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Trends in international telecom traffic, costs and prices

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1 Trends in international telecom traffic, costs and prices
Dr Tim Kelly, International Telecommunication Union (ITU) Closing Workshop on the costing and pricing of telecom services in the Arab States, Tunis, 29 Nov - 2 Dec 1999 Note: The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU or its membership. Dr Tim Kelly can be contacted by at 1

2 Agenda Trends in international traffic Regional breakdown of traffic
Worldwide Arab States Regional breakdown of traffic Market shares Competitive markets Cost and price trends FCC benchmarks ITU Focus Group, indicative target rates Conclusions 2

3 Trends in subscribers and international traffic, Worldwide
1'200 160 143 Fixed main lines 124 140 1'000 Mobile subscribers 108 120 Total int'l traffic 800 94 100 82 72 Fixed lines and mobile subscribers worldwide (millions) 600 Billions of minutes of international 80 telephone traffic 62 54 48 60 400 44 38 30 40 200 20 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

4 Trends in subscribers and international traffic, Arab States
25 6 Fixed lines 4.9 5 Mobile 4.3 20 Int'l outgoing 3.7 4 15 3.3 2.7 3 2.3 Subscribers (millions) 10 2.0 Int'l traffic (billion mins) 1.8 1.6 2 5 1 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: ITU World Telecommunication Indicators Database.

5 Yemen Oman Qatar Bahrain Syria Minutes of international traffic, outgoing and incoming, Arab States, 1998 Jordan Tunisia Kuwait Incoming Outgoing Algeria Lebanon Egypt Morocco UAE S. Arabia 500,000,000 1,000,000,000 1,500,000,000 Source: ITU World Telecommunication Indicators Database. Note: Excluding States with <100’000 minutes.

6 Trends in subscribers and international traffic, Egypt
Fixed lines 4 600 Mobile Int'l outgoing 500 Int'l incoming 3 400 2 300 Subscribers (millions) Traffic (million minutes) 200 1 100 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

7 Trends in subscribers and international traffic, Lebanon
0.8 400 Fixed lines Mobile Int'l outgoing 0.6 300 Int'l incoming 0.4 200 Traffic (million minutes) Subscribers (millions) 0.2 100 0.0 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

8 Trends in subscribers and international traffic, Morocco
Fixed lines 2 600 Mobile Int'l outgoing 500 Int'l incoming 1.5 400 1 300 Subscribers (millions) Traffic (million minutes) 200 0.5 100 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

9 Trends in subscribers and international traffic, Saudi Arabia
3 Fixed lines 1,200 Mobile Int'l outgoing 1,000 Int'l incoming 2 800 600 Subscribers (millions) Traffic (million minutes) 1 400 200 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

10 Trends in subscribers and international traffic, Tunisia
1.0 Fixed lines 200 Mobile Int'l outgoing 0.8 Int'l incoming 150 0.6 100 Subscribers (millions) Traffic (million minutes) 0.4 50 0.2 0.0 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

11 Trends in subscribers and international traffic, UAE
1.0 Fixed lines 1,000 Mobile Int'l outgoing 0.8 800 Int'l incoming 0.6 600 Subscribers (millions) Traffic (million minutes) 0.4 400 0.2 200 0.0 1993 1994 1995 1996 1997 1998 Source: ITU World Telecommunication Indicators Database.

12 Trends in outgoing traffic, bn minutes
60 50 Developed countries 40 30 20 Developing countries 10 - 1990 1991 1992 1993 1994 1995 1996 1997 Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

13 Trends in incoming traffic, bn minutes
60 50 40 Developed countries 30 20 Developing countries 10 1990 1991 1992 1993 1994 1995 1996 1997 Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

14 Trends in settlement payments and receipts, Developing countries, US$bn
20 Payments Receipts Net settlement 15 10 5 1993 1994 1995 1996 1997 1998 Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

15 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.

16 Level of competition in international services in WTO basic telecoms agreement
Monopoly Competition Source: ITU Telecommunication Regulatory Database.

