Global trends in Telecom
Development
Saburo TANAKA
Councellor,
Regional Seminar
on cost and tariffs,
Bamako, Mali
7-9 April 2003
International Telecommunication Union
Agenda
z Market situation
¾ In the world in general
¾ In Africa
z Telephony (fixed-line)
¾ Future trends
¾ What needs to be done in Africa (USO)
z Mobile phone
¾ General trends
¾ What to do to be competitive
z Internet
2
¾ Connectivity in LDCs
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
Source: ITU World Telecommunication Indicators Database.
1999
2001
2003
1000
Revenue growth (US$bn)
Service revenue (US$ bn)
900
800
700
Other: Data, Internet,
Leased lines, telex, etc
600
500
400
14%
Mobile
39%
Int'l
8%
300
200
100
Domestic Telephone/fax
39%
0
90 91 92 93 94 95 96 97 98 99 00 01 02
Source: ITU.
International Telecommunication Union
Mobile and Internet: Identical twins
born two years apart?
Users (millions) and penetration per 100 pop.
1,000
18
Mobile subscribers
800
16
Internet users
14
Mobile penetration
600
12
Internet penetration
10
8
400
6
4
200
2
0
0
5
1992 93 94 95
96 97
98 99 2000 01
International Telecommunication Union
Distribution of mobile and Internet
users by region, 2001
Estimated Internet
users, 500 million
Americas,
28%
Africa,
3%
6
Asia-Pacific,
38%
Europe,
31%
Americas,
37%
Asia-Pacific,
32%
Europe,
29%
Mobile phone users
948 million
Africa, 1%
International Telecommunication Union
Growth rate in phone subscribers
Africa
In %
World
40
35
30.5
30
33
32
25
20
15
10
5
21
17.2
8
6
9
7
10
8
12.4
13.5
12
18
14
11
9
0
7
1993
1994
1995
1996
1997
Years
1998
1999
2000
2001
International Telecommunication Union
Regional share of the world’s
phone subscribers
100%
80%
Africa & Arab States
Americas
60%
Europe
40%
Source: ITU
Asia-Pacific
Telecom
Indicators
20%
Asia-Pacific
0%
8
1991
1996
2001
Main telephone Lines
Main telephone lines per
100 inhabitants
Main telephone lines
1995 (k)
2001 (k)
CAGR (%)
1995-01
1995
2001
CAGR (%)
1995-01
Africa
12’549.6
21’261.8
9.2
1.77
2.62
6.7
Americas
221’295.8
296’508.4
5.0
28.71
35.14
3.4
Asia
183’456.0
392’671.0
13.5
5.42
10.68
12.0
Europe
263’183.7
324’484.0
3.6
33.27
40.54
3.3
Oceania
10’942.7
12’310.9
2.0
38.81
40.04
0.5
WORLD
689’251.6
1’144’884.6
7.2
12.29
17.19
5.8
International telephone traffic
Int’l
telephone
circuits
Outgoing telephone traffic
M Minutes
Minutes
per
inhabitant
2000
Minutes per
subscriber
2000
2000 (k)
1995
2000
CAGR
(%)
95-00
Africa
1’340.6
2’147.2
9.7
3.0
110.2
58.7
Americas
22’343.8
47’191.5
16.9
57.5
163.4
499.3
Asia
10’612.0
17’756.2
10.7
4.9
51.2
420.2
Europe
27’800.7
46’739.8
10.9
58.7
147.5
459.9
Oceania
1’342.2
2’114.4
1.0
69.9
173.8
4.7
WORLD
63’362.8
115’847.5
13.1
19.5
117.8
1’442.5
Telecommunications revenue
Total
(M US$)
2000
Per inhabitant
(US$)
2000
Per main line
(US$)
2000
Per employee
(US$)
2000
As a %
of GPD
2000
Africa
16’391.9
23.0
868
68’880
2.4
Americas
379’521.4
470.7
1’315
239’818
2.9
Asia
235’089.8
65.9
679
163’131
2.6
Europe
276’607.5
347.1
873
141’229
2.8
Oceania
17’677.5
580.5
1’440
252’219
3.6
WORLD
925’074.0
156.5
942
176’824
2.8
Waiting list for telephone lines
Waiting list
for telephone lines
Total
demand
Satisfied
demand
Waiting
time
(years)
1995 (k)
2000 (k)
CAGR (%)
1995-00
2000 (k)
2000 (%)
2000
Africa
3’640.2
3’677.4
0.2
23’044.7
84.3
2.4
Americas
2’788.8
4’864.6
11.8
288’761.0
98.4
0.3
Asia
13’419.1
10’386.6
-5.0
192’228.4
97.1
0.9
Europe
21’420.4
11’838.2
-11.2
321’204.0
96.4
1.2
Oceania
12.2
9.9
-4.2
12’223.4
99.9
-
WORLD
41’277.6
30’772.5
-5.7
837’145.7
97.0
0.8
Telecommunications investment
Total
(M US$)
2000
Per inhabitant
(US$)
2000
Per main line
(US$)
2000
As a %
of revenue
