Suitability of IP Telephony in the Public Switched Telephone Network (PSTN): A Case Study

Suitability of IP Telephony in the Public Switched Telephone Network (PSTN): A Case Study

Hak Ju Kim (University of Houston–Clear Lake, USA)
DOI: 10.4018/978-1-60566-148-3.ch003
OnDemand PDF Download:
$37.50

Abstract

This article seeks to develop a richer understanding of the suitability of IP telephony in the Public Switched Telephony Network (PSTN) with an actual local exchange carrier (LEC)’s case and network simulation. We also performed a simple real options analysis to evaluate a telecommunications network. The underlying network and associated data were derived from our studies of an actual LEC. The preliminary result shows that an IP telephony network would save about 73% of the total link capacity of a circuit switched network and it could also carry some integrated services traffic at low incremental cost. The value of the IP telephony network was shown as positive under real options and as negative using net present value (NPV). We measured deferrable and irreversible value as well as the uncertainty value of an IP telephony network. Through this experiment, we can get inference that IP has potential for a voice carriage.
Chapter Preview
Top

Introduction

Real options have been popular in academics (Amram & Kulatilaka, 1999; Brealey & Myers, 2002; Dixit & Pindyck, 1994; Graham & Harvey, 2002; Kauffman & Li, 2005), by recognizing its fundamental importance as a strategic decision-making tool. However, they do not feel the effect on how it leads to reframe the way they approach to solve a certain problem and to build in much more flexibility into their problems in practice.

The current telecommunications industry can be characterized as dynamic, aggressive, and uncertain (Antonelli, 1997; Bourreau & Dogan, 2001; Grover & Vaswani, 2000; Uri, 2000). This is particularly true for Internet-based businesses, due in large part to the ongoing development of IP-based technologies and declining costs (Leida, 1998; McKnight & Bailey, 1997; Odlyzko, 1998). Extrapolating from the growth of the Internet, some industry observers (Bos & Leroy 2001; Traupman, O’Connell, Minnis, Jadoul, & Huterer, 1999; Venken, Vleeschauwer, & Vriendt, 2001) expect that the primary network of the future will be IP-based. Included in this framework is voice traffic, which has been emerging as an Internet application in recent years.

The phenomenon of IP telephony (IPT) is interesting from many perspectives. Several previous studies (Marlatt, 1998; McKnight & Leida, 1998; Mier, 1998; Pospischil, 1998; Selsius Systems, 1998; Weiss & Hwang, 1998; Wong, 1999) have shown that the transmission and switching costs of this technology are lower than circuit switching, leading to speculation that IP technology will eventually replace circuit switching technology in the PSTN. The decision to undertake such a technological transition will surely be complex and multidimensional.

IPT is becoming an alternative to the telephone technology used by traditional telephone networks that have not changed substantially for decades. However where IPT can be a substitute for traditional telephony, it has a variety of challenges such as technical hurdles (Stone, 2003), pricing dilemma (Wieland, 2006), and policy environments (FCC, 2004). IPT also has many uncertainties, such as reduction in current growth rate, devaluating equipment and service by the short IP technology transition cycle, a fiercely competitive landscape of technology substitutes and innovations, and uncertain service demands by subscribers. Various policy issues are unresolved: the possibility of universal service obligation, access charge requirements, and treatment as a traditional telephone company. Enormous uncertainties create the opportunity to make decisions as states of nature are revealed. The uncertainties associated with IPT suggest the real options approach would be useful. For example, when should an Internet company try to enter the IPT market? If it enters now, it may obtain a larger market share that it would not get by entering later, but it may lose money because of too small a total market. If it waits a few years, it will know if market growth will be high or low, but it has missed out on several years of sales and will probably obtain a reduced market share due to late entry. Under these types of uncertainties, IPT is ripe for a real options approach.

