Global trends in telecom development Tim Kelly (ITU) CTO Annual Council, Gaborone,

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: [email protected]
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
Projection of growth trends, fixed and
Subscribers (million)
1'500
1'250
300
Fixed main lines
250
Mobile subscribers
1'000
Total int'l traffic
200
750
150
500
100
250
50
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: ITU.
Billions of minutes of int’l traffic
cellular subscribers and int’l traffic, 1995-2005
The changing pie: Global telecom
service revenue, 1998
Other (incl. Internet, leased
lines, telex), 10.6%
Domestic fixedline revenues,
59.2%
Mobile
service
revenues,
21.2%
International
revenues, 8.8%
1998 Telecom service revenue. Total = US$724b
Source: ITU “World Telecommunication Development Report 1999: Mobile cellular” (forthcoming)
Projection of revenue growth (US$bn)
1000
Service revenue (US$ bn)
900
800
700
Actual Projected
Other: Data, Internet,
Leased lines, telex, etc
600
500
Mobile
Int'l
400
300
200
100
Domestic Telephone/fax
0
90 91 92 93 94 95 96 97 98 99 00 01 02
Source: ITU.
Internet hosts (million)
July 1993-July 1999
56.2
Compound Annual Growth Rate = 61.8%
36.7
26.1
16.7
8.2
1.8
Jul-93
3.2
Jul-94
Jul-95
Jul-96
Jul-97
Jul-98
Source: ITU “Challenges to the Network: Internet for Development, 1999”, Network Wizards.
Jul-99
Distribution of Internet hosts,
January 1998
Australia,
Japan & New
Zealand
7.0%
Canada &
US
64.1%
Other
4.6%
Europe,
24.3%
Developing
Asia-Pacific
2.9%
LAC*
1.2%
Africa
0.5%
Source:
ITU “Challenges to the Network: Internet for development, 1999”.
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 fullyprivate, 3 are partially private, 1 is state-owned
 Independent regulators
 There are currently 84 independent regulators
(only 12 in 1990)
Degree of competition by service,
1999 (ITU Member States)
Monopoly
80%
Duopoly
Competition
70%
60%
50%
40%
30%
20%
10%
0%
Basic
services
Cellular
Source: ITU Telecommunication Regulatory Database.
Cable TV
ISPs
Degree of competition in basic
services, 1999, by region
90%
Monopoly
Duopoly
Competition
80%
70%
60%
50%
40%
30%
20%
10%
0%
Africa
Americas
Source: ITU Telecommunication Regulatory Database.
AsiaPacific
Arab
States
Europe
Increasing competition:
By no. of countries, by service, 1995-2005
Countries
100
Local
Long distance
International
90
80
70
60
50
40
30
20
10
0
1995
1997
1999
Source: ITU Telecommunication Regulatory Database.
2001
2003
2005
Percentage of outgoing international
traffic open to competition
Monopoly
74%
35%
85%
Competition
46%
4
14
29
48
1990
1995
1998
2005
Number of
countries
permitting
more than
one operator
for
international
telephony
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
1995
Source: ITU
Telecommunication
Regulatory Database.
Note: Some countries
made sales in several
tranches (e.g., Spain)
1996
Bolivia
Belgium
Cape Verde Germany
Cuba
Ghana
Czech Rep. Greece
Indonesia
Guinea
Mongolia
Hungary
Portugal
Indonesia
Spain
Ireland
Korea
Peru
Portugal
Singapore
Venezuela
1997
Armenia
Australia
Cote d'Ivoire
France
Greece
Hungary
India (MTNL)
India (VSNL)
Israel
Italy
Kazakhstan
Panama
Portugal
Senegal
Serbia
South Africa
Sri Lanka
Spain
1998
Brazil
Denmark (2)
France
El Salvador
Finland
Guatemala
Lithuania
Malta
Poland
Puerto Rico
Romania
Switzerland
Telecom Privatisations in Africa
Country
Year
%
Cape Verde
1995
Price Partner
US$m
40%
40 Portugal Telecom
Côte d’Ivoire
1997
51%
210
France Telecom
Ghana
1996
30%
38
Telekom Malaysia
Guinea
1996
60%
45
Telekom Malaysia
GuineaBissau
Sao Tomé &
Principe
Senegal
1989
51%
3
Portugal Telecom
1989
51%
1
Portugal Telecom
1997
33%
90
FT-led consortium
South Africa
1997
30%
Source: ITU Telecommunication Regulatory Database.
1’260 SBC/Telekom
Malaysia
Ownership status of the incumbent
Private
Countries
State-owned
160
140
120
100
80
60
40
20
0
1991
1993
Source: ITU Telecommunication Regulatory Database.
1995
1999
Separate regulatory bodies,
worldwide, 1998
Source: ITU
Telecom
Regulatory
Database.
Separate
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
“The future is here, it’s just not
evenly distributed” William Gibson
Teledensity
1996
27.8
8.6
1.4
0
to
to
to
to
68.3
27.8
8.6
1.4
(46)
(45)
(47)
(48)
Source: ITU World Telecommunication Indicators Database.
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
 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 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
 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?