2000
As a %
of GFCF
1999
Africa
3’476.2
6.2
194
25.2
4.6
Americas
53’972.8
68.3
188
14.2
2.3
Asia
88’163.8
25.1
263
38.4
3.6
Europe
53’056.9
66.6
168
19.2
3.1
Oceania
4’113.2
137.7
338
23.5
3.6
WORLD
202’771.8
35.7
209
22.1
3.0
Household penetration rates of
various services in Malaysia
Television sets
Fixed lines
95%
75%
59%
Mobile phones
54%
22%
PC
9%
24%
Total households
Urban households
Rural households
International Telecommunication Union
Graphical representation of the
Four USP objectives
SERVICES
TYPE OF ACCESS
Basic telephony
15
The Internet
Collective
access
Objective 1:
Collective access
to basic telephony
and public payphone
services
Objective 3:
Collective access
to Internet
access services
Individual
access
Objective 2:
Individual access to
basic telephony
services
Objective 4:
Individual access to
Internet
access services
International Telecommunication Union
USP Regulations - Graphical Points
Underserved Æ Connected
Implementation
of universal
service plan
Designation of
the universal
service provider
Draft universal
service plan
Notification of
universal
service targets
16
Progress Report
Compliance with
QOS standards
Costing USP
Licensees
Claims
USP Fund
International Telecommunication Union
Selected Highlights
• Costing of universal service provision
¾ Commission shall pay the designated universal service
provider from the USP Fund the cost incurred in
implementing the approved universal service plan in a
universal service target
¾The net cost in implementing the approved universal
service plan is computed as:
Net USP cost = avoidable cost - revenue forgone
• USP Fund
¾Contribution - By licensee of 6% of its weighted net
revenue. Only by those whose net revenue > RM500,000.
¾Commission shall maintain proper accounts of the USP
Fund - Annual report and statement of accounts
17
Universal service policy
implementation in domestic
market
100%
G6: Mandatory contribution to a
universal service fund
80%
G5: Obligatory investment in
unprofitable areas
60%
G4: Discriminatory tariffs in
favour of specific eligible groups
G3: State-imposed limit on the
monthly subscription fee
40%
G2: State-imposed limits on
installation charges
20%
G1: State-imposed limits on the
price of domestic calls
0%
Africa
America
Source: ITU/BDT Tariffs Policies Database
Arab States
Asia & Pacific
Europe & CIS
How are your universal service
costs financed
H5: Receipts from a fund
covering only Discriminatory
tariffs in favour of specific
eligible groups and Obligatory
investment in unprofitable
areas
H4: Receipts from a fund
covering all costs
100%
90%
80%
70%
60%
H3: The setting of a USO
mark-up on top of the
interconnection charge
50%
40%
30%
H2: Reflection of the access
deficit in the calculation of
interconnection charges
20%
10%
0%
Africa
America
Arab States
Source: ITU/BDT Tariffs Policies Database
Asia & Pacific
Europe & CIS
H1: Cross-subsidies between
inter. and nat. services
Time-frame for absorbing the
access deficit (Tariffs Rebalancing)
100%
90%
80%
I0: None
70%
I3: Over seven years
60%
50%
I2: Between three and
seven years
40%
I1 Less than three
years
30%
20%
10%
0%
Africa
America
Source: ITU/BDT Tariffs Policies Database
Arab States
Asia & Pacific
Europe & CIS
International Telecommunication Union
The secret of mobile success
z Why is mobile currently growing ten times faster
(~55% p.a.) worldwide than fixed lines networks
(~5.5% p.a.)?
z Why is the average mobile user much younger
than the average fixed-line user?
z Why do users make calls using a mobilephone
even when a fixed-line telephone is available and
cheaper?
z What is the secret of the success of mobile?
