ARO- BDT

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Convergence Business Challenges and Threats
International Telecommunications Union
Convergence Telecommunications Forum Business
Challenges and Threats Amman, Jordan 16 July 2002

• Khalil ABURIZIK,
• ITU Arab Regional Office
• Email aburizik_at_itu.int Web http//www.itu.int
  
  http//www.ituarabic.org

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Agenda

• The new Telecom Market
• The trend is Convergence
• The platform is IP
• The strategy is Alliance
• The model is Services
• The future is Mobile
• From dot.coms to dot.gones

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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 115 independent regulators
  (only 13 in 1990)

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Selected Trade Principles

• Market access
• Access to foreign market on reasonable,
  non-burdensome terms
• Access to telecommunication transport networks
• Transparency
• Rules of the game clear for all players
• Most-favoured nation
• Preferential market access granted to most
  favoured nation made available to all signatories
• National Treatment
• Foreign service providers treated no less
  favourably than domestic ones

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Telecom Reform Creating independent regulators
115
104
Regulatory agencies,
world (cumulative)
93
85
74
55
42
33
30
26
16
13
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Source ITU World Telecommunication Regulatory
Database.
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The New Telecom WorldPrivate, competitive,
mobile global

• Private
• More than half the world has a privatized
  incumbent operator gt 80 has some form of
  private participation
• Competition
• Majority allow mobile Internet competition
• De facto competition in international local
  services
• Mobile
• Surpassing fixed
• Globalization
• Operators
• Multilateral agreements
• Services

By country
By telecom revenue
Most countries have initiated a reform process.
Still, much fine-tuning remains to be done.
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Getting the recipe right

• Assessment of telecom market and telecom
  development is based on three essential
  ingredients
• Competition
• Private sector participation
• Independent regulation

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Global Tele-Economy Revenues
US Billion
Source ITU
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Old economy and New economy Networks Whats
the Difference?

• Old economy network
• Hybrid analogue/digital
• Circuit-switched
• Highly regulated
• Priced per minute
• Distance-sensitive pricing
• Generally state-owned and operated
• Accounting rate system means cash flows from net
  traffic generating to net traffic receiving
  countries

• New economy network
• All digital
• IP (packet-switched)
• Largely unregulated
• Priced per megabyte
• Distance-insensitive pricing
• Generally privately-owned and operated
• Peering and transit system means cash flows from
  net traffic receiving to net traffic generating
  countries

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Internet Trends
Phenomenal Growth Projections in all Regions. New
Types of Alliances and Partners. New Business
Models and Revenue Streams. Core Platform for
Convergent Services. Reduced Set-up Costs for
Start-ups.
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The Trend is Convergence
Convergence is Breaking Industry and Service
Barriers Broadcasting Companies --gt Voice and
Network Services Telecom Operators --gt data
network and financial services Computing
Companies --gt Broadcasting (TV services) Financial
Institutions --gt Data network access
Services Voice Services provided over data
networks (VoIP) Data Services over broadcasting
networks (DVB) Broadcasting services over data
networks (WebTV, Radio) Voice and Data Services
over electrical power lines TV Stations Using Web
as another Distribution Channel
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The Platform is IP
Rapid Evolution in Several Platforms Fixed
Networks (dial-up, ISDN, Satellite, leased
line) Digital Mobile Data Services (GSM, WAP,
I-mode) Streaming Media (WebTV, VoIP, Cable
Modems) Household Appliances (TVs, Microwaves,
Refrigerators) Wireless Access (PDA Mobile,
Bluetooth) Broadband (xDSL, DWDM, UWA, 3G Mobile
- IMT2000) Power-line Technology For Internet
Access Fixed Mobile Convergence (WAP)
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The Strategy is Alliance
No Single entity holds answer to puzzle,
traditional carriers and operators are converging
to provide the new services Broadcasting
Companies Access Providers TV-based Internet
access and e-tailing Content Providers Network
Carriers Distributed Content delivery and
Hosting Mobile Operators Financial Institutions
Software Firms Mobile e-Payments Fixed
Operators Broadcasting Companies Voice
Services via TV Networks Energy Companies xSPs
Powerline Internet Access Operators Financial
Companies ePayment Solutions And Small
Businesses Big Businesses Survival
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The Model is Services
1- Application Service Provisioning (ASP)
Deploy, Host, Manage, Rent Access to
Applications for businesses from a central
location with security, availability and
performance. Issue Finding the Right Position in
the ASP Value Chain 1. Network Access Services
(Network Connectivity) 2. Content Distribution
Services 3. Community and Hosting Services 4.
Business Productivity and Communications
Solutions 5. Application Integration and
Work-Group Solutions Network --gt Services --gt
Applications --gt Content --gt Portal
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NSP - Strategies
2- Network Service/Access Provisioning (NSP)
Reliable, low-cost, high speed access for
Businesses and Consumers Issue Finding the model
for reliable and affordable Internet Access to
All. 1. Determine Appropriate Pricing Policy for
Services 2. Take Advantage of New access
Technologies 3. Forge Strategic Alliances with
New Bread of Carriers 4. Migrate from Traffic to
Content Delivery Services
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Why Change
the rapid rate of change of technologies and its
falling costs, the convergence of technologies,
services and industries and the process of
globalisation, the phenomenal growth of the IP
networks (e.g. Internet) and the proliferation of
pervasive computing, the emergence digital
wireless mobile data services and technologies
(Bluetooth, WAP, GPRS and IMT2000), digital TV,
voice recognition, Internet appliances and
Broadband IP (xDSL, DWDM ) access, the increase
in mergers, alliances and powerful new
players, the breakdown of geographical, time and
industry sector barriers, are perpetuating the
phenomenon of e-convergence and introducing new
opportunities and challenges to developing
countries.
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E-Business Drivers

