1. Global trends in telecom development CTO Annual Council, Gaborone,
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: 1

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
The shape of things to come
The changing telecom development gap
The industry in 2005
Key policy issues

3. Projection of growth trends, fixed and cellular subscribers and int’l traffic, 1995-2005
1'500
300
Fixed main lines
1'250
250
Mobile subscribers
Total int'l traffic
1'000
200
Subscribers (million)
750
Billions of minutes of int’l traffic
150
500
100
250 50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source: ITU.

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 90 91 92 93 94 95 96 97 98 99 00 01 02
Source: ITU.

6. Internet hosts (million) July 1993-July 1999
Compound Annual Growth Rate = 61.8%
56.2
36.7
26.1
16.7
8.2
3.2
1.8
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.

7. Distribution of Internet hosts, January 1998
Australia,
Japan & New
Zealand
7.0%
Developing
Canada &
Asia-Pacific US
Other
2.9%
64.1%
4.6%
Europe, 24.3%
LAC* 1.2%
Africa
0.5%
Source: ITU “Challenges to the Network: Internet for development, 1999”.

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 84 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
100
Local 90
Long distance 80
International 70 60 50 40 30 20 10
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
The two most important landmarks along the road to competition were arguably the European Union’s single market for telecommunication services, which was implemented on January 1st of this year, and the World Trade Organisation’s basic telecommunications agreement, implemented on February 5th, also this year. Some three-quarters of all outgoing international telecommunications traffic now originates in markets that permit at least two international carriers.
Taking just the commitments made at the time that the WTO agreement was implemented, the percentage of the market exposed to competition should rise to 85 per cent early in the next decade. This projected percentage will almost certainly be higher as countries make improved commitments, or join the agreement for the first time.
Competition, which was once the exception in international telecommunications, is now the norm. Competition is in full bloom, or so it would seem. 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. Telecom Privatisations in Africa
Source: ITU Telecommunication Regulatory Database.

15. Ownership status of the incumbent
Private
State-owned
Countries
160
140
120
100 80 60 40 20
1991
1993
1995
1999
Source: ITU Telecommunication Regulatory Database.

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

17. 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: = 1.4%; = 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

18. “The future is here, it’s just not evenly distributed” William Gibson
Teledensity
1996 27 .8 to 68 .3
(46) 8 .6 to 27 .8
(45) 1 .4 to 8 .6
(47) to 1 .4
(48)
Source: ITU World Telecommunication Indicators Database.

19. 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
1’000’000 Gigabits (1 Petabit) per second of Internet traffic
Services market of around US$1.1 trillion
Equipment market of around US$400 billion

20. 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

21. 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

22. Key policy issues to be tackled
Interconnection
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?