Trends in international telecom traffic, costs and prices Dr Tim Kelly, International...

Trends in international telecom Trends in international telecom traffic, coststraffic, costs and pricesand 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 e-mail at [email protected].

2Trends in int’l traffic, costs and pricesTrends in int’l traffic, costs and prices

AgendaAgendaTrends in international traffic

Worldwide Arab States

Regional breakdown of traffic Market sharesCompetitive marketsCost and price trends

FCC benchmarks ITU Focus Group, indicative target rates

Conclusions

143

124

108

94

7262

5448

4438

30

82

0

200

400

600

800

1'000

1'200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Fix

ed

lin

es

an

d m

ob

ile

su

bs

cri

be

rs

wo

rld

wid

e (

mil

lio

ns

)

0

20

40

60

80

100

120

140

160

Bil

lio

ns

of

min

ute

s o

f in

tern

ati

on

al

tele

ph

on

e

tra

ffic

Fixed main lines

Mobile subscribers

Total int'l traffic

Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.

Trends in subscribers and Trends in subscribers and international traffic, international traffic, WorldwideWorldwide

Trends in subscribers and Trends in subscribers and international traffic, international traffic, Arab StatesArab States

Source: ITU World Telecommunication Indicators Database.

4.94.3

3.7

3.32.7

2.32.0

1.81.6

0

5

10

15

20

25

1993 1994 1995 1996 1997 1998 1999 2000 2001

Su

bsc

rib

ers

(mill

ion

s)

0

1

2

3

4

5

6

Int'

l tra

ffic

(b

illio

n m

ins)

Fixed lines

Mobile

Int'l outgoing

0 500,000,000 1,000,000,000 1,500,000,000

S. Arabia

UAE

Morocco

Egypt

Lebanon

Algeria

Kuwait

Tunisia

Jordan

Syria

Bahrain

Qatar

Oman

Yemen

Incoming

Outgoing

Minutes of Minutes of international international traffic, outgoing traffic, outgoing and incoming, and incoming, Arab States, 1998Arab States, 1998

Source: ITU World Telecommunication Indicators Database. Note: Excluding States with <100’000 minutes.

Trends in subscribers and Trends in subscribers and international traffic, international traffic, EgyptEgypt


0

1

2

3

4

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mil

lio

ns)

0

100

200

300

400

500

600

Tra

ffic

(m

illi

on

min

ute

s)

Fixed linesMobileInt'l outgoingInt'l incoming

Trends in subscribers and Trends in subscribers and international traffic, international traffic, LebanonLebanon


0.0

0.2

0.4

0.6

0.8

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mill

ion

s)

0

100

200

300

400

Tra

ffic

(m

illio

n m

inu

tes)


Trends in subscribers and Trends in subscribers and international traffic, international traffic, MoroccoMorocco


0

0.5

1

1.5

2

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mill

ion

s)

0

100

200

300

400

500

600

Tra

ffic

(m

illio

n m

inu

tes)

Fixed lines

Mobile

Int'l outgoing

Int'l incoming

Trends in subscribers and Trends in subscribers and international traffic, international traffic, Saudi ArabiaSaudi Arabia


0

1

2

3

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mill

ion

s)

0

200

400

600

800

1,000

1,200

Tra

ffic

(m

illio

n m

inu

tes)


Trends in subscribers and Trends in subscribers and international traffic, international traffic, TunisiaTunisia


0.0

0.2

0.4

0.6

0.8

1.0

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mill

ion

s)

0

50

100

150

200

Tra

ffic

(m

illio

n m

inu

tes)


Trends in subscribers and Trends in subscribers and international traffic, international traffic, UAEUAE


0.0

0.2

0.4

0.6

0.8

1.0

1993 1994 1995 1996 1997 1998

Su

bsc

rib

ers

(mill

ion

s)

0

200

400

600

800

1,000

Tra

ffic

(m

illio

n m

inu

tes)


Trends in Trends in outgoingoutgoing traffic, traffic, bn minutesbn minutes

-

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997

Developed countries

Developing countries


Trends in Trends in incomingincoming traffic, traffic, bn minutesbn minutes


0

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997

Developed countries

Developing countries

0

5

10

15

20

1993 1994 1995 1996 1997 1998

Payments Receipts Net settlement

Trends in settlement payments and Trends in settlement payments and receipts,receipts, Developing countries, US$bnDeveloping countries, US$bn


35%46%

74% 85%

1990 1995 1998 2005

Mono-poly

Compe-tition

4 14 29 48

Number of countries permitting more than one operator for international

telephony

Percentage of outgoing international Percentage of outgoing international traffic open to competitiontraffic open to competition

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.

Level of competition in international Level of competition in international services in WTO basic telecoms services in WTO basic telecoms agreementagreement

CompetitionMonopoly

Source: ITU Telecommunication Regulatory Database.

