Global trends in telecom development & new challenges for - - PowerPoint PPT Presentation
Global trends in telecom development & new challenges for developing countries Saburo TANAKA Seminar in Buenos Aires, June 2005 The original document is elaborated by Dr Tim Kelly, ITU/SPU. It has completed by Saburo Tanaka. The views
The original document is elaborated by Dr Tim Kelly, ITU/SPU. It has completed by Saburo Tanaka. 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.int saburo.tanaka@itu.int
Network evolution Paradigm shift Tariff evolution
IP Telephony Mobile service Internet issue
Source: ITU World Telecommunication Indicators Database.
200 400 600 800 1'000 1'200 1'400 1993 1995 1997 1999 2001 2003 Mobile Users Fixed Lines Fixed Lines vs. Mobile Users, worldwide, Million
89.7%
5.0% 5.0% 0.3%
1993
52.7%
19.9% 19.9% 7.5%
1998
23.4%
25.0% 25.0% 26.7%
2003
Fixed-to- fixed Fixed-to- mobile Mobile-to- fixed Mobile-to- mobile Source: ITU Fixed-Mobile Interconnect website: http://www.itu.int/interconnect
5
5
200 400 600 800 1000 1200 1400 1600 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 5 10 15 20 25
Mobile subscribers Internet subscribers Mobile penetration Internet penetration
0.1 2 3 8 26 65 8 9 11 14 16 18 20 23 30 31 10 20 30 40 50 60 70 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Internet Telephone
1999 2000 2001 2002 2003 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000
Growth In DSL Subscribers-Regional Division (000s) 1999-2003
Asia-Pacific North America Western Europe South & South East Asia Latin America Eastern Europe Middle East & Africa
(in billions of minutes) (in billions of minutes)
0.01% 0.2% 1.6% 4.8% 7.4% 11.8% 13.1% 20 40 60 80 100 120 140 160 180 1997 1998 1999 2000 2001 2002 2003 VoIP PSTN As % of total
Source: ITU / TeleGeography
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9
Rise of international private lines Rise of international private lines
1 2 3 4 5 6 7 8 2002 1995
Availability and status of international circuits from the United States(64 kbit/s equivalents, in millions) Idle circuits Other International Private Lines PSTN circuits 2002, total = 6.7m circuits of which IPL = 29.4% 1995, total = 0.26m circuits of which IPL = 10.6%
Source: ITU, adapted from FCC Circuit Status Report.
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1
Revenue (US$bn) and price per min ( cents) Revenue (US$bn) and price per min ( cents)
33 39 44 51 58 63 68 10 20 30 40 50 60 70 1997 1998 1999 2000 2001 2002 2003 Revenue (US$bn) Price per minute (US cents)
Source: ITU World Telecom Indicators Database.
Worldwide, in US$ billions Worldwide, in US$ billions
200 400 600 800 1'000 1'200 1993 95 97 99 01 2003 Domestic fixed telephone International fixed telephone
Source: ITU World Telecom Indicators Database.
Service revenue (US$ bn) Other: Data, Internet, leased line, etc. Mobile
19% 38% 4.5% 38.5%
12
1 2
In Euro cents per minute In Euro cents per minute
0.017 0.017 0.151 0.022 0.08 0.164 0.251 0.138 0.022 0.08 0.016 0.019 0.180 0.140 0.150 France Germany India China Mexico
Settlement/RIO Skype, Mobile Skype, Fixed
Note: Mobile and fixed rates are for SkypeOut. Settlement is from US and Reference Interconnect Offer is for double tandem. Source: Skype, FCC, Analysys.
