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Standardization for IP-Based Network and Newest Trend Of Launching an NGN commercial service - NTT’s approach - December 16, 2008 Tatsuro Murakami NTT Information Sharing laboratory Group (C)2008 NTT Contents z Issues facing telecom carriers z The status of Japan’s telecommunications market z NTT’s Activities z NTT’s Medium-term Strategy z NTT’s Challenges in Field Trials z NGN Commercialization and Service Deployment z NTT’s history and plan for introducing the NGN z Questions for launching the NGN z Summary 2 (C)2007NTT Issues facing telecom carriers 3 (C)2007NTT Issues facing telecom carriers Issues facing all telecom carriers are migration to IP, promotion of broadband services, and creation of new telecom businesses. Carriers are investing in the NGN as a solution to these issues. z Promote broadband & ubiquitous services like FMC and triple play Revenue shift from telephony Revenue from z Collaborate with various service telephony Revenue from players in creating new businesses broadband and Expand telecoms market ubiquitous services Cost z Migrate telephone network to IP Reduce CapEx and OpEx 4 (C)2007NTT The status of Japan’s telecommunications market 5 (C)2007NTT The lifetime of NTT’s PSTN facilities NTT’s PSTN consists of about thousands switches. Although a then-state-of-art switching system was developed around 10 years ago, the rapid progress in technology since then has resulted in the discontinuation of production of some components used in the system. Currently, we are trying to prolong the lifetime of the switches by re-establishing sources for such components. Migration to more highly integrated LSI that operates with lower voltage power supply NTT Communications 1.8, 2.5V PS ~dozens 0.25µm Transit Transit 3.3V PS 0.35µm Other carriers Other carriers switch switch 0.5µm POI POI 5V PS 0.6µm d e NW between prefectures u 0.8µm n ti 1.0µm n co is 1.2µm D Degree of integration ~hundreds Transit NTT West NTT East Transit switch switch 90 95 00 05 Year NW inside a prefecture NW inside a prefecture NS8000 ~thousands Local Local Local Local (developed around 10 years ago) switch switch switch switch 6 (C)2007NTT The revenue structure of the NTT Group Revenue from traditional networks, such as the PSTN, is falling. This fall has not yet been made up for by revenue from broadband businesses. It is necessary to change the revenue structure by expanding revenue from Broadband services provided on the NGN. Consolidated revenue of NTT Group (Billion US$) Mobile 100 Internet and data communication Fixed-line analog telephone (POTS) 90 80 34 34 70 30 32 33 32 31 30 60 9 11 7 8 8 50 12 12 13 16 Revenue from 18 20 22 40 broadband market 30 49 46 45 41 40 40 38 36 20 34 31 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 7 (C)2007NTT Increase in ARPU of broadband services (ARPU : Average Revenue Per User) • The bundled service of FTTH records a higher ARPU than POTS service. • Since FTTH services can incorporate video delivery & other supplementary services, the ARPU is increasing gradually. ・ It is urgent to raise ARPU further to strengthen our financial basis. (Yen) 6,000 5,607 5,370 estimate 5,000 5,120 4,800 4,000 FY 2005 FY 2006 FY 2007 FY 2008 8 (C)2007NTT Promotion of optical access by the u-Japan Strategy The Japanese government’s “u-Japan” plan proposes the full development of broadband infrastructure by installing optical fiber networks nationwide. ProposedProposed statusstatus ofof broadbandbroadband networksnetworks inin 20102010 Proposed on Aug. 11, 2006 1. 100% broadband network The projected status of a 100% broadband network, through which broadband services are made available to all communities, is as follows: (1) Overall, a variety of wireline and wireless technologies will be seamlessly linked, and broadband service based on one or more of these technologies will be available nationwide. (2) In areas where cost-effective investment is difficult, broadband infrastructure will be built taking both investment efficiency and the needs of communities into account. Specifically, the following will be used in addition to ADSL and cable modems: (a) Wireless broadband using wireless LAN and other technologies; (b) Integrated broadband, in which “wireless and ADSL/VDSL”, “optical fiber and infrared transmission”, or “optical fiber and ADSL (in so-called Fiber To The RT (FTTR))” are integrated. (3) Of these varieties of broadband service, super-high-speed broadband access, mostly based on FTTH, will cover 90% of households nationwide. 