Countries permitting int’l competitionCountries permitting int’l competition

1990 1998 20 Israel1 Japan 1 Australia 21 Italy2 New Zealand 2 Austria 22 Japan3 UK 3 Belgium 23 Korea (Rep.)4 USA 4 Brunei D. 24 Malaysia

1995 5 Canada 25 Mexico1 Australia 6 Chile 26 Netherlands2 Canada (partial) 7 Colombia 27 New Zealand3 Colombia 8 DPR Congo 28 Norway4 Chile 9 Denmark 29 Peru5 Denmark 10 Dominican Rep. 30 Philippines6 Finland 11 El Salvador 31 Russia7 Japan 12 Finland 32 Somalia8 Korea (Rep.) 13 France 33 Spain (after Dec. 1998)9 Malaysia 14 Germany 34 Sweden

10 New Zealand 15 Ghana 35 Switzerland11 Philippines 16 Guatemala 36 Uganda12 Sweden 17 HK-China (after Dec 1998) 37 Ukraine13 UK 18 Indonesia 38 UK14 USA 19 Ireland (after Dec. 1999) 39 USA

Top 10 PTOs by outgoing int’l trafficTop 10 PTOs by outgoing int’l trafficPTO 1998 Bn Mins % change 97/98

AT&T (97 data) 10’331 8.2%

MCI WorldCom (97) 7’313 17.6%

Deutsche Telekom 4’711 -2.1%

France Telecom 3’400 9.7%

Sprint (97) 2’759 0.5%

BT 2’710 4.5%

Telecom Italia 2’339 5.9%

SwissCom 1’901 -2.9%

Telefonica 1’803 15.1%

Hongkong Telecom 1’718 -2.1%


1.1%

21.2%

0.6%

2.2%

-14.3%

-16.4%

-17.3%

-2.7%

BT

FT

Sprint

MCI WorldCom

AT&T

Telecom Italia

SwissCom

DT

4.5%

9.7%

0.5%

8.2%

5.9%

-2.9%

-2.1%

17.6%

% change in traffic% change in traffic % change in int’l rev.% change in int’l rev.Selected PTOs, performance 1997/98Selected PTOs, performance 1997/98

Note: Based on 1998 international outgoing traffic and revenue from international operations.For Sprint, MCI WorldCom and AT&T, data relates to 1997. The definition of international revenue (gross, net or retail) is tat used by each individual operator.


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”

AT&T/BT, 17.2%

GlobalOne, 14.3%

MCI WorldCom,Telefonica, TP,

11.1% Cable & Wireless, 4.7%

Others, 47.3%

Total, 1997: 81.2 bn minutes

Unisource, 5.4%

Emerging global alliances, Emerging global alliances, shares of shares of int’l traffic marketint’l traffic market


Emerging global alliances:Emerging global alliances:Recent developmentsRecent developments

WorldCom merges with MCI, bids for SprintFollowing 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 WorldComDeutsche Telekom’s bid for Telecom Italia fails;

Olivetti’s succeedsCable & Wireless re-positioning itself as supplier of

data servicesTelia and TeleNor merge

0

0.2

0.4

0.6

0.8

1

87 88 89 90 91 92 93 94 95 96 97 98

1987-92, -2% p.a.

1992-96, -4% p.a.

1997-98, -14% p.a.

D.140 approved

D.140 revised

Global average settlement rates,Global average settlement rates, US$ per minuteUS$ per minute


00.20.40.60.8

11.21.41.6

1993 1995 1997 1999

Italy

France

UK

Germany

Convergence: Accounting rate to US in Convergence: Accounting rate to US in US$ per minute, US$ per minute, four European countriesfour European countries

Source: FCC. Data for year-end except 1999 = September 1999

Accounting Accounting rates with rates with

USA,USA, US$ per US$ per minute, minute,

1 Nov 19991 Nov 1999

Source: FCC (Ken Stanley).

2.00

1.75

1.72

1.38

1.36

1.36

1.10

1.10

1.00

0.90

0.89

0.84

0.41

0.30

UAE

Lebanon

Mauritania

Oman

Syria

S. Arabia

Bahrain

Egypt

Jordan

Algeria

Tunisia

Morocco

World Ave.

Kuwait

Trends in accounting rates,Trends in accounting rates, US$ per min US$ per min

Source: FCC (Ken Stanley). “1999” is 1 November 1999 data.

0.00

0.50

1.00

1.50

2.00

2.50

1992 1993 1994 1995 1996 1997 1998 1999

Saudi Arabia

Kuwait

World Average

Oman

Qatar, UAE

Bahrain

Trends in accounting rates,Trends in accounting rates, US$ per min US$ per min

Source: FCC (Ken Stanley). “1999” is 1 November 1999 data.

0.00

0.50

1.00

1.50

2.00

2.50

1992 1993 1994 1995 1996 1997 1998 1999

Morocco

AlgeriaWorld Average

Mauritania

Egypt Tunisia

Two alternative scenarios:Two alternative scenarios:

T < 1 1<T<5 5<T<10 10<T<20 20<T<35 35<T<50 T>50

$0.45 $0.35 $0.29 $0.23 $0.16 $0.12 $0.06

Source: ITU Focus Group Report, FCC.

ITU Focus Group targets, by teledensity ITU Focus Group targets, by teledensity (T), to be achieved by 2001 (2004)(T), to be achieved by 2001 (2004)

FCC Benchmarks, by income groupFCC Benchmarks, by income groupLow income,

T<1Low

incomeLow-midincome

Upper-mid

income

Highincome

$0.23 $0.23 $0.19 $0.19 $0.15

2002 2001 2000 1999 1998

0

2

4

6

8

10

12

1990 1991 1992 1993 1994 1995 1996 1997

300 minutes, local calls

3 mins Int'l call to US

Monthly line rental

Tariff rebalancing trends, in US$Tariff rebalancing trends, in US$ Average of 39 major economiesAverage of 39 major economies



International traffic trends:International traffic trends:ConclusionsConclusions

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

Trends in international telecom traffic, costs and prices Dr Tim Kelly, International...

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