Global trends in telecom development

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Global trends in telecom development Tim Kelly
(ITU) CTO Annual Council, Gaborone, 20 September
1999
The views expressed in this presentation are
those of the author, and do not necessarily
reflect the opinions of the ITU or its
membership. Tim Kelly can be contacted by e-mail
at Tim.Kelly_at_itu.int.
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Global trends in telecom development

• The state of the industry
• Fixed-lines
• Mobile
• The Internet
• The state of the market
• Increasing competition
• Private sector participation
• Independent regulation
• The shape of things to come
• The changing telecom development gap
• The industry in 2005
• Key policy issues

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Projection of growth trends, fixed and cellular
subscribers and intl traffic, 1995-2005
1'500
300
Fixed main lines
1'250
250
Mobile subscribers
Total int'l traffic
1'000
200
Subscribers (million)
750
150
Billions of minutes of intl traffic
500
100
250
50
0
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source ITU.
4
The changing pie Global telecom service revenue,
1998
Domestic fixed-
Other (incl. Internet, leased lines, telex),
10.6
line revenues,
59.2
Mobile
service
revenues,
21.2
International
revenues, 8.8
1998 Telecom service revenue. Total US724b
Source ITU World Telecommunication Development
Report 1999 Mobile cellular (forthcoming)
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Projection of revenue growth (USbn)
1000
Actual
Projected
900
800
Other Data, Internet,
Leased lines, telex, etc
700
600
Mobile
500
Int'l
Service revenue (US bn)
400
300
200
Domestic Telephone/fax
100
0
90
91
92
93
94
95
96
97
98
99
00
01
02
Source ITU.
6
Internet hosts (million) July 1993-July
1999 Compound Annual Growth Rate 61.8
56.2
36.7
26.1
16.7
8.2
3.2
1.8
Jul-93
Jul-94
Jul-95
Jul-96
Jul-97
Jul-98
Jul-99
Source ITU Challenges to the Network Internet
for Development, 1999, Network Wizards.
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Distribution of Internet hosts, January 1998
Australia,
Japan New
Zealand
7.0
Developing
Canada
Asia-Pacific
Other
US
2.9
4.6
64.1
Europe, 24.3
LAC 1.2
Africa
0.5
Source ITU Challenges to the Network
Internet for development, 1999.
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The state of the market

• Increasing competition
• Around two-thirds of telecom subscribers now have
  a choice of operator
• More than 99 per cent of mobile and Internet
  subscribers now have a choice of operator
• Dominantly private-ownership
• 19 out of top 20 top public telecom operators are
  partially or fully private-owned
• Of the top 20 mobile operators, 16 are
  fully-private, 3 are partially private, 1 is
  state-owned
• Independent regulators
• There are currently 84 independent regulators
  (only 12 in 1990)

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Degree of competition by service, 1999 (ITU
Member States)
Monopoly
Duopoly
Competition
80
70
60
50
40
30
20
10
0
Basic
Cellular
Cable TV
ISPs
services
Source ITU Telecommunication Regulatory
Database.
10
Degree of competition in basic services, 1999, by
region
90
Monopoly
Duopoly
Competition
80
70
60
50
40
30
20
10
0
Africa
Americas
Asia-
Arab
Europe
Pacific
States
Source ITU Telecommunication Regulatory
Database.
11
Increasing competition By no. of countries, by
service, 1995-2005
Countries
100
Local
90
Long distance
80
International
70
60
50
40
30
20
10
0
1995
1997
1999
2001
2003
2005
Source ITU Telecommunication Regulatory
Database.
12
Percentage of outgoing international traffic open
to competition
Mono-
poly
Compe-
85
74
tition
46
35
Number of countries permitting more than one
operator for international telephony
4
14
29
48
1990
1995
1998
2005
Note Analysis is based on WTO Basic
Telecommunications Commitments and thus presents
a minimum level of traffic likely to be open to
competitive service provision. Source ITU,
WTO.
13
Recent privatisation transactions
Source ITU Telecommunication Regulatory
Database. Note Some countries made sales in
several tranches (e.g., Spain)
14
Telecom Privatisations in Africa
Source ITU Telecommunication Regulatory Database.
15
Ownership status of the incumbent
Private
State-owned
Countries
160
140
120
100
80
60
40
20
0
1991
1993
1995
1999
Source ITU Telecommunication Regulatory
Database.
16
Separate regulatory bodies, worldwide, 1998
Source ITU Telecom Regulatory Database.
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The development gap is shrinking but also shifting

• The share of the telecom market of Low
  Lower-middle income countries
• Fixed-lines 1984 13 1998 27
• Mobile [phone]
• Internet hosts 1993 0.1 July 1999 1.7
• Some LDCs and CIS Republics are falling further
  behind in fixed-line networks
• No growth or decline between 1995-98 in
  Afghanistan, Armenia, Burundi, DPR Congo, Haiti,
  Kazakhstan, DPR Korea, Kyrgyzstan, Sierra Leone,
  Somalia, Tajikistan, Uzbekistan, Zambia

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The future is here, its just not evenly
distributed William Gibson
Teledensity
1996
(46)
(45)
(47)
(48)
Source ITU World Telecommunication Indicators
Database.
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Forecasting to 2005 Projecting forward current
trends

• By 2005, there could be
• 1.4 billion telephone lines
• 1.1 billion cellular telephone subscribers
• 400-500 million Internet users
• These could account for
• 250 billion minutes of intl voice/fax traffic
• 2.5 trillion minutes of total voice/fax traffic
• 1000000 Gigabits (1 Petabit) per second of
  Internet traffic
• Services market of around US1.1 trillion
• Equipment market of around US400 billion

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Forecasting to 2005 Identifying discontinuities

• By 2001, less than 10 of intl traffic will use
  accounting rate system
• Domestic interconnect fees will be dominant mode
• Major price cuts in international calls after
  2002/2003
• Availability of new infrastructures
• Impact of Internet pricing model (distance and
  duration independent)
• Mobiles exceed fixed-line phones in most OECD
  countries by 2004/2005
• Introduction of third generation mobiles after
  2001
• Generational shift, as new users reject
  fixed-lines

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The intl telecoms market in 2005 Some educated
guesses

• The premium of an international call over a
  domestic call (currently gt300) will be lt20
• Internet-like pricing structure
• Traffic flows will be dictated by a small number
  of hubs connected to multiple fat pipes
• Major hubs in New York, London and Hong Kong?
• Major alliances will own a smaller share of the
  market as infrastructure owners resell capacity
• Market significantly bigger by volume, but only
  slightly bigger by revenue
• Telecom development gap will shift
• Gap between middle income countries and LDCs

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Key policy issues to be tackled

• Interconnection
• How to manage the transition to a multi-player
  environment?
• Internet
• Who really sets the rules? Who really gets
  benefits?
• International settlements
• How to transition to a cost-oriented system while
  providing a soft-landing for developing
  countries?
• International infrastructures
• How to ensure equal access at competitive rates?
• Investment
• How to increase investment, esp in LDCs?