Trade in Telecommunications

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TRADE IN TRADE IN TELECOMMUNICATIONSTELECOMMUNICATIONS

Michael MingesTelecommunication Development Bureau

Telecommunications and Economic Growth

Webster UniversityGeneva

20 September 1996

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TopicsTopics

Trade in telecommunication equipment Trade in telecommunication services Rules and regulations Global electronic commerce

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TELECOMMUNICATION TELECOMMUNICATION EQUIPMENT TRADEEQUIPMENT TRADE

1990 1991 1992 1993 1994

5661

76

96

68

Telecommunication equipment exportsUS$ billions

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Top telecom equipment vendorsTop telecom equipment vendorsTELECOM EQUIPMENT REVENUE, 1995

ForeignCompany (US$ b) sales %

1 Alcatel (Fra.) 20'054 77%2 Motorola (USA) 16'660 63%3 AT&T (USA) 15'564 26%4 Siemens (Ger.) 13'669 57%5 Ericsson (Swe.) 13'423 91%6 NEC (Jap.) 13'045 28%7 Nortel (Can.) 10'143 89%8 Nokia (Fin.) 8'525 91%9 Fujitsu (Jap.) 4'899 30%10 Bosch (Ger.) 3'777 56%

Top 10 119'759 49%

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Trade-dependentTrade-dependentHow can developing countries How can developing countries

pay?pay? Generate enough service

revenues Have strong currency

Multi-lateral loans (World Bank, EIB)

Declining Bi-lateral loans

Tied Make own equipment

China, Korea Foreign Investment

Telecom equipmentexports, 1994

Asian27%

Developed70%

Developing 3%

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TRADE IN TRADE IN TELECOM SERVICESTELECOM SERVICES

Cross-border supply Consumption abroad Commercial presence Presence of natural persons

7

Cross-border supplyCross-border supply

Traf

fic (b

illio

ns o

f min

utes

)

0

10

20

30

40

50

60

70

75 77 79 81 83 85 87 89 91 93 950%

5%

10%

15%

20%

25%

Annual grow

th rate

Twenty years of talkingInternational telephone trafficBillions of minutes

Developing countries

Traffic growth

GDP growth

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ImbalanceImbalance

Growing imbalances creating pressure for reform of “Accounting rate” system

Growing call-back exacerbates problem

Net telephone trafficMinutes, 1994

Mexico

Canada

Philippines

Turkey

Colombia

Singapore

SwitzerlandJapan

Germany

USA

1'134

700

369

230

-240

-279

-400

-1'044-7'800

326

9

Consumption abroadConsumption abroad

Home billing Global System

for Mobile Communications (GSM)

Global Mobile Personal Satellite Systems

Cellular subscribersWestern Europe, millions

1992 1993 1994 1995

GSMAnalog

69

15

23

10

Presence of “natural” personsPresence of “natural” personsCAN WE HELP?: SCANDINAVIAN TELECOM CONSULTANTS1995 Revenue

Company (US$ m)

Staff

ProjectsTeleDenmark Consult 11

44

Management training in Bulgaria. Network planning in Ukraine. Payphone network in Mozambique.

Telnor Consult 3

11

Corporate Plan for Mongolia. Feasibility study for cellular in Bangladesh. Subscriber network plan for Eritrea. Training for Lesotho and Poland. Billing system for Tanzania. Network planning in Russia.

Swedtel 33

225

More than 50 countries including development of services in Philippines, cooperation with new network operators in Poland, building transmission systems in Bosnia and Hungary.

TOTAL 46

280

11

Commercial presenceCommercial presence

Liaison office “Watching” function Foreign Direct Investment

Privatization Joint ventures International partnerships

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Foreign Direct InvestmentForeign Direct Investment

“Only foreign investors can save Mongolia. We must do everything to attract them.”