17 Countries permitting int’l competition
1990 1998 20 Israel 1 Japan 1 Australia 21 Italy 2 New Zealand 2 Austria 22 Japan 3 UK 3 Belgium 23 Korea (Rep.) 4 USA 4 Brunei D. 24 Malaysia 1995 5 Canada 25 Mexico 1 Australia 6 Chile 26 Netherlands 2 Canada (partial) 7 Colombia 27 New Zealand 3 Colombia 8 DPR Congo 28 Norway 4 Chile 9 Denmark 29 Peru 5 Denmark 10 Dominican Rep. 30 Philippines 6 Finland 11 El Salvador 31 Russia 7 Japan 12 Finland 32 Somalia 8 Korea (Rep.) 13 France 33 Spain (after Dec. 1998) 9 Malaysia 14 Germany 34 Sweden 10 New Zealand 15 Ghana 35 Switzerland 11 Philippines 16 Guatemala 36 Uganda 12 Sweden 17 HK-China (after Dec 1998) 37 Ukraine 13 UK 18 Indonesia 38 UK 14 USA 19 Ireland (after Dec. 1999) 39 USA

18 Top 10 PTOs by outgoing int’l traffic
Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

19 Selected PTOs, performance 1997/98
% change in traffic % change in int’l rev. -2.1% DT -16.4% -2.9% SwissCom 2.2% 5.9% Telecom Italia 0.6% 8.2% -2.7% AT&T 17.6% MCI WorldCom 21.2% 0.5% Sprint 1.1% 9.7% FT -17.3% 4.5% BT -14.3% Note: Based on 1998 international outgoing traffic and revenue from international operations. For Sprint, MCI WorldCom and AT&T, data relates to The definition of international revenue (gross, net or retail) is tat used by each individual operator. Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

20 Emerging global alliances, shares of int’l traffic market
AT&T/BT, 17.2% Others, 47.3% GlobalOne, 14.3% Total, 1997: 81.2 bn minutes MCI WorldCom, Telefonica, TP, 11.1% Cable & Wireless, 4.7% Unisource, 5.4% Note: Traffic shares relate to minutes of outgoing traffic from members of each alliance. Source: ITU/TeleGeography Inc. “Direction of Traffic, 1999: Trading Telecom Minutes”

21 Emerging global alliances: Recent developments
WorldCom merges with MCI, bids for Sprint Following collapse of BT/MCI merger, BT & AT&T join forces in “Concert” AT&T and Telefonica withdraw from Unisource GlobalOne on point of collapse following purchase of Sprint by WorldCom Deutsche Telekom’s bid for Telecom Italia fails; Olivetti’s succeeds Cable & Wireless re-positioning itself as supplier of data services Telia and TeleNor merge

22 Global average settlement rates, US$ per minute
1 , 0.8 -14% p.a. 0.6 , -2% p.a. 0.4 , -4% p.a. D.140 0.2 D.140 approved revised 87 88 89 90 91 92 93 94 95 96 97 98 Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

23 Convergence: Accounting rate to US in US$ per minute, four European countries
1.6 1.4 Italy 1.2 France 1 UK 0.8 Germany 0.6 0.4 0.2 1993 1995 1997 1999 Source: FCC. Data for year-end except 1999 = September 1999

24 Accounting rates with USA, US$ per minute, 1 Nov 1999
Kuwait 0.30 World Ave. 0.41 Morocco 0.84 Tunisia 0.89 Algeria 0.90 Accounting rates with USA, US$ per minute, 1 Nov 1999 Jordan 1.00 Egypt 1.10 Bahrain 1.10 S. Arabia 1.36 Syria 1.36 Oman 1.38 Mauritania 1.72 Lebanon 1.75 UAE 2.00 Source: FCC (Ken Stanley).

25 Trends in accounting rates, US$ per min
2.50 Oman Saudi Arabia Qatar, UAE 2.00 1.50 Bahrain Kuwait 1.00 World Average 0.50 0.00 1992 1993 1994 1995 1996 1997 1998 1999 Source: FCC (Ken Stanley). “1999” is 1 November 1999 data.

26 Trends in accounting rates, US$ per min
2.50 Mauritania 2.00 Morocco 1.50 Egypt Tunisia 1.00 Algeria World Average 0.50 0.00 1992 1993 1994 1995 1996 1997 1998 1999 Source: FCC (Ken Stanley). “1999” is 1 November 1999 data.

27 Two alternative scenarios:
ITU Focus Group targets, by teledensity (T), to be achieved by 2001 (2004) FCC Benchmarks, by income group Source: ITU Focus Group Report, FCC.

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

29 International traffic trends: Conclusions
Voice traffic continuing to grow, but the main action is now elsewhere Mobile and the Internet will be the major demand drivers for the future Competitive markets will be the norm, monopolistic markets the exception in the future, in most regions of the world Alliances will continue to be formed, but partnerships are still unstable Settlement rates in most countries of the region are well above indicative target rates

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