Global trends in telecom development Havana, 22 October 2001 The original document was elaborated by Dr Tim Kelly, ITU/SPU. It has been completed by Saburo

Global trends in telecom development

Havana, 22 October 2001

The original document was elaborated by Dr Tim Kelly, ITU/SPU. It has been completed by Saburo Tanaka and by Pape-Gorgui Toure. The views expressed in this presentation are those of the authors, and do not necessarily reflect the opinions of the ITU or its membership. Authors can be contacted by e-mail at: [email protected] [email protected] [email protected].

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Global trends in telecom Global trends in telecom developmentdevelopment

The state of the industry Fixed-lines Mobile The Internet

The state of the market Increasing competition Private sector participation Independent regulation

Situation in the TAL region countries Addressing the digital divide Traffic and tariffs trends Tariff rebalancing

A Mobile RevolutionA Mobile Revolution

Source: ITU World Telecommunication Indicators Database.

0

200

400

600

800

1'000

1'200

1'400

1993 1995 1997 1999 2001 2003

Mobile Users

Fixed Lines

Fixed Lines vs. Mobile Users, worldwide, Million

Domestic fixed-line revenues,

59.2%

International revenues, 8.8%

Mobile service

revenues, 21.2%

Other (incl. Internet, leased lines, telex), 10.6%

1999 Telecom service revenue. Total = US$724b

The changing pie: The changing pie: Global telecom Global telecom service revenue, 1999service revenue, 1999

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

0

100

200

300

400

500

600

700

800

900

1000

90 91 92 93 94 95 96 97 98 99 00 01 02

Ser

vice

rev

enu

e (U

S$

bn

)

ActualProjected

Domestic Telephone/fax

Int'l

Mobile

Other: Data, Internet, Leased lines, telex, etc

Projection of revenue growth (US$bn)Projection of revenue growth (US$bn)

Source: ITU.

Internet users, millionsInternet users, millionsAnnual rate of changeAnnual rate of change

311

230

3454

90

14935%

55%

66%67%59%

109%

1995 1996 1997 1998 1999 2000

Change

Source: ITU.

Inter-regional Internet Inter-regional Internet connectivityconnectivity

Asia /Pacific

LatinAmerica

USA / Canada

Europe

Africa

56 Gbit/s

0.1 Gbit/s

0.5 Gbit/s

Note: Gbit/s = Gigabits (1’000 Mb) per second.Source: ITU adapted from TeleGeography.

18 Gbit/s

0.4 Gbit/s

3 G

bit/

s

0.2 Gbit/s

The state of the marketThe 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 102 independent regulators

(only 12 in 1990)

Degree of competition by service, Degree of competition by service, 1999 (ITU Member States)1999 (ITU Member States)

Source: ITU Telecommunication Regulatory Database.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Basicservices

Cellular Cable TV ISPs

Monopoly Duopoly Competition

Degree of competition in basic Degree of competition in basic services, 1999, by regionservices, 1999, by region


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Africa Americas Asia-Pacific

ArabStates

Europe


0

10

20

30

40

50

60

70

80

90

100

1995 1997 1999 2001 2003 2005

Local

Long distanceInternational

Countries

Increasing competition: Increasing competition: By no. of countries, by service, 1995-2005By no. of countries, by service, 1995-2005


35%46%

74% 85%

1990 1995 1998 2005

Mono-poly

Compe-tition

4 14 29 48

Number of countries permitting more than one operator for internationaltelephony

Percentage of outgoing international Percentage of outgoing international traffic open to competitiontraffic open to competition

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 transactionsRecent privatisation transactions


Note: Some countries made sales in several tranches (e.g., Spain)

1995 1996 1997 1998Bolivia Belgium Armenia BrazilCape Verde Germany Australia Denmark (2)Cuba Ghana Cote d'Ivoire FranceCzech Rep. Greece France El SalvadorIndonesia Guinea Greece FinlandMongolia Hungary Hungary GuatemalaPortugal Indonesia India (MTNL) LithuaniaSpain Ireland India (VSNL) Malta

Korea Israel PolandPeru Italy Puerto RicoPortugal Kazakhstan RomaniaSingapore Panama SwitzerlandVenezuela Portugal

SenegalSerbiaSouth AfricaSri LankaSpain

0

20

40

60

80

100

120

140

160

1991 1993 1995 1999

Private State-ownedCountries

Ownership status of the incumbentOwnership status of the incumbent


Separate

Separate regulatory bodies, Separate regulatory bodies, worldwide, 1999worldwide, 1999

Source: ITU Telecom Regulatory Database.