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1 3
1995-1999:
“Internet phone”, offered primarily over the public Internet (e.g. FreeWorld Dial-up, DialPad)
2000-2002
“VoIP”, offered as discounted telephony over IP-based networks (e.g. Net2Phone, iBasis) Collapse of dot.com bubble left many VoIP companies struggling as incumbent PTOs also offered VoIP services
Teleglobe)
2003-present
“Voice over broadband”, offered as free or flat-rate chat plus discounted calls to PSTN/mobile users (e.g. Vonage, Skype) “Corporate IP”, as users shift both data and voice to a unified IP platform
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1 4
International voice traffic, in % International voice traffic, in %
Note: Vertical scale is logarithmic. Source: ITU / TeleGeography
1% 10% 100% 1’000% 10’000% 1998 1999 2000 2001 2002 2003 VoIP PSTN
By region, 2003 By region, 2003
14 6 5 5 7 8 6 4 4 2 6 4 1 3 8 9 29 6 2 1 2 0% 20% 40% 60% 80% 100% Africa Americas Arab States Asia-Pacific Europe/CIS No policy for IP Telephony Full Competition Partial Competition Prohibited Restricted
Note: Based on responses from 132 economies. “Prohibited” means no service is possible. “Restricted” means
networks or the public Internet. “Full competition” means anyone can use or offer service. Source: ITU (2005, forthcoming): General Trends in Telecom Reform”
Examples of regulatory confusion or inconsistency in Examples of regulatory confusion or inconsistency in regulation of IP Telephony regulation of IP Telephony
Non-licensed PTOs may offer IP Telephony, but not licensed PTOs Users are able to make IP phone calls, but no company is licensed to provide it Licensed PTOs are allowed to offer IP Telephony, but users are not allowed to use it All PTOs are allowed to
users are not allowed to use it Brazil Barbados Aghanistan Bhutan Sri Lanka Algeria Congo DR Suriname Antigua & Barbuda Kyrgyzstan TYFR Macedonia Indonesia Togo Malawi Mali Morocco Oman Pakistan Paraguay Rwanda Uganda
Note: Based on responses to 2003/04 questionnaire from 132 economies. Only selected responses are shown. “PTO” = Public Telecommunications Operator. Source: ITU World Telecommunication Regulatory Database.
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Major technological and regulatory trends Major technological and regulatory trends IP-based traffic indistinguishable from PSTN
Around 100 bn minutes of IP-based international traffic in 2008, or >50% of total Many carriers will have all IP-networks A majority of voice traffic will originate on wireless networks and much of it will be IP-based
Numbering convergence
ENUM will allow calls to and from IP voice on multiple different devices Numbering plan will allow for non-geographic and device- indendent VoIP numbers
Voice over IP over mobile
Voice will increasingly travel over data channel in mobile networks to provide discounted calling prices
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In 2000, Japanese Ministry (now MIC) introduced new rules on unbundling local loop and co-location
Rapid rise of DSL connections Very low prices (<US$20 per month) Service speeds in excess of 26 Mbit/s
Yahoo BB! Entered marked in September 2001 with bundled DSL and VoIP
MIC defined numbering plan (prefix 050) for VoIP, allowing calls to be received on PCs November 2002, >7m VoIP numbers allocated to ISPs VoIP development consortium worked with MIC to establish standards for QoS, interconnection, tariffs, number allocation etc.
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1 9
Japanese broadband prices are among the Japanese broadband prices are among the lowest in the world lowest in the world
32.97 31.50 31.21 30.61 30.12 29.57 27.71 27.71 26.92 26.64 26.07 26.05 25.38 25.30 25.00 25.00 24.77 23.93 23.58 21.71 21.13 21.01 19.39 18.68 17.43 16.78 14.77 14.08 13.64 9.66
256 256 400 256 512 1024 1000 512 256 512 300 512 640 256 512 256 512 2048 256 512 256 384 256 1500 512 1024 256 512 256 512
10 20 30 40 Morocco 30 Barbados 29 New Zealand 28 Mexico 27 French Guiana 26 Slovenia 25 Germany 24 Netherlands 23 Senegal 22 Estonia 21 Brazil 20 Malaysia 19 Hong Kong, China 18 Greece 17 Ukraine 16 Cyprus 15 Czech Republic 14 Korea (Rep.) 13 Israel 12 Sri Lanka 11 Australia 10 Croatia 9 Taiwan, China 8 Macao, China 7 Belarus 6 Japan 5 Slovak Republic 4 Jordan 3 Lithuania 2 China 1 500 1000 1500 2000 2500 Broadband monthly sub. prices, US$, July 2004
Overall subscription charges are important
0.92 0.86 0.86 0.55 0.43 0.42 0.38 0.31 0.29 0.28 0.26 0.24 0.20 0.18 0.18 0.18 0.17 0.17 0.15 0.13 0.10 0.09 0.07 0.06 0.06 0.04 0.04 0.02 0.01 0.00 Estonia 30 Greece 29 Czech Republic 28 New Zealand 27 Bahamas 26 Ireland 25 Iceland 24 Austria 23 Slovenia 22 Luxembourg 21 United Kingdom 20 Israel 19 France 18 Italy 17 Australia 16 Finland 15 Netherlands 14 Norway 13 Denmark 12 Germany 11 Switzerland 10 Singapore 9 Belgium 8 Canada 7 United States 6 Hong Kong, China Taiwan, China 4 Korea (Rep.) 3 Sweden 2 Japan 1 Cost 100 kbit/s as % of monthly income
But factoring in the speed of the connection and income is the more telling story
Source: ITU Internet Reports 2004: The Portable Internet.