Complete Chapter List

Search this Book:
Reset
Dedication
Editorial Advisory Board
Table of Contents
Preface
Indranil Bose
Chapter 1
Varadharajan Sridhar
Telecom operators have a wide variety of functions to perform including marketing of telecom products and services, managing their networks... Sample PDF
Strategic Outsourcing: Opportunities and Challenges for Telecom Operators
$37.50
Chapter 2
Sami J. Habib
This article presents a computer-aided integration tool, iCAD, that can predict a network evolution. We have used the term a network evolution to... Sample PDF
Empirical Prediction of Computer-Network Evolution
$37.50
Chapter 3
Hak Ju Kim
This article seeks to develop a richer understanding of the suitability of IP telephony in the Public Switched Telephony Network (PSTN) with an... Sample PDF
Suitability of IP Telephony in the Public Switched Telephone Network (PSTN): A Case Study
$37.50
Chapter 4
Abid Al Ajeeli
This chapter describes a detailed framework configuration infrastructure design for a high performance network. The configuration is described based... Sample PDF
A Framework for High-Speed Networking
$37.50
Chapter 5
Nurul I. Sarkar, Catherine Byrne, Nabeel A.Y. Al-Qirim
Ethernet network technology is still one of the most popular LAN technologies in use today by many organizations and educational institutions... Sample PDF
Updating on Gigabit Ethernet Implementation: The Case of a Large New Zealand Organization
$37.50
Chapter 6
M. Chandrasekaran, R. S.D. Wahida Banu
This chapter introduces and analyses a class of non-linear congestion control algorithms called polynomial congestion control algorithms. These... Sample PDF
Interaction Between MIMD-Poly & PIPD-Poly Algorithms and other TCP Variants in Multiple Bottleneck TCP Networks
$37.50
Chapter 7
Xabiel G. Pañeda
This chapter presents a method for performance analysis and configuration of audio/video-on-demand services. These kind of services makes use of an... Sample PDF
A Systematic Approach to the Analysis and Configuration of Audio/Video-on-Demand Services
$37.50
Chapter 8
Say Ying Lim
As more and more servers appearing in the wireless environment provide accesses to mobile users, more and more demand and expectation is required by... Sample PDF
Mobile Information Processing Involving Multiple Non-Collaborative Sources
$37.50
Chapter 9
Vilmos Simon
In the next generation IP-based mobile networks, one of the most important QoS parameters are the delay and the delay variation. The cell handover... Sample PDF
Network Planning Algorithms for Optimizing Signalling Load in Mobile Networks
$37.50
Chapter 10
Joon-Yeoul Oh, John P. Mullen
This chapter proposes a very effective heuristic algorithm to address a variation of the cellular network expansion problem and discusses each... Sample PDF
A Heuristic Solution to the Large Scale Cellular Telecommunication Network Expansion Problem
$37.50
Chapter 11
Manuel Vilas
This article introduces a distributed system, called wireless proxy, to mitigate the effects of user mobility over streaming services on IEEE 802.11... Sample PDF
Wireless Proxy: Distributed System to Mitigate the Effects of User Mobility Over Streaming Services on IEEE 802.11 Wireless LANs
$37.50
Chapter 12
R. Radhakrishnan, K. R. Shankarkumar, A. Ebenezer Jeyakumar
In this chapter, we propose a new scheme for Multi User Detection (MUD) using Parallel Interference Cancellation (PIC) technique. This technique... Sample PDF
Soft Decision Parallel Interference Cancellation for Multi-Carrier DS-CDMA
$37.50
Chapter 13
Ghassan Kbar
This chapter introduces a new radio resource management technique based on distributed dynamic channel assignment, and sharing load among Access... Sample PDF
Distributed Resources Management in Wireless LANs that Support Fault Tolerance
$37.50
Chapter 14
Mieso K. Denko
This article proposes a cooperative data caching and prefetching scheme for Mobile Ad Hoc Networks (MANETs). In this scheme, multiple hosts... Sample PDF
Cooperative Data Caching and Prefetching in Wireless Ad Hoc Networks
$37.50
Chapter 15
Essam Natsheh
The challenge in creating a routing protocol for ad-hoc networks is to design a single protocol that can adapt to the wide variety of conditions... Sample PDF
A Survey on Fuzzy Reasoning Applications for Routing Protocols in Wireless Ad-Hoc Networks
$37.50
Chapter 16
Essam Natsheh
Mobile ad-hoc network is a network without infrastructure, where every node has its own protocols and services for powerful cooperation in the... Sample PDF
Fuzzy Linguistic Knowledge for Active Queue Management in Wireless Ad-Hoc Networks
$37.50
Chapter 17
Yun Wang, Lee Seidman
The use of network traffic audit data for retrieving anomaly intrusion information and profiling user behavior has been studied previously, but the... Sample PDF
Risk Factors to Retrieve Anomaly Intrusion Information and Profile User Behavior
$37.50
Chapter 18
Rania Wehbi
In Inter-Vehicle Communication (IVC) networks, the high mobility and lack of infrastructure pose major challenges in designing secure routing... Sample PDF
Network Setup for Secure Routing in Inter-Vehicle Communication Networks
$37.50
Chapter 19
Antonios Alexiou, Christos Bouras, John Papagiannopoulos, Dimitrios Primpas
This chapter presents the design principles that cover the implementation of broadband infrastructure in the region of Western Greece, by examining... Sample PDF
Metropolitan Broadband Networks: Design and Implementation Aspects, and Business Models
$37.50
About the Contributors