Global trends in telecom development Saburo TANAKA Councellor ITU/TSB

1. Global trends in telecom development Saburo TANAKACouncellor ITU/TSB The original document is elaborated by Dr Tim Kelly, ITU/SPU. It has 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: Tim.Kelly@itu.intsaburo.tanaka@itu.intgorgui.toure@itu.int.

2. 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 • Situation in the Regions • Addressing the digital divide • Traffic and tariffs trends • Tariff rebalancing

3. A Mobile Revolution Fixed Lines vs. Mobile Users, worldwide, Million 1'400 Mobile Users 1'200 Fixed Lines 1'000 800 600 400 200 0 1993 1995 1997 1999 2001 2003 Source: ITU World Telecommunication Indicators Database.

4. 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)

5. 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.

6. Internet users, millionsAnnual rate of change Source: ITU.

7. Inter-regional Internet connectivity 0.4 Gbit/s USA / Canada 56 Gbit/s 18 Gbit/s Europe Asia /Pacific 3 Gbit/s 0.5 Gbit/s 0.2 Gbit/s LatinAmerica Africa 0.1 Gbit/s Note: Gbit/s = Gigabits (1’000 Mb) per second. Source: ITU adapted from TeleGeography.

8. 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 102 independent regulators (only 12 in 1990)

9. 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.

10. 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.

11. 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.

12. 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.

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

14. 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.

15. Separate regulatory bodies, worldwide, 1998 Source: ITU Telecom Regulatory Database.

16. 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.

17. Internet users Digital divide = Telecoms divide User distribution, by income group, Jan 2000 490 912 280 6 billion million million million 100% 15 % High income 90% 58 % Upper-mid income 80% 70% Lower-mid income 69 % 60% 82 % 50% Low income 40% 30% 20% 10% 0% Mobile users Telephone lines Popul-ation Source: ITU World Telecommunication Indicators Database.

18. Jan. 1995 Jan. 2000 Share of low and lower-middle income countries in: Telephone main lines Mobile subscribers Estimated Internet Users 18% 28% 5% 14% 1.1% 7.6% Source: ITU World Telecommunication Indicators Database. The digital divide is shrinking, but also shifting

19. LDCs falling further behind:Share of worldwide Internet Users 10% LDCsShare of world population = 10.6%Share of Internet users = 0.1% 8% China 6% Other low 4% & lower- mid 2% income 0% LDCs 1995 1996 1997 1998 1999

20. Share of the USA in the International telephone market

22. Settlement rates versus Retail prices in the TAS Region

23. As competitors gain market share ... Long distance prices come down ... Source: ITU Asia-Pacific Telecommunication Indicators, 1997.

24. Rebalancing in action (1): Iceland Telecom, price of 3 minute, peak-rate call, includ. tax 1.6 1.4 Local 1.2 Medium 1 Long distance 0.8 0.6 0.4 0.2 0 Jan- Jul- Jul- Nov- Oct- Feb- Sep- Jun- Aug- Dec- 01- 11- 88 88 89 90 91 92 93 94 95 96 Nov- Nov- 97 97 Source: Iceland Telecom, OECD.

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

26. Rebalancing in action (3): Average trends in 39 major economies, in US$ 12 10 8 6 4 300 minutes, local calls 3 mins Int'l call to US 2 Monthly line rental 0 1990 1991 1992 1993 1994 1995 1996 1997 Source: ITU World Telecommunication Indicators Database.

27. Rebalancing in action (4): Trends in Thailand, in US$ 300 mins, local calls 14 Monthly line rental 12 3 mins Int'l call to US 10 8 6 4 2 0 1993 1994 1995 1996 1997 1998 1999 Source: ITU World Telecommunication Indicators Database.

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

29. International telephony market

30. Monopoly Duopoly Competition Degree of competition in cellular services,2000 by region • 70% • 60% • 50% • 40% • 30% • 20% • 10% • 0% • Africa • Americas • Asia- • Arab • Europe States Pacific Source: ITU/BDT Regulatory Database

31. Monopoly Duopoly Competition Degree of competition in basic services in Africa, 2000 • 90% • 80% • 70% • 60% • 50% • 40% • 30% • 20% • 10% • 0% • Local • Long • International • Cellular distance

32. Separate regulators in the World • 102 • 84 • 53 • 30 • 22 • 12 • 1990 • 1992 • 1994 • 1996 • 1999 • 2000 Source: ITU/BDT Regulatory Database

33. Separate regulators by Region 2000, Total: 102

34. 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”