9 (C)2007NTT Dramatic increase in the number of FTTH subscribers Number of users (Million) 16.0 14.0 12.0 10.0 Optical access is being promoted so aggressively that the number of FTTH subscribers is 8.0 of DSL subscribers has now gradually begun to fall. 6.0 4.0 2.0 0.0 02 Q2 02 Q4 03 Q2 03 Q4 growing rapidly and the number 04 Q2 04 Q4 05 Q2 05 Q4 06 Q2 06 Q4 07 Q2 CATV DSL 07 Q4 FTTH ADSL (NTT) Source: Ministry FTTH (NTT) Affairs and Communications of Internal (C)2007NTT 10 Intense competition in broadband access •Competition in the telecommunication market is intensifying in Japan. •NTT faces strong competition in gaining share in broadband access. Shares in ADSL market Shares in FTTH market Others Others 3.4% USEN7.4% ACCA 4.9% 7.6% KDDI 6.1% eAccess NTT 37.1% Power 14.3% Company 10.2% NTT SoftBank BB 71.4% 37.6% As of December 2007 11 (C)2007NTT 12 Hokkaido Aomori ss nationwide. However, in urban areas, Akita Iwate (C)2007NTT Miyagi y, NTT faces tough competition and is Yamagata Fukushima Ibaraki Tochigi Gunma Saitama Chiba Tokyo Kanagawa Yamanashi Nigata Toyama Ishikawa Gifu Share of FTTH, prefecture by prefecture Nagano Shizuoka Aichi Fukui Mie Nara Kyoto Osaka Shiga (As of March 2005) Wakayama NTT has over 50% share in optical acce Hyogo where fibers canFTTH be installedmarket in individual efficientl prefectures Okayama falling behind in many prefectures. Hiroshima Tottori Shimane Yamaguchi Share of 100 Kagawa 90 NTT average: 57.4% Ehime 80 Tokushima Kochi 70 Fukuoka 60 Saga 50 Nagasaki Oita 40 Miyazaki 30 T’ hr (%) share NTT’s Kumamoto 20 Kagoshima 10 Okinawa 0 Rapid reduction in the charge for broadband access •Strong competition has led to a price war, bringing down the charges for ADSL and even FTTH dramatically. •Strong competition has made it hopeless to seek to gain significant revenue from telecommunication traffic. 100 80 60 40 For detached house $34 20 $22 $21 Monthly charge (US$) 1.5M-type For MDU 0 2001 2002 2003 2004 2005 13 (C)2007NTT NTT’s Activities 14 (C)2007NTT NTT Medium-term Strategy - November ’04 Objective Contribute to National Plans of e-Japan and u-Japan to solve social problems such as population aging and environmental issues Milestone Migrate 3020 million customers to optical fiber access and next-generation network services by 2010 Specific actions (1) Develop and implement a ubiquitous broadband service by integrating fixed and mobile communicationsBuildBuild, etc. anan NGNNGN thatthat isis ofof highhigh quality,quality, flexibleflexible andand securesecure (2) Build a high-quality next-generation network that is flexible and secure (3) Migrate seamlessly from existingDevelop fixed andline spread telephony broadband to IP and telephony Build and an open from network copper that wire systems to optical fiber ubiquitous services that allow fixed- allows collaboration with mobile convergence (FMC) other carriers and ISPs (4) Expand business opportunities using a ubiquitous broadband service (5) Strengthen our competitiveness1 and financial base 2 3 Implement smooth migration from Expand business opportunities Provide new business existing fixed-line to IP-based by exploiting broadband ubiquitous opportunities to various telephony, and from copper to optical services service players (XSP) access StrengthenStrengthen competitivecompetitive edgeedge andand financialfinancial base,base, andand contributcontributee toto achievemachievementent ofof u-Japanu-Japan 15 (C)2007NTT Issues facing telecom carriers Issues facing all telecom carriers are migration to IP, promotion of broadband services, and creation of new telecom businesses. Carriers are investing in the NGN as a solution to these issues. z Promote broadband & ubiquitous services like FMC and triple play Revenue shift from telephony 2 Revenue from z Collaborate with various service telephony Revenue from players in creating new businesses broadband and Expand telecoms market ubiquitous 3 services Cost z Migrate telephone network to IP Reduce CapEx and OpEx 1 16 (C)2007NTT 17 (C)2007NTT Overview of Field Trials of NTT’s NGN Objectives : - Verification of the NGN implementation - Creation of new business opportunity with ASPs - Building consensus to use NGN as a communication infrastructure of the future Various services through tie-ups with IT- home appliance manufacturers and ASPs Osaka area Open connectivity functions NGNNGN IP multicast End-to-end Security function quality control functions Base station Tokyo area IP telephony Video Internet FMC distribution access 18 (C)2007NTT Examples of services tested in the trial ■ NGN for Business - High definition visual communication - Multipoint Web Conferencing System - Wideband IP conference phone - Enterprise-oriented network service - Push to talk with multimedia over NGN, etc. ■ NGN for Life - Broadcast retransmission over IP - High-definition IPTV service - IP high-definition videophone - Wideband IP phone - One phone, etc. ■ NGN for Society - Home security and control - Telepathology system - Healthcare - Ubiquitous network service for kid’s safety - Gentle touch supervision by robot, etc. 19
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