21
Price Options
A selection of price options
From Orange (UK)
Plan name
Monthly
charge for
single phone
Standard talk
time included
(per month)
Peak time
call charges
(per minute)
Off-peak
call charges
(per minute)
Chat 60
£17.63
60 off-peak
minutes
40p
5p
Talk 30
£17.50
30 minutes
30p
5p
Talk 120
£25.00
120 minutes
24p
5p
Talk 400
£58.75
400 minutes
22p
5p
Talk 1300
£176.25
1’300 minutes
17p
5p
Talk 3700
£470.00
3’700 minutes
15p
5p
Talk 7500
£940.00
7’500 minutes
15p
5p
Everyday 50
50p/day
50 minutes/day
40p
1p
Source: http://www.uk.orange.net/kit/index.html.
Declining prices for mobile access,
global average, in US$, 1992-2000
Monthly subscription, in US$
Connection charge, in US$
CAGR, 1992-2000 = -9.2% p.a
CAGR, 1992-2000 = -32.1% p.a.
44.9
38.1
547
34.2
410
31.3
20.2
231
16.6
180
86
1992
Note:
Source:
1994
1996
1998
1999
75
2000
1992
1994
1996
1998
1999
CAGR = Compound Annual Growth rate.
ITU “World Telecommunication Development Report 1999: Mobile cellular”
2000
Expenditure per month
Cultivate the high-spenders
14 per cent of highspending customers
generate 53% of
revenue
Average revenue
per user (ARPU)
14%
53%
22%
36%
24%
8%
40%
3%
Customers
Source:
Price Waterhouse Coopers, based on Canadian data.
40 per cent of lowspending customers
generate 3% of
revenue
Mobile and Fixed-line ARPU in Japan
Yen 1,000
300
278
250
252
265
275
284
Mobile
272
Fixed-line
230
200
158
150
100
98
98
97
98
99
1990
1991
1992
1993
1994
100
98
96
134
94
127
92
141
91
152
88
160
87
50
0
1995
1996
Years
1997
1998
1999
2000
2001
2002
International Telecommunication Union
Mobile generations:
Hong Kong, China (million users)
7
6
5
4
Analogue
3
Source: ITU
Asia-Pacific
Telecom
Indicators.
OFTA
26
2.5G users
Other prepaid
"Activated"
prepaid
users
PCS 1.7/ 1.8 GHz
2
Digital, 800/900 MHz
1
0
1995
1996
1997
1998
1999
2000
2001 2002.8
Opportunités d’appel dans le monde
5.0%
5.0%
0.3%
7.5%
19.9%
1993
89.7%
52.7%
26.7%
Mobile-tomobile
19.9%
1998
Mobile-tofixed
25.0%
2003
Source: ITU Fixed-Mobile Interconnect website: http://www.itu.int/interconnect
23.4%
Fixed-tofixed
Fixed-tomobile
25.0%
Mobile subscribers
Mobile subscribers
Mobile subscribers per
100 inhabitants
1995
2001
CAGR (%)
1995-01
1995
2001
CAGR (%)
1995-01
Africa
652.0
25’504.2
114.9
0.2
5.9
100.8
Americas
40’257.1
223’366.0
64.6
2.0
20.8
61.7
Asia
23’104.7
335’767.4
74.7
3.0
20.2
63.0
Europe
24’084.1
349’563.8
0.0
4.7
48.3
71.3
Oceania
2’618.0
13’732.8
45.9
3.0
22.8
43.5
WORLD
90’715.91
947’934.2
80.80
2.81
23.58
71.26
International Telecommunication Union
Distribution of Internet users, 2001
W. Europe
25%
North
America
32%
LAC
5%
C&E
Europe
3%
AsiaPacific
33%
Africa
1%
Arab
States
1%
29
LDCs falling further behind:
25%
20%
Share of worldwide Internet Users
LDCs
Share of world population = 10.6%
Share of world Internet users = 0.2%
China
15%
Other
Emerging
Economies
10%
5%
0%
1995
LDCs
1996
1997
1998
1999
2000
Source: ITU World Telecommunication Development Report, 2002: Reinventing Telecoms
Barriers to connectivity in LDCs
z Regulatory barriers
¾ Many LDCs retain a monopoly telecom carrier,
including for data and Internet traffic
¾ Some LDCs restrict market entry by ISPs
z Economic barriers
¾ High costs for int’l leased lines in some markets, esp.
