, in the near future of packet based NGNs, service and connectivity are unbundled which means that different network layers are provided by different providers. Therefore, it would no longer be appropriate to assume that a service provider has ownership or jurisdiction over all the network layers to provide a service e.g., with such new voice services the customer may be responsible for their own broadband access.

In the case of PATS the network and service provider have to work together for the service provider to be responsible for bundling the service and making sure all underlying elements are operational. For a PECS provided the consumer understands the type of service they are receiving this should be sufficient.

¾ Power Outage

Question 34: Do respondents consider whether other options to ensure continuity in the case of a power outage are appropriate?

Nortel believes that the requirement for in-line powering of terminals stems from a PSTN-based environment. Given recent technological developments in batteries for consumer products, any mandate for in-line powering for VoIP terminals would appear to ignore technological developments and the widespread acceptance of the use of

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batteries in terminals. With the further deployment of fibre and wireless (eg WiMax) networks in the access, line powering will cease to be practical.

¾ Reliable Location

Question 35: What other steps could be taken to provide reliable location to assist the emergency services in their work? Question 36: What other steps could be taken to provide reliable location to assist the emergency services in their work in the case of nomadic users? Question 37: In addition to participating in the NICC working group on providing location in IP networks and the 112 expert group, what other steps should Ofcom take?

Location information should only be mandated for PATS. Whilst location information can be provided for some new voice services, reliable location information may be more problematic. Some existing VoIP services facilitate location tracking through log-in providing self-certified location information and therefore access to emergency services is an appropriate service.

Concluding Remarks

Nortel would welcome the increased regulatory certainty that this consultation may lead to as investment in innovation will only happen in a predictable regulatory environment. VoIP services increasingly offer a wide range of innovative services to residential and business consumers. It is Nortel’s view that VoIP defined by PECS should be allowed to flourish in a transparent, stable and technology neutral regime with minimal regulation. For new voice services to be successful in the UK and EU it is imperative that regulation be harmonised across all EU Member States to the largest extent possible to allow for economies of scale throughout the supply chain. It would be disastrous if the lack of resolution of VoIP related issues were to lead to a requirement on an operator to maintain legacy PSTN infrastructure beyond the time it was economically feasible to do so. Nortel looks forward to seeing Ofcom’s statement on regulation of VoIP services when published in August 2006. In the meantime, Nortel welcomes any queries from Ofcom on any specific areas detailed in this response.

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About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world’s most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world’s greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

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