An Introduction to NTT's NGN and New Services in Japan

An introduction to NTT’s NGN and new services in Japan

MarchMarch 17,17, 20072007

TadanobuTadanobu OKADAOKADA

AssociateAssociate SeniorSenior ViceVice President,President, ExecutiveExecutive DirectorDirector ofof InformatInformationion SharingSharing LaboratoryLaboratory Group,Group, NTTNTT

1.1. TheThe currentcurrent statusstatus andand futurefuture directiondirection ofof Japan’sJapan’s telecommunicationstelecommunications marketmarket

2. NTT’s plans for the deployment of its NGN

3. Conclusion

• NTT’s PSTN consists of several thousand switches. • Although a then-state-of-art switching system (NS8000) 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 Several 0.25µm

tens Transit Transit e 3.3V PS 0.35µm

Other carriers Other carriers e switch switch r 0.5µm POI g

POI e

5V PS 0.6µm d NW between prefectures e

ion d 0.8µm u t in a t 1.0µm n co is 1.2µm D Several Transit NTT West NTT East Transit Integr switch switch hundreds 90 95 00 05 Year NW inside a prefecture NW inside a prefecture Several NS8000 thousands Local Local Local Local (developed around 10 years ago) switch switch switch switch

y IP telephony is spreading from business users (IP-PBX). Low rates (or free between specific points) offered by ISPs have increased the number of IP phone users in Japan to more than 13 million. y NTT already provides an IP phone service “Hikari Phone” using the ordinary telephone numbering plan.

OCN.Phone ■ Increase of subscribers to IP 1 Free phone service 14

OCNOCN Affiliated ISP’s IP Affiliated ISP’s illions) 12 network IP phone m 2 Free (178ISPs) 10 *1 *2 Non-affiliated ISP’s 8 3 ¢7 / 3min IP phone le (12ISPs) ab rk 6 a th *2 em w PSTN phone R ro 4 ¢7 / 3 min 4 g *2 5 ¢9 / 3 min PSTN phone 2 ¢14 / min 0 6 Mobile phone Number of subscribers ( 2004 2005 2006 Int’l phone network 7 Discount rate Int’l phone

• In the first quarter of 2005, the net increase in FTTH users exceeded that of ADSL users. In the second quarter of 2006, the number of ADSL users began to decrease. • In contrast, as anticipated by the u-Japan Plan, optical access is increasing rapidly.

1.6 Number ofsubscribers(millions)

1.4 7

1.2 6

1.0 5 ADSL 0.8 4

0.6 3

0.4 2 FTTH 0.2 1

0 0

Net increase in numbersNet increase in (millions) -0.2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2002 2003 2004 2005 2006

• The revenue from the fixed-line phone service has decreased considerably. • The revenue from the mobile phone service has also begun to decrease.

9.2 Fix-line-based operators （billion 8.8 -2.7 NTT East/West/Communications +0.4 US$） 6.5 6.9 ProfitProfit Profit +0.4 2.8 +530 2.6 1.8 2.0 （billion Mobile (NTT DoCoMo) +1.0 -0.2 -0.6 US$） 55 50.6 RevenueRevenue RevenueRevenue 49.4 48.0 50 47.2 45 42.1 40.1 40.4 39.7 40

2002 2003 2004 2005 2002 2003 2004 2005

•NTT has over 50% share in optical access nationwide. However, in urban areas, where fibers can be installed efficiently, NTT faces tough competition and is falling behind in many prefectures.

Share of FTTH market in individual prefectures (As of March 2005) 100 90 80 70 60 NTT average 50 40

NTT’s share (%) 30 20 10

O K K T S T H O H N S I N Y G T I F Y A A H 0 M O N S F K E K Y W S O K M F A N G s T K T C S b M Iw k a u u o h a h o i k y h s y a u i hi h o i a o h a u o u a k om o g i i a a o a i t r a i c a if g a a m iy a in m y t g g k k i g m m t o a o i a o r e k z g u i y m n k i i n c r k it k os a a u c u m o y go k g a u h k a a y b t h a u a t a k a a a a hi a a s a a k t i u a a t a a a a m a gi e or z s o s e a r h a a o i o n m a g o m i k s ga a w h m a h w gu n i m y w n a g i h i k a k i a k o a a a a i i d a im o k a i a e m a a w i i m c a m s m ta o to i hi a h a a a a i a

Numerous and diverse devices and appliances will be connected to the network, which should inevitably increase the variety of services, the means whereby services are provided, and number of service providers.

Domestic A variety of application services e-business & life market ApplicationApplicationApplicationApplicationApplication 54T yen (2005)Æ86T yen (2009) Platform market The future network needs a 2.4T yen (2005)Æ4T yen (2009) capacity of... Security market Future network Peta bits (1015) in 2015 1.2T yen (2005)Æ1.6T yen (2009) Exa bits (1018) in 2024 http://www.nri.co.jp/news/2005/050114.html Source: “R&D strategy for the 21st century network core technology”, Ministry of Internal Affairs and Communication 1.3B (2005) Æ1.8B subs (2010) Source: ITU statistics Internet New network appliances http://www.itu.int/ITUD/ict/statistics Fixed-line IP-TV Mobile access 2.0B (2005) 1.0B (2005) 5M (2005) Æ53M households Domestic applications Æ7.0B subs Æ2.5B subs 9. 5M (2005) (2010) (2010) (2010) Source: RNCOS Æ15M units (2010) Source: ITU statistics Source: ITU statistics http://www.rncos.com/Report/I http://www.nri.co.jp/news/2005/050114.ht http://www.itu.int/ITUD/ict/statistics http://www.itu.int/ITUD/ict/statistics M063.htm ml

