Next generation networks

Regulatory considerations

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9.5Regulatory considerations

In general, legacy networks have been monitored, guided and sometimes regulated by different regulations according to the business types which are based on different services. For example, PSTN/ISDN has been strong responsibility by the regulation for universal services, emergency services and interconnection. But PSDN has only strong guidance from accounting and charging aspect without other responsibilities. By the way, deployment of the NGN means that change the fundamental elements in the legacy networks such as services, network structure and the functioning model of the network structure in terms of business and regulation aspects. By taking into account these regulatory environments of legacy networks and features of the NGN, NGN raises regulatory challenges that can be linked, in one way or another, to the convergence process at the service provision and network access levels.

A number of challenges on the NGN from a regulatory perspective are being studied by ITU-D SG2 from several years ago in terms of general considerations, open access, market definition, QoS and interconnection. Followings are summary from the ITU-D SG2 report.

General considerations

The report from ITU-D SG2 indicated that it is important to remember NGN inherit some of the same regulatory obligations imposed on the PSTN/ISDN like lawful interception and access to emergency services. Lawful interception for packet mode services is already enabled by GPRS (General Packet Radio Service) in 2G mobile networks. GPRS has the capability to send a duplicate of all packets exchanged by a user over a PDP (Packet Data Protocol) context as well as the address of the entity accessed through this context. Lawful interception was introduced from the first 3GPP IMS R5 (Release 5) specification. Although NGNs and their services appear to offer numerous advantages, it is anticipated to get better understanding of all the options available and all the advantages and disadvantages related to NGNs. The followings are issues to be helpful for identifying these considerations:

  • What networks for what services?

  • What actions can the regulator envisage to facilitate migration to NGNs to the benefit of the consumer?

  • How is the regulation of dominant operators modified by migration to NGN?

  • What is the impact of the introduction of NGN networks on interconnection, tariff-setting for services, numbering, frequency spectrum management, etc.?

With a view to preparing transition of the existing telecommunication environment towards NGNs, possible problems raised by the NGNs, such as interconnection, consumer protection, redefinition of universal access, technological neutrality, quality of service, numbering and licensing should be carefully considered. Technical, economic and regulatory study on arrangements for migration to the NGN is very important with the purpose of determining the right time for migration. It is important to note that the regulator ensures the market emerging from the transition is fair, open and competitive and, on the other, to elucidate for the regulator all the technical, economic and regulatory issues raised by transition to the NGN, allowing it to identify as early on as possible the areas of interest related to its activity.

The following study issues have been considered for these objectives:

  • review the legal and regulatory telecommunication regime and identify those elements that may require adaptation in order to accommodate convergence;

  • gather the expectations of operators and service providers vis-à-vis NGN networks;

  • examine the migration strategy of the major fixed and mobile telephone operators regarding the core network and access network segments;

  • identify what elements hamper or boost migration to the NGN (at the technological, economic and regulatory levels);

  • identify the new economic models that will be associated with the NGN and their suitability and durability;

  • draw up the strategy for migration of fixed and mobile telephone networks to the NGN;

  • propose for that migration an ambitious roadmap that is adaptable to new technological changes, along with a budget, realistic realization deadlines and indicators/mechanisms to monitor its implementation.

The study should be conducted according to the following proposed phases:

  1. gathering and analysis of information on the legal and regulatory framework for telecommunications;

  2. organization of a seminar/workshop on NGNs open to all players in the telecommunication and ICT sector;

  3. collections of data from fixed and mobile telephone operators and Internet access and service providers;

  4. analysis and exploitation of the data on the situation in each country and comparison with the experiences of other countries;

  5. preparation of a roadmap, production of the final study report and the strategy document for transition to the NGN.

One of the ways to have regulatory perspective could be focused on the necessity of examining the NGN regulatory issues within the framework of a methodological approach. In this sense, a question about whether the NGNs are public goods or not is a good subject to examine many of aspects such as non-excludability in supply, non-rivalry in consumption and externalities. Study on these aspects may provide valuable inputs to direct very high level regulatory regime for the NGN, possibly adopting new regulatory approach which will have different regulatory frameworks than legacy networks.

