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Global trends in telecom development Tim Kelly (ITU) CTO Annual Council, Gaborone, 20 September 1999.

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slide1

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@itu.int.

slide2

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
slide3

Projection of growth trends, fixed and cellular subscribers and int’l traffic, 1995-2005

1'500

300

Fixed main lines

1'250

250

Mobile subscribers

Total int'l traffic

1'000

200

Subscribers (million)

Billions of minutes of int’l traffic

750

150

500

100

250

50

0

0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Source: ITU.

slide4

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 = US$724b

Source: ITU “World Telecommunication Development Report 1999: Mobile cellular” (forthcoming)

slide5

Projection of revenue growth (US$bn)

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.

slide6

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.

slide7

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”.

the state of the market
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)
slide9

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.

slide10

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.

slide11

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.

slide12

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.

recent privatisation transactions
Recent privatisation transactions

Source: ITU Telecommunication Regulatory Database. Note: Some countries made sales in several tranches (e.g., Spain)

telecom privatisations in africa
Telecom Privatisations in Africa

Source: ITU Telecommunication Regulatory Database.

slide15

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.

slide16

Separate regulatory bodies, worldwide, 1998

Source: ITU Telecom Regulatory Database.

the development gap is shrinking but also shifting
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: 1990 = 1.4%; 1998 = 12%
    • 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
slide18

27

.8

to

68

.3

8

.6

to

27

.8

1

.4

to

8

.6

0

to

1

.4

“The future is here, it’s just not evenly distributed” William Gibson

Teledensity

1996

(46)

(45)

(47)

(48)

Source: ITU World Telecommunication Indicators Database.

forecasting to 2005 projecting forward current trends
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 int’l voice/fax traffic
    • 2.5 trillion minutes of total voice/fax traffic
    • 1’000’000 Gigabits (1 Petabit) per second of Internet traffic
    • Services market of around US$1.1 trillion
    • Equipment market of around US$400 billion
forecasting to 2005 identifying discontinuities
Forecasting to 2005 Identifying discontinuities
  • By 2001, less than 10% of int’l 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
the int l telecoms market in 2005 some educated guesses
The int’l telecoms market in 2005: Some educated guesses
  • The premium of an international call over a domestic call (currently >300%) will be <20%
    • 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
key policy issues to be tackled
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?