“Little countries like ours [Zaire] are in desperate need of help in developing infrastructure in things like telecoms, and we’re grateful for whatever can be done. But we mustn’t lose sight of what the world ‘help’ means. We’re not negotiating the carve-up of the world for the benefit of only half-a-dozen countries.”

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PrivatizationPrivatization“La Reconquista”Spain’s Telefónica in South America

Telefónica del Perú (35%)1994: US$ 2 billion

CANTV (6%)(Venezuela)1991: US$ 300 million

Telefónica deArgentina (21%)1990: US$ 160 million

CTC (44%)(Chile)1990: US$ 400 million

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Joint venturesJoint ventures

TELECEL: AirTouch (USA) 23%AIRTEL:AirTouch (USA) 16%OMNITEL:AirTouch (USA) 12%BellAtlantic (USA)12%Telia (Sweden) 10%

BELGACOM MOBILE:AirTouch (USA) 25%Ameritech (USA)13%TeleDanmark 12%Singapore Telecom10%

NORDICTEL: AirTouch (USA) 51%

MANNESMAN: AirTouch (USA) 35%C&W (UK) 5%

ONE 2 ONE: US West 50%

Foreign investment inWestern Europe

Cellular Operators

Ö CALL:Deutsche Telekom25%

SONOFON:BellSouth (USA)29%Vodafone (UK) 25%

E-PLUS:BellSouth (USA) 21%Vodafone (UK) 17%

SFR:BellSouth (USA) 4%Vodafone (UK) 10%

NETCOM:Singapore Telecom17%

STET HELLAS: STET (Italy) 75%PANAFON:Vodafone (UK) 45%France Telecom 35%

EUROPOLITAN:Vodafone (UK) 19%

LIBERTEL: Vodafone (UK) 35%

ORANGE:Hutchison (HK) 65%

ESAT: TelNor(way) 38%

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INTERNATIONALINTERNATIONALREGULATIONSREGULATIONS

ITU Equipment

standards Numbering Traffic settlement

principles Frequency

conflicts Policy discussions

GATT / WTO Equipment trade

barriers General

Agreement on Trade in Services (GATS)

Annex on Telecoms

Negotiating Group on telecoms

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General Agreement on Trade General Agreement on Trade in Services (GATS)in Services (GATS)

Most-Favored Nation Transparency Domestic regulation Monopolies and exclusive service supply Business practices Market access National treatment Annex on Telecommunications

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WTO timetableWTO timetable

1986-1993: Uruguay Round 15 April 1994: Marrakech Treaty 1994 - 1996: Negotiating Group on Basic

Telecommunications (NGBT) April 30 1996: “Standstill” on NGBT December 9-13, 1996: WTO Ministerial

Conference, Singapore Jan 15 - Feb 15 1997: Reopening of Group

on Basic Telecommunications Implementation of agreement on basic

telecommunications on January 1 1998?

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APPLICATIONS: APPLICATIONS: Global electronic commerceGlobal electronic commerce

Telecommunications for other services Banking, travel, etc. Off shore software development

Telecommunications as commerce Voice services Information services

Telecommunications as trade facilitator Trade points EDI

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Communications for other Communications for other servicesservices

Internal networks Banking, airline

industry Customer interaction

Call centres International

freephone Delocalization

Off-shore software development

0

100

200

300

400

500

600

1990 1992 199405001'0001'5002'0002'5003'0003'5004'0004'5005'000

SWIFT MessagesMillions

Banks connected(right scale)

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Communications as commerceCommunications as commerce

Audiotex Videotex On-line services Internet Interactive TV-

based services0

2'000

4'000

6'000

8'000

10'000

12'000

14'000

1.91 1.93 1.95 7.960

5'00010'000

15'00020'00025'000

30'00035'000

40'000Hosts(leftscale)Users

Internet host computersWorld, 000s

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Communications as trade Communications as trade facilitatorfacilitator

Trade points EDI Pacific

8%

Asia30%

Other1%

Europe23%

Americas38%

1995 total: 130'000

EDI usersEstimated distribution