Country A Country B
20
Country A Country B
Jointly provided circuit Circuit provided by operator B
21
Country A Country B
Operator A Operator B
IWF
Interconnect Leased lines
(By (By-
passing accounting rate)
Once a foreign carrier accepts the benchmark rate, it can negotiate ISR arrangements with US carriers
Country A Country B
Telephone service using data transmission Telephone service using data transmission
(By (By-
passing accounting rate) Operator A
PSTN
Voice is packetized = data transmission Telephone regulations do not apply
VSAT Inter- connection
T 0 2 0 8 5 0 0 - 0 0 ( 1 0 6 1 4 7 )
I P N e t w o r k I W F Terminating N e t w o r k Local or distributed function Call initiated from P S T N / I S D N / P L M N to P S T N / I S D N / P L M N P S T N / I S D N / P L M N IW F P S T N / I S D N / P L M N Local or distributed function Originating N e t w o r k
Call from International Telecommunication Network (ITN) to another ITN via IP-based Network
ADSL ADSL
Or Call initiated by ADSL
A C B C B A
Oper at or in A sends t r af f ic t o
ar r angement of exclusivit y
C/ B
Origin A Destination B Origin C Destination B
Oper at or in C declar es t r af f ic t o B on t r ansit t hrough A Operat or in B r eceives t r af f ic at set t lement r at e C/ B inst ead of A/ B Oper at or in C “r e-labels” t he t r af f ic as or iginat ed in C
1 2 3 4
Caller A
Operator A’s national network
Operator B’s mobile network
Operator A’s Int’l facility Operator B’s Int’l facility Operator X or Operator A’s facility in another country
International boundary
High Interconnection charge
Operator B’s fixed network Operator B’s fixed network
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Originating international voice traffic
Traditional bilateral settlement rate system Traditional bilateral settlement rate system Refile via a third country Refile via a third country Sender keeps all exchange of traffic Sender keeps all exchange of traffic Via a point of presence in the terminating country Via a point of presence in the terminating country Via a wholesale carrier Via a wholesale carrier Direct dealing with the terminating country Direct dealing with the terminating country 30% 20% 15% 70% 65%
$0.00 $0.50 $1.00 $1.50 $2.00 90 92 94 96 98 00 02 04 Average retail price of one minute call to USA. Mark-up Settlement Source: ITU adapted from FCC and national data (34 countries).
Forecast
SwissCom SwissCom, price per minute of local call and call to US , price per minute of local call and call to US
5 7 28 43 58 58 74 3 4 4 4 4 5 5 95 96 97 98 99 00 2001 Swiss call prices. US cents per minute. Source: ITU. Call to USA Local call
1 10 100 1'000 10'000 100'000
TAT-7 1983 TAT-8 1988 TAT-9 1991 TAT-10 1992 T-11 1993 T-12/13 1995 Gemini 1998 TAT-14 2000
Cost per voice path (US$) 1 10 100 1'000 10'000 100'000 1'000'000 100'000'000 Capacity (voice paths)
Cost per voice path (US$), declining by 41% p.a.
Source: ITU, TeleGeography Inc., FCC. Note: Voice-path numbers assume a compression ratio of 5:1 to number of circuits.
