Internet vs. Circuit Switched Telephony: Cost and QoS of Large Scale Integrated Services Networks

Telephony is an Internet application that has the potential to radically alter the telecommunications environment. This application may a ect traditional regulatory structures, subsidy structures, business models, etc. Today, users can transmit telephone-like voice tra c over the Internet at zero incremental price, unlike circuit switched telephony, which has a per-minute incremental price. These economics make Itel a compelling application for international users in particular. In our earlier paper [16], we showed that this was not due to a regulatory artifact, but to fundamentally lower cost for voice only networks with equivalent quality. In this paper, we consider the cost and quality issues of integrated services networks, as these are the networks that are evolving. To compare these networks, we build a \green elds" network for an area and a population equivalent to the US state of Rhode Island ( 1M people in 3140 km) using each technologies. We employed \normal" engineering standards for voice quality service and then compared the costs. To realize the comparable packet switched voice service with circuit switched, we dimension the Itel network to have a service quality generally similar to conventional telephony. The network simulation models are developed to support the appropriate dimensioning of the networks. In this initial computation, we assume that the local loop costs are identical for both technologies, and that the services provided are identical. In our earlier paper, we found that the switching and transmission costs for Itel are approximately 50% lower than the costs for circuit switching. We further nd that this cost di erence is largely due to the reduced intero ce transmission capacity required by Itel. This is consistent with the ndings in [14] and what many potential ITSPs (Internet Telephony Service Providers) claim [1]. We nd that the incremental cost of integrated services under Itel is near zero for a integrated service load that is 75% for voice, while it is much higher for the circuit switched networks. This has profound implications for the business models of telecommunications carriers.