those without infrastructure competition
¾ For LDCs with only low levels of IP demand, unit
bandwidth costs are higher than for countries with
higher levels of demand (economies of scale)
¾ Many countries are not served by international cables
(e.g., landlocked countries, small islands)
The “Internet latecomer”
problem
z In the beginning, the Internet was:
¾ North American
¾ Not-for-profit
¾ Used primarily for email & file transfer
z By the mid-1990s, the Internet had:
Ö Spread to the OECD countries
Ö Begun “privatisation” of the backbone
Ö Become primarily a channel for the Web
z By 2005, the Internet may be:
Ö Available throughout the world
Ö A fully commercial undertaking
Ö Used primarily for multimedia streaming
USA &
Canada
AsiaPacific
Europe
Latin
America &
Caribbean
Arab
States,
Africa
Bandwidth begins with “B”
International Internet
Bandw idth per capita (bit/s)
Belgium
Brazil
36
Botsw ana
9
Bahamas
7
Bulgaria
5
2
Belize
1.0
Bolivia
Bangladesh
0.1
Benin
0.04
0.04
Burundi
8014
Source: ITU World Telecommunication Development Report, 2002: Reinventing Telecoms
Total
(Mbps)
81'426
6'069
14
2
44
.512
8
16
.256
.256
760 million Africans share less IP
connectivity than 400’000 Luxemburgers
1'400
Africa's IP
bandwidth (Mbit/s)
1'200
Africa's share of
global total
0.3%
1'000
0.2%
800
600
0.1%
400
200
0.0%
0
1999
Source:
Note:
2000
2001
ITU African Telecom Indicators, adapted from TeleGeography Inc. “Packet Geography, 2002”.
Figures are for mid-year.
Even within Africa, large
disparities are evident
Distribution of international Internet
bandw idth in Africa, 2001
100%
90%
South
80%
Africa
70%
60%
50%
Northern
40%
Africa
30%
Sub
20%
Saharan
10%
Africa
0%
Population
Bandw idth
Source: ITU World Telecommunication Development Report, 2002: Reinventing Telecoms
Two LDC “success stories”
z Nepal
¾ 16-fold increase in IP connectivity in 8 months
following liberalisation of VSAT market in 1999
¾ Lowest IP access prices in South Asia
¾ BUT, opening up VSAT market has lead to a drastic
fall in incoming telephone traffic and settlements
z Uganda
¾ Rapid increase in network growth following
introduction of second national operator, MTN Uganda
and VSAT liberalization
¾ Nine separate ISPs own international gateways
¾ BUT, entire national capacity is less than 20 Mbit/s
Source: Internet Diffusion Case Studies at: http://www.itu.int/ti/casestudies
Something should be done
…
z Feasibility
study to look at an international
project to increase IP connectivity in LDCs
z Look at regulatory, economic and commercial
issues and examine evidence for market failure
z Could VSATs provide a solution?
¾ Evidence from Uganda and Nepal suggests opening
VSAT market could make big difference
¾ But, VSATs are expensive
z How could such a solution be delivered?
¾ Providing a “subsidy” without interfering with the
operation of market forces (avoiding creating
dependency on foreign donors)
¾ Working with ISPs rather than end-users
Issues for discussion
z Is there a problem?
¾ Is IP connectivity more expensive and more scarce
in LDCs?
¾ Do higher connectivity prices feed into higher
access prices?
z Can it be solved?
¾ What can be done by LDCs? (e.g., liberalizing VSAT
markets, liberalizing ISP markets)
¾ What can be done by the international community?
z How to structure the project?
¾ Which donors, which agencies, which players?
¾ How to involve DOT Force, UN ICT Task Force etc?