10'000'000
Capacity (voice 64% p.a. paths), growing by
Bill for network connection
Increasing integration of monthly telephone subscription and Internet subscription prices
Bill for privacy/advertising
Privacy-protected customer pays premium Customer agreeing to receive advertising pays less
Bill for quality of service
Differentiated by transmission quality, waiting time, bandwidth on demand, value-added secretarial support, mail functions etc.,
Bill for Billing
Customising of billing: by service, by user, by site
Towards a flat-rate price structure
All you can eat for US$20.00
Towards lower service quality
“Best efforts” service delivery at lowest price
Death of distance
Message to other side of earth costs same as a message sent next door
Cross-promotion of Internet and other services
“Free PC” with three year’s ISP subscription “Free Internet” with residential local loop charges
Tendency towards industry concentration
AOL’s subscriber base > next ten ISPs added together
Service, tariff and technical issues
Alternative calling procedures Public switched network to IP based network Challenges related to mobile service
Regulatory issues
Interconnection rules Implementation of USO Tariff Rebalancing
Internet connectivity in developing countries
Guideline for negotiating IIC Traffic based negotiation
Note: CAGR = Compound Annual Growth rate. Source: ITU “World Telecommunication Development Report 1999: Mobile cellular”
547 410 231 180 86 75 1992 1994 1996 1998 1999 2000
Connection charge, in US$
CAGR, 1992-2000 = -32.1% p.a.
44.9 38.1 34.2 31.3 20.2 16.6 1992 1994 1996 1998 1999 2000
Monthly subscription, in US$
CAGR, 1992-2000 = -9.2% p.a
14% 22% 24% 40% 53% 36% 8% 3% Customers Average revenue per user (ARPU) Expenditure per month
40 per cent of low- spending customers generate 3% of revenue 14 per cent of high- spending customers generate 53% of revenue
Source: Price Waterhouse Coopers, based on Canadian data.
Mobile and Fixed-line ARPU in Japan
278 230 158 87 88 91 92 94 96 98 100 99 98 97 98 98 160 152 141 127 134 272 284 275 265 252 50 100 150 200 250 300 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Years
Yen 100 Fixed line Mobile
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0.00 0.05 0.10 0.15 0.20 0.25 Lithuania Norway Finland C zech R ep. Sweden Denmark I reland I celand Slovak R ep. P
Spain Lat via Austria UK Luxembourg Belgium Hungary G ermany France Slovenia I taly Netherlands G reece Malt a Estonia P
Switzerland
Countries Eu ro s P eak Of f peak Tot al
Average Mobile Termination Rate Average Mobile Termination Rate
(European countries, July 2004) (European countries, July 2004)
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3 9
Mobile and fixed Settlem ent rates, Mobile/ Fixed ratio Mobile and fixed Settlem ent rates, Mobile/ Fixed ratio
0.062 0.047 0.095
0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 Sout h Af rica Zimbabwe Zambia 2.23
1.00
Af rica
0.0515 0.0104 0.0125
0.128
0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 Netherlands Germany Russia Mobile Fixed Mobile/ Fixed Rat io 15.29 10.24 0.94
Europe
0.085
0.0229 0.0624
0.12 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 Chile Brazil Jamaica
1.15
Latin America & the Caribbean
0.0295
0.0228 0.025
0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 Australia Japan Malaysia 5.7
8.94
Asia Pacif ic From FCC data Notice of Inquiry October 2004
Universal Service Obligation Fund = Cross Subsidy
Not recognized as cost
Network extremity = increase utility of a network to users
network = this can be added to the usage price or to the monthly subscription fee
the network externality effect has a solid basis in economic analysis and had successfully – at least with some regulators – been brought to bear by mobile operators on their case for higher termination rates
Can be used by the developing countries to enhancing take-up and roll-out of the network
Country A (Calling) International operator A Country B (Called) Access network A2 Access network A1 International operator B Access network B2 Access network B1 Customers A Customers B Do Customers in A derive benefit from more Customers in B? Accounting rate How can we be sure that an externality will be passed through to connect more customers in B? Is benefit to calling
enough incentive to agree prices above cost? If so, how much?
Inter Inter-
regional Internet connectivity
Asia / Pacific Latin America USA / Canada Europe Africa, Arab 1 6 2 G b i t / s 0.1 Gbit/s 0.77 Gbit /s
Note: Gbit/s = Gigabits (1’000 Mb) per second. Source: ITU adapted from TeleGeography.
4 1 . 8 G b i t / s 0.4 Gbit/s 1 4 G b i t / s . 4 5 G b i t / s
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In 2001, for telephony services, settlement
payment to developing countries amount to around : 5 billion US$
Now with decrease of accounting rates, they receive less and because of Internet payment developing countries pay some 2 billions US$ SG3 adopted Recommendation D.50 on IIC
Fair sharing of Int’l Internet backbone network
Barriers to Internet Connectivity
Regulatory Barriers Economic Barriers
What need to do?
Internet Exchange Point (IXP)=cost and service gains