• Better Shopping Options, Price Comparison,
  Cost-effective and Rapid Market Expansion.
• Drive to Streamline Business Processes and
  Customer Demands
• Search for New Revenue Streams by moving up the
  value-chain as Profits Margins for Voice Traffic
  Declines.
• Operators Capitalising on Customer-base and
  Investments.

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We found the missing link Its mobile
communications
Telephone subscribers internet users millions
97 countries have more mobile than fixed phones
Fixed
Internet
Mobile
2002Mobile surpasses fixed
Mobile has raised access to communications to
new levels policy-makers must look to mobile as
a way of achieving social policy goals.
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One gap closes, another opens up
Total telephone subscribers Per 100 inhabitants
International Internet bandwidth, Per capita, 2001
x112
x171
x10327
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Jordan, Arab Countries and the World
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M-Commerce Drivers (1)
High growth rate expected due to lower deployment
cost and speed of deployment. Mergers and
alliances between mobile operators, equipment
manufacturers and service providers creating
opportunities for new services. Convergence to IP
as platform is facilitating access to existing
IP-based services through WAP and
I-mode. Problems of low speed on 2G platforms and
limited WAP services will be resolved as
migration from circuit-switched to
packet-switched networks continues. Migration
from time-based tariffs to volume-based tariffs
will create opportunities for IP-based services
and content. Security (SIM and PIN codes) on
Mobile terminals (as PSEs) encourage secure
e-payment solutions.
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M-Commerce Drivers (2)
Falling prices for high speed processors and
reduction in their sizes will transform mobile
devices to powerful handheld computers. Global
Standards (ITU-T/ITU-R Recommendations) will
enable global interoperability, create critical
mass and reduce deployment cost. Pre-paid
services will provide low-entry cost for
subscribers but might have negative impact on
operator revenues as customer loyalty reduces.
These drivers will affect the business models
for operators as voice revenues decline. But
they also present new markets for innovative
operators and service providers what can
capitalise on the opportunities brought about by
these changes.
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M-Commerce Applications
Banking - Accounts, Statements, Bill payments and
Fund Transfers Payments - Credit cards, Micro
payments and Pre-paid Trading - Stock quotes,
Notifications of events. E-Government - E-voting
and E-admin, E-payment Retailing Subscription
and Direct sales Entertainment - Interactive TV
and Live Music
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Mobile Commerce Services

• Security Services
• Access Control
• User Authentication
• Digital Signatures
• Non-repudiation
• Data integrity

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The dot.com euphoria

• What Happened to the New E-economy?
• Building market share and dominance was vital.
• Long term future was justification for high share
  prices.
• Cash and profits were secondary.
• Technology used as a business rather than
  enabler.
• Unlimited cash injections from Venture Capitaists
  VCs and Initial Public Offers IPOs.
• Business models too complex for VCs and
  investors.
• Having an Internet Strategy was the guaranteed
  component for success.
• More than USD 3 trillion lost when the bubble
  burst.

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The dot.com euphoria

• That was
• bricks and mortar to
• bricks and clicks to
• clicks and clicks to
• bricks and clicks
• Can these pitfalls be avoided?
• Does this affect e-commerce growth?

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Reinventing Telecoms
Thank you, See you at
www.itu.int www.ituarabic.org