Followings are summary of key features about aforementioned aspects:

  • Non-excludability in supply: This determinant means that the supply of the related product should cover everybody without a manner of excludability. The product that has been supplied in the market in a country or a society is within the reach of all individuals there. A supply on the level of market operation cannot be made by market players. One of the fundamental elements here is that the supplied product has not been supplied upon request. A product which has been provided for a person, at the same time, has been provided for each person or player in the society. The supply of the related product is provided homogenously. The supply is itself should be a homogenous product;

  • Non- rivalry in consumption: This determinant means that the consumption of the related product by a person does not pose a hindrance to another person’s consumption of the product. Consumption preferences of individuals are not homogenous but heterogeneous. On the other hand, this heterogeneous nature of preferences about consumption does not generate a competition or rivalry in consumption;

  • Externalities: This is the ratio relationship between benefit and cost for other units concerned with the product. A product which has been provided as a public good does not operate as efficiently within the framework of benefit-cost-balance unlike the functionality of free market. Public goods form a negative externality, so cannot be regarded as efficient situation in term of open market.

Open access with Next Generation Access (NGA) Networks

There was only a single access network infrastructure in legacy networks, thus it requires an obligation to reach access of local loop. However, in the scope of NGN which has no dependency on specific access networks, even fibre access is not an essential facility for NGN services. Thus it is worthwhile to focus on whether NGA (Next Generation Access) networks are essential facilities or not.

During migration to the NGN, PSTN/ISDN based access networks can be considered as an alternative to NGA networks. Consequently, NGN can be considered as a technologic device to give more IP based new services (video-phone service, broadband, IPTV and intelligent services, etc.) with respect to PSTN/ISDN based network structure.

Therefore, there needs to be a new regulatory approach for promoting competition, while encouraging investment in NGN access networks, such as the question of local loop unbundling (LLU) in a fibre environment. Today’s local loop unbundling regulations focuses on the last mile. But the move to FTTH, FTTB and FTTC means the focus is on the last quarter mile or less. Given the costs and other resources involved, the LLU model appropriate for legacy copper may have to be adapted for fibre or different remedies identified. Where regulators mandate LLU one option could be a bit-stream offer at the Central Office level, where the nature of the access network is totally transparent. Other options could include requiring collocation at the street cabinet level and backhaul from the cabinet to the operator’s node. In addition, there will be a new approach to LLU, throughout the NGN migration, different from the conventional perspective of LLU in legacy networks. Not having a regulation for LLU of NGA during the process of migration to NGN can be considered as a new approach. Because exposing LLU to the regulation in the migration process will aggravate the formation of distributive efficiency and fair competition. Companies deployed on the NGA networks should not be exposed to LLU, until sunk costs will have been recovered and the competitive environment will be emerged in the service market. The duration of the return of investment depends on the company business models, the market structure and the welfare of the society but it is generally understood that should be at least 4 or 5 years long. Obligation to LLU to NGA networks may cause the emergence of free-rider problem in the market. The free-rider issue must not be considered only for the return of the investments but also fairness and service differences of the various providers participated into the NGN.

After a competitive market structure is formed and the migration phase is completed, there exist other devices apart from LLU to benefit from fibre cable deployment such as bit-stream access, exchange and virtual unbundling. Beyond this, it should be also decided whether the competitive market is desired for retail service market or wholesale access market. However, backhaul could be difficult for competitive operators to provide for themselves unless duct-sharing is available.

Another issue, raised by FTTx, is possible removal of Main Distribution Frames (MDF) by the incumbent operator thereby making obsolete the "old" scheme of LLU for copper at least in its full unbundling and line sharing options, since LLU takes place at the MDF under traditional LLU scenarios. Where points of interconnection are withdrawn, it will be important for competitive operators both that they not face additional costs as part of the NGN migration process, and that they remain able to continue their current service offerings, and not face the problem of "stranded investments".

Market definition

The identification and definition of relevant markets are the basis of competition analysis used for the establishment of ex ante regulation in many countries, particularly in the EU. With NGN this task will become much more complex due to the blurring of the boundaries between technologies and services. This complexity could be at the source of disputes between regulatory authorities and market players.

Quality of Service

It is not the regulator’s duty to enter into the detailed technicalities of QoS provision within the NGN. However, to support essential services, such as interactive voice, regulators could contribute to the definition of the basic requirements needed at interconnection points, in a similar way to what occurs today between legacy networks such as PSTN/ISDN.

