Global trends in telecom development & new challenges for ... · Global trends in telecom...
Transcript of Global trends in telecom development & new challenges for ... · Global trends in telecom...
Global trends in telecom development & new challenges
for developing countriesSaburo TANAKA
Seminar in Cyberjaya, May 2005
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: [email protected] saburo.tanaka@itu. int
AgendaAgenda
lMarket trendsØNetwork evolution ØParadigm shiftØTariff evolution
lChallenges for developing countriesØIP TelephonyØMobile service ØInternet issue
A Mobile RevolutionA Mobile Revolution
Source: ITU World Telecommunication Indicators Database.
0
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
Calling opportunities worldwideCalling opportunities worldwide
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
550
200
400
600
800
1000
1200
1400
1600
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
0
5
10
15
20
25
Mobile subscribers
Internet subscribers
Mobile penetration
Internet penetration
Impact of new technologiesImpact of new technologies
AsiaAsia--Pacific international Pacific international communications capacity,communications capacity, GbitGbit/s/s
0 0 0 0 0.1 2 38
26
65
8 9 1114 16 18 20
23
30 31
0
10
20
30
40
50
60
70
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Internet
Telephone
1999 2000 2001 2002 2003
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,00011,00012,00013,00014,00015,00016,00017,00018,00019,00020,000
Growth In DSL Subscribers-Regional Division (000s)1999-2003
Asia-Pacific
North America
Western Europe
South & South East AsiaLatin America
Eastern Europe
Middle East & Africa
International voice traffic International voice traffic (in billions of minutes)(in billions of minutes)
0.01% 0.2% 1.6%
4.8%
7.4%
11.8%13.1%
0
20
40
60
80
100
120
140
160
180
1997 1998 1999 2000 2001 2002 2003
VoIP
PSTN
As % of total
Source: ITU / TeleGeography
99
Changing mix of intChanging mix of int’’l circuitsl circuitsRise of international private linesRise of international private lines
0
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.
1010
International voice traffic trendsInternational voice traffic trendsRevenue (US$bn) and price per min ( cents)Revenue (US$bn) and price per min ( cents)
3339
4451
5863
68
0
10
20
30
40
50
60
70
1997 1998 1999 2000 2001 2002 2003
Revenue (US$bn)
Price