It is urgent for NTT to increase profit by increasing revenue in addition to reducing capital and operational expenditure.

z Promote broadband & ubiquitous services like FMC and triple play >Revenue shift from telephony

Revenue from z Establish service delivery platform telephony Revenue for new seamless businesses from >Expand telecom market Broadband and ubiquitous services Cost z Migrate telephone network to IP >Reduce capital and operational expenditure

Broadcast High-speed IPIP Videos Internet IP phone Programs networknetwork

OpticalOptical fiberfiber :: SimultaneousSimultaneous transmissiontransmission ofof broadcastbroadcast programsprograms andand IPIP datadata

IPIP phonephone :: High-qualityHigh-quality videophonevideophone

TVTV Telephone :: High-qualityHigh-quality brbroadcastoadcast andand videovideo distridistributibutionon

TV InternetInternet : Stable and high throughput PC : Stable and high throughput environmentenvironment

AA peakpeak speedspeed ofof 100M100M bpsbps bidirectionalbidirectional transmissiontransmission forfor eacheach customercustomer isis possiblepossible underunder lowlow traffictraffic loads,loads, withwith IEEEIEEE 802.3ah802.3ah interfaceinterface conditions.conditions.

InIn thethe eventevent ofof heavyheavy traffic,traffic, thethe operatoroperator cancan controlcontrol thethe minimumminimum bandwidthbandwidth allocatedallocated toto eacheach ONUONU (this(this enhancesenhances thethe functionalityfunctionality ofof IEEEIEEE 802.3ah).802.3ah). ForFor example,example, ifif 3232 usersusers shareshare thethe bandwidthbandwidth equally,equally, thethe operatoroperator cancan guaranteeguarantee atat leastleast 30M30M bpsbps forfor eacheach customer.customer.

ONU-1 Downstream ONU-2 Upstream ONU OLT ONU-3 Max: 100M bps/ONU Optical splitter ONU-4 （Max: 32 branches）

2. NTT’s plans for the deployment of its NGN

3. Conclusion

BuildBuild NGNNGN thatthat isis ofof highhigh quality,quality, flexibleflexible andand securesecure

Develop and spread Open network that broadband and ubiquitous allows collaboration services that allow fixed- with other carriers and mobile convergence (FMC) xSPs

Smooth migration from Expand business xSP: existing fixed-line to IP opportunities by exploiting Provide new telephony, and from copper to broadband and ubiquitous business optical access services opportunities

StrengthenStrengthen competitivecompetitive edgeedge andand financialfinancial base,base, andand contributecontribute toto achievementachievement ofof u-Japanu-Japan

Community, ASPs and various e-commerce service players Network Broadcast, interface Lifestyle support, content providers home appliance disclosure,to enable various service players Open network interface to provide a IP-based network enabling wide array of provision of seamless fixed applications on IMS the NGN and mobile services NGNNGN

Safe, secure, and convenient network equipped with features of both the existing fixed-line Home Office, network telephone and IP networks hotspot, etc.

IMS:IMS: IPIP MultimedMultimediaia SubsySubsystemstem

Fiscal year 2006 2007 2008–

STEP 1 Steps in Provide optical access to 30M introducing users (End of fiscal 2010) the NGN Field trials STEP 2

STEP 3

Construct Construct transit network access networks Seamless integration Core network with mobile network -deploy core nodes -deploy optical wavelength deploy edge nodes transmission equipment

Service Deploy service control functions control IMS deployment functions (conforming to ITU standards)

Service Trial services Full-scale development •Broadband Internet access development •IP telephony services •Bi-directional video (data) communication •Ethernet services, etc.

• Trial period: One year from Dec. 2006 • Areas: Tokyo and its surroundings and Osaka

VariousVarious servicesservices throughthrough tie-upstie-ups withwith IT-IT- homehome applianceappliance manufacturersmanufacturers andand ASPsASPs

SNISNI (Applicat(Applicationion Sever-NetworkSever-Network InterInterfface)ace) NGNNGN IP multicast End-to-end function Security quality control functions

Base station

IPIP telephonytelephony InternetInternet VideoVideo accessaccess FMCFMC distributiondistribution © 2007 17 28 participants in the field trial The following companies are participating in the NGN field trial.

Cisco Systems Inc. Sony Corp. NEC Corp. Hitachi Ltd. Matsushita Electric Industrial Co., Ltd. Iwatsu Electric Co., Ltd. Oki Electric Industry Co., Ltd. Sumitomo Electric Networks, Inc. Fujitsu Ltd. Mitsubishi Electric Corp. Asahi Broadcasting Corp. Square Enix, Inc. TOHO Cinemas Ltd. USEN Corp. NTT Communications Corp. NTT DoCoMo, Inc. Internet Initiative Japan Inc. eAccess Ltd. K-Opticom Corp. KDDI Corp. ASAHI Net, Inc. NEC BIGLOBE Ltd. So-net Entertainment Corp. NIFTY Plala Networks Inc. an EditNet Co. Global Solution K.K. FreeBit Co., Ltd.

2. NTT’s plans for the deployment of its NGN

3. Conclusion

UpgradeUpgrade thethe fixedfixed-linefixed--lineline telephonetelephone networknetwork toto aa broadbandbroadband IPIP networknetwork byby applyingapplying thethe latestlatest optical,optical, broadbandbroadband andand IPIP technologiestechnologies

DeployDeploy newnew broadbandbroadband andand ubiquitousubiquitous servicesservices

CreateCreate newnew marketsmarkets byby collaboratingcollaborating withwith variousvarious serviceservice playersplayers onon thethe networknetwork

As one of the first carriers in the world to implement an NGN, NTT will be happy to share with Asian Pacific countries our experiences of NGN trials and deployment.