Global trends in telecom development
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1 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 at: 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 1
2 Projection of growth trends, fixed and cellular subscribers and int l traffic, Subscribers (million) 1'500 1'250 1' Fixed main lines Mobile subscribers Total int'l traffic Billions of minutes of int l traffic Source: ITU. The changing pie: Global telecom service revenue, 1998 Other (incl. Internet, leased lines, telex), 10.6% Mobile service revenues, 21.2% Domestic fixedline revenues, 59.2% International revenues, 8.8% 1998 Telecom service revenue. Total = US$724b Source: ITU World Telecommunication Development Report 1999: Mobile cellular (forthcoming) 2
3 Projection of revenue growth (US$bn bn) Service revenue (US$ bn) Source: ITU Other: Data, Internet, Leased lines, telex, etc Domestic Telephone/fax Actual Int'l Projected Mobile Internet hosts (million) July 1993-July 1999 Compound Annual Growth Rate = 61.8% 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. 3
4 Distribution of Internet hosts, January 1998 Australia, Japan & New Zealand 7.0% Canada & US 64.1% Europe, 24.3% Other 4.6% Developing Asia-Pacific 2.9% LAC* 1.2% Africa 0.5% Source: ITU Challenges to the Network: Internet for development, 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) 4
5 Degree of competition by service, 1999 (ITU Member States) 80% Monopoly Duopoly Competition 70% 60% 50% 40% 30% 20% 10% 0% Basic services Cellular Cable TV ISPs Source: ITU Telecommunication Regulatory Database. Degree of competition in basic services, 1999, by region 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Africa Americas Asia- Pacific Source: ITU Telecommunication Regulatory Database. Monopoly Duopoly Competition Arab States Europe 5
6 Increasing competition: By no. of countries, by service, Countries Local Long distance International Source: ITU Telecommunication Regulatory Database Percentage of outgoing international traffic open to competition 35% 46% 74% 85% Monopoly Competition 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. 6
7 Source: ITU Telecommunication Regulatory Database. Note: Some countries made sales in several tranches (e.g., Spain) Recent privatisation transactions Bolivia Belgium Armenia Brazil Cape Verde Germany Australia Denmark (2) Cuba Ghana Cote d'ivoire France Czech Rep. Greece France El Salvador Indonesia Guinea Greece Finland Mongolia Hungary Hungary Guatemala Portugal Indonesia India (MTNL) Lithuania Spain Ireland India (VSNL) Malta Korea Israel Poland Peru Italy Puerto Rico Portugal Kazakhstan Romania Singapore Panama Switzerland Venezuela Portugal Senegal Serbia South Africa Sri Lanka Spain Telecom Privatisations in Africa Country Year % Price Partner US$m Cape Verde % 40 Portugal Telecom Côte d Ivoire % 210 France Telecom Ghana % 38 Telekom Malaysia Guinea % 45 Telekom Malaysia Guinea % 3 Portugal Telecom Bissau Sao Tomé & % 1 Portugal Telecom Principe Senegal % 90 FT-led consortium South Africa % SBC/Telekom Malaysia Source: ITU Telecommunication Regulatory Database. 7
8 Ownership status of the incumbent Countries Private State-owned Source: ITU Telecommunication Regulatory Database. Separate regulatory bodies, worldwide, 1998 Separate Source: ITU Telecom Regulatory Database. 8
9 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 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 to 68.3 (46) 8.6 to 27.8 (45) 1.4 to 8.6 (47) 0 to 1.4 (48) Source: ITU World Telecommunication Indicators Database. 9
10 Forecasting to 2005 Projecting forward current trends By 2005, there could be: 1.4 billion telephone lines 1.1 billion cellular telephone subscribers 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 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 10
11 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 Interconnection Key policy issues to be tackled 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? 11
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