Source: ITU/BDT Regulatory Database

Separate regulators in Separate regulators in

the Worldthe World

•12

•22•30

•53

•84

•102

•1990 •1992 •1994 •1996 •1999 •2000

Separate regulators Separate regulators by Region 2000, Total: 102by Region 2000, Total: 102

Afrique28%

Amériques23%Etats arabes

6%

Asie-Pacifique

13%

Europe30%

Organismes séparés par région, 2000

Total: 102


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

Teledensity1996

27.8 to 68.3 (46)8.6 to 27.8 (45)1.4 to 8.6 (47)0 to 1.4 (48)

0%10%

20%30%

40%50%60%

70%80%

90%100%

Internetusers

Mobile users

Telephone lines

Popul-ation

High income

Upper-mid income

Lower-mid income

Low income

280 million

490 million

912 million 6 billion

82 %69 %

58 %

15 %

Digital divide = Telecoms divideDigital divide = Telecoms divideUser distribution, by income group, Jan 2000User distribution, by income group, Jan 2000


The digital divide is The digital divide is shrinking, shrinking, but also shiftingbut also shifting

Share of low and lower-middle income countries in:

Telephone main lines

Mobile subscribers

Estimated Internet Users


18%Jan. 1995 Jan. 2000

28%

5% 14%

1.1% 7.6%

LDCs falling further behind:LDCs falling further behind: Share of worldwide Internet UsersShare of worldwide Internet Users

LDCs Share of world population = 10.6%Share of Internet users = 0.1%

0%

2%

4%

6%

8%

10%

1995 1996 1997 1998 1999

China

Other low & lower-mid income

LDCs

TAL Traffic

0

1000

2000

3000

4000

5000

6000

1995 1996 1997 1998 1999

Mill

ions

of m

inut

es

0

1

2

3

4

5

6

7

mar

ket vo

lum

e sh

are

TAL Traffic

Percentage of the TAL Traffic in respect of the World Traffic

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

28.00%

29.00%

1994 1995 1996 1997 1998 1999

USA market share

Share of the USA in the International telephone market

International telephony International telephony marketmarket

1

10

100

1000

10000

100000

1995 1996 1997 1998 1999

Mil

lio

ns

of

min

ute

s

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

mar

ket

volu

me

shar

e

World traffic USA traffic USA share

TAL Traffic Percentage TAL traffic

0.580

0.474

0.541

0.595

0.670

0.8050.845

0.8650.910

0.9500.98011.010

1.0401.060

0.1220.1290.153

0.1950.230

0.2520.272

0.3060.347

0.3740.401

0.449

0.5130.505

0.2870.318

0.374

0.4200.467

0.487

0.406

0.334

0.540

0.635

0

0.2

0.4

0.6

0.8

1

1.2

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Years

Ave

rag

e s

ett

lem

en

t ra

te (

in S

DR

)

ITU

USA

TAS

TAF

TAL

Settlement rates versus Retail prices to the USA in the TAL Region

2.24

1.87

1.211.07

0.82

0.00

0.50

1.00

1.50

2.00

2.50

1995 1996 1997 1998 1999

Retail Price Settlement rates

Source: ITU World Telecommunication Indicators Database

Latin America Monthly residential subscription charge

(in US$)

16,33

14,75

14,01

12,83

8,74

6,7

6,59

4,28

3,67

3,29

Chile

Peru

Mexico

Argentina

Uruguay

Brazil

Average

Costa Rica

Ecuador

Colombia


CaribbeanMonthly residential subscription charge

(in US$)

24,5

15,5

14,07

11,11

10,62

10,47

9,75

6,61

4,6

2,69

Bahamas

Barbados

Grenada

Antigua

Guadeloupe

Martinique

Average

Dominican Rep.

T&T

Jamaica


Residential installation charge, in US $

50

$750

$500

$250$150 $150

$1'500

$1'118 $1'118

$28

1992 1994 1996 1998 1999

Argentina

Brazil


Residential monthly subscription, in US$

$8,02 $8,27$8,72

$12,83 $13,2

$0,90 $0,69

$2,67

$6,70$6,0

1992 1994 1996 1998 1999

Argentina

Brazil

Degree of competition in Degree of competition in cellularcellular services, services, 20002000 by region by region

Source: ITU/BDT Regulatory Database

•0%

•10%

•20%

•30%

•40%

•50%

•60%

•70%

•Africa •Americas •Asia-

Pacific

•ArabStates

•Europe


0

10

20

30

40

50

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 20000

10

20

30

40

50

60

Caribbean

SouthCentral

% of total

Mobile cellular subscribers, millions

Source: ITU

Mobile as a percentage of total telephone subscribers

1,33 %

74,74 %

74,97 %

114,11 %

201,71 %Venezuela

Mexico

Brazil

Peru

Cuba

Comparative prices for 100 minutes per month use of a mobilephone in selected South American markets

(in US$, 1999)

$19,67

$24,62

$26,58

$28,01

$30,93

$31,58

$43,00

$44,16

$45,41Venezuela

Clombia

Argentina

Paraguay

Brazil

Chile

Uruguay

Bolivia

Peru

Note: The ‘100 minutes of cellular use’ is based on the lowest charge (among different operators in a country) payable for a basket of 50 peak and 50 off-peak minutes of calls per month.Source: ITU adapted from cellular company websites.

South America

Comparative prices for 100 minutes per month use of a mobile phone in selected

Central America & Caribbean markets (in US$, 1999)

$16,85

$19,94

$30,81

$31,43

$37,67

$45,00

$48,22

$52,45

$82,5Bahamas

Panama

Barbados

Honduras

Mexico

Dominican Rep.

Guatemala

El Salvador

Costa Rica

Central America and the Caribbean

Note: The ‘100 minutes of cellular use’ is based on the lowest charge (among different operators in a country) payable for a basket of 50 peak and 50 off-peak minutes of calls per month.Source: ITU adapted from cellular company websites.

Internet users as a percentage of population - 1999

36,3%

7,6%

2,2%

1,7%

0,3%

Canada

Uruguay

Barbados

Venezuela

Honduras

Source: ITU

Central America

Note: Generally tariffs of leading ISPs. Countries with * indicate unlimited use (no 20 hours package available).Source: ITU adapted from ISP websites

Internet Charges Monthly cost of 20 hours, off-peak Internet use (excluding

telephone charges) for selected countries in Central America (1999)

$74,99

$40

$25,51

$22

$20

$20

$19,48

$11,4

Belize*

Honduras

Mexico*

Guatemala

Costa Rica

Panama

Nicaragua*

El Salvador

Note: Generally tariffs of leading ISPs. Countries with * indicate unlimited use (no 20 hours package available).Source: ITU adapted from ISP websites

South America

Internet chargesMonthly cost of 20 hours, off-peak Internet use (excluding telephone charges) for selected countries in South America

(1999)

$12,24

$13,26

$15,07

$19,12

$21,99

$25

$27,9Argentina*

Ecuador

Peru*

Chile*

Bolivia

French Guyana*

Brazil

Long distance market share% share of long distance calls

0%

5%

10%

15%

20%

25%

30%

35%

1991 1992 1993 1994 1995 1996

NCCs (Japan) Clear (NZ) Optus (Aust.)

Long distance pricesIndex, 1993=100

75

80

85

90

95

100

1993 1994 1995 1996

JapanNew ZealandAustralia

As competitors gain market share ...

Long distance prices come

down ...Source: ITU Asia-Pacific Telecommunication Indicators, 1997.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Jan-88

Jul-88

Jul-89

Nov-90

Oct-91

Feb-92

Sep-93

Jun-94

Aug-95

Dec-96

01-Nov-97

11-Nov-97

Local

Medium

Long distance

Rebalancing in action (1): Iceland Telecom, price of 3 minute, peak-rate call, includ. tax

Source: Iceland Telecom, OECD.

Rebalancing in action (2): SwissCom, price per minute of local call and call to US

7

28

43

5858

74

444455

95 96 97 98 99 00

Swiss call prices. US cents per minute.

Source: ITU.

Call to USA

Local call

0

2

4

6

8

10

12

1990 1991 1992 1993 1994 1995 1996 1997

300 minutes, local calls

3 mins Int'l call to US

Monthly line rental


Rebalancing in action (3): Average trends in 39 major economies, in US$

Rebalancing in action (4): Trends in Thailand, in US$


0

2

4

6

8

10

12

14

1993 1994 1995 1996 1997 1998 1999

300 mins, local calls

Monthly line rental

3 mins Int'l call to US

Rebalancing in action (5): Trends in price per minute of an international call to USA

$0.00

$0.50

$1.00

$1.50

$2.00

90 92 94 96 98 00 02 04

Average retail price of one minute call to USA. US$

Mark-up

Settlement

Source: ITU adapted from FCC and national data (34 countries).

Forecast

Conclusion and Recommendation Conclusion and Recommendation

Erosion of traditional system of accounting rates for exchange of international traffic Domestic interconnect fees will be dominant mode

Major price cuts in international calls Availability of new infrastructures Impact of Internet pricing model (distance and duration

independent)

Mobiles exceed fixed-line phones worldwide by 2002/03 Introduction of “third generation” mobiles after 2001 Generational shift, as new users reject fixed-lines

“ Interconnection and tariff rebalancing”

Documents

Global trends in telecom development Havana, 22 October 2001 The original document was elaborated by Dr Tim Kelly, ITU/SPU. It has been completed by Saburo