NGN’s unified transport of services raises issues related to the connection-less nature of IP transport, especially for real-time interactive voice or multimedia communication streams that are sensitive to packet loss, delay or jitter. However, many technologies that ensure QoS over an IP network already exist. These can be broadly split into technological approaches based on over-provisioning that is associated with relative priorities or on explicit end-to-end resource reservation.

It must be noted that the bulk of the Internet uses the "best-effort" model with no QoS guarantees. Many applications on the Internet use the Transmission Control Protocol (TCP) that reduces user traffic in the case of congestion. TCP, however, is not suitable for real-time applications like video streaming, voice or multimedia communications that cannot limit the rate of packet sending in case of congestion. Recently, more real-time applications such as voice telephony or video streaming are being represented, not only from fixed but also from mobile network environments, a significant amount of Internet core traffic. Today over-provisioned core network, as is the case of many Internet backbones, has serious challenges to handle this traffic including the problems about fair usage of network resources and data explosions.

However NGN relies on explicit guarantees provided by the network to its end-user for quality sensitive applications, such as IPTV and guaranteed VoIP. Such applications are expected to constitute a large portion of the NGN traffic. NGN is a managed and closed network, as such, many of the QoS techniques involving differentiated priorities and resource reservations that are not widely applied in the Internet because of scalability and cost issues. And, in the NGN architecture the transport domain is under the control of a service domain which guarantees that proper resources are allocated by the transport domain for the duration of a given service provision by the network.

The critical issue that remains is the need to ensure the coordination between different NGNs in order to provide end-to-end QoS. For this, end-to-end signalling should be applied over any packet transport bearer, the possibility of which was demonstrated by ITU’s specification of the Bearer Independent Call Control (BICC) protocol which is an adaptation of SS7. By definition and design, IMS architecture uses the SIP protocol for call (session) signalling. SIP is essentially an Internet end-to-end protocol; however 3GPP and ETSI TISPAN have extended it to make it usable for network control functions in NGN voice and multimedia calls. This occurs in a manner similar to call and service control functions in legacy SS7-based intelligent network architecture. ITU-T SG11 has been developed NGN signalling protocols for resource reservation on a call-by-call basis applicable within networks, especially at network interconnection points. This work has been done in close cooperation with 3GPP and ETSI TISPAN.


The need for interconnection between telecommunication networks stems generally from the over-arching necessity of service completion. NGN is no exception in this regard. In fact, NGN introduces even more interconnection requirements than legacy networks as a consequence of the ubiquity of access to services it introduces.

In addition to the legacy interconnection requirements for service completion among different networks (including legacy networks, NGN and between NGNs) it must allow subscribers the ability to:

  • Connect from any other network and get their service profile from their home network in order to be served according to it, which is similar to the concept of mobile roaming, but applied to all types of broadband packet access;

  • Access the services of their own network in preference to those of the visited network, which is a feature currently present in mobile networks that allows roaming subscribers to receive, for instance, network information messages and access value-added service in their own language; and

  • Access value-added services from a third-party service provider, which is a concept that is currently available for some 2.5 and 3G content services.

It is likely that the roaming issue will be even more complex with NGN. Today, the mobile industry has agreed on mutual roaming agreements without the necessity of regulatory intervention. Regulators have only intervened on the topic of roaming tariffs. With NGN, regulators will have to consider whether it will be necessary to mandate roaming. For example, should an NGN mobile access operator be required to allow clients of any NGN fibre access operator to roam on its access network and vice-versa?

9.6Business considerations

To accomplish whole process of the migration in smooth and success, it is essential to get enough support from the business environments which provide practical means for the realization of migration. Business environments should be built with contributions from all players who involved in the telecommunication businesses whether as providers and/or consumers in services, networks and contents.

Following Figure 26 illustrates more detailed scope of business environments showing relationship with other considerations. It may possible to look at business environments with following four different areas:

  • System Business environments: to know the domestic capability to develop and provide relevant systems into the market is the most important objective on this subject and this study also identify the relationships with/to foreign supports;

  • Network Business environments: this is the most crucial point to know the exact situation of business based on legacy telecommunication infrastructure including future plans for each networks (or network providers);

  • Service Business environments: this study provides the current status of legacy telecommunication services and helpful to know positions (or importance) of each service in the overall telecommunication services in the country which will guide for the future directions;

  • Contents Business environments: this identifies the status of contents related productions including consumptions and this will impact also choose a specific scenario for the migration.

Figure 26 – Scope of Business considerations

10Choose the scenario

After having all study and considerations, specific scenarios should be chosen. This section introduces what scenario should be used in what situation, especially applying for developing country.

10.1Overlay Scenario

The Overlay Scenario will be useful in the case of country or operator who have well stable or new PSTN/ISDN infrastructure. In this case, it is hard to justify replace all PSTN/ISDN equipment to NGN because this legacy infrastructure could not yet return value to compensate all their investment. And the status of infrastructure is quite good stage and will use next several years without any serious amount of operation, administration and maintenance including fault management.

Through this scenario, operator will be gradually preparing enough resources for the next investment while keeping their customers in a good situation. In addition to this, operator will also meet users’ requirements which use advanced capabilities through newly deployed NGN. According to the increasing of users who wish to use advanced capabilities, then operator will expand the coverage of NGN and consequently will decrease customers in legacy networks. Finally someday will fully deployed of NGN and cover all users. In this case, NGN users will communicate with PSTN/ISDN users using their simulation but through interworking between NGN and PSTN/ISDN networks.

10.2Replacement Scenario

This scenario will be useful in the case of country or operator who does not have enough PSTN/ISDN infrastructures, where there is already lack of connectivity to support voice services. In this case, it is hard to continue the deployment of PSTN/ISDN equipments because this will also need new investment while investment for NGN will be also necessary. But in this case, current users even using PSTN/ISDN will be continuously supported without any change of their terminal if possible.

Through this scenario, operator will stop their deployment of PSTN/ISDN but replaced investment to NGN. Then operator will provide ADF (Adaptation Function) to the current PSTN/ISDN users to provide continuous usage of voice services which means expansion of NGN emulation capabilities. And according to the increasing of users who wish to use advanced capabilities, then operator will expand the coverage of NGN and consequently will decrease customers who using emulation services. Finally someday all users will be fully covered by NGN capabilities.

This scenario will be useful for some parts of PSTN/ISDN need to be replaced but other parts of PSTN/ISDN are still in good stage. In this case, operator should keep PSTN/ISDN networks with relevant customers until the time of returning their investment or the status of PSTN/ISDN will request serious amount of operation, administration and maintenance including fault management which means time to replacement. In other direction, operator will start to deploy NGN infrastructure replacing other parts of PSTN/ISDN which reach to time to replacement.

Through this scenario, operator will be gradually preparing enough resources for the next new investment while keeping their customers in PSTN/ISDN situation. In addition to this, operator will also meet users’ requirements which use advanced capabilities through newly deployed NGN. According to the increasing number of users who wish to use advanced capabilities, operator will expand the coverage of NGN and consequently will decrease the number of customers in legacy networks. The final solution will be to fully deploy of NGN for covering all users.

References and Bibliography

[1] Webopedia:

[2] Wikipedia:

[b-ITU-T I.324] Recommendation ITU-T I.324 (1991), ISDN network architecture.

[b-ITU-T Q.1290] Recommendation ITU-T Q.1290 (1998), Glossary of terms used in the definition of intelligent network.

[b-ITU-T Y.2001] Recommendation ITU-T Y.2001 (2004), General overview of NGN.

[b-ITU-T Y.2261] Recommendation ITU-T Y.2261 (2006), PSTN/ISDN evolution to NGN.

[b-ITU-T Y.2201] Recommendation ITU-T Y.2201 (2009), Requirements and capabilities for ITU-T NGN.

[b-ITU-T Y.2011] Recommendation ITU-T Y.2011 (2004), General principles and general reference model for Next Generation Networks.

[b-ITU-T Y.2012] Recommendation ITU-T Y.2012 (2010), Functional requirements and architecture of next generation networks.

[b-ITU-T Y.1541] Recommendation ITU-T Y.1541 (2011), Network performance objectives for IP-based services.

[b-ITU-T Y.2018] Recommendation ITU-T Y.2018 (2009), Mobility management and control framework and architecture within the NGN transport stratum.

[b-ITU-T Y.2021] Recommendation ITU-T Y.2021 (2006), IMS for Next Generation Networks.

[b-ITU-T Y.2271] Recommendation ITU-T Y.2271 (2006), Call server-based PSTN/ISDN emulation.

[b-ITU-T Y.2002] Recommendation ITU-T Y.2002 (2009), Overview of ubiquitous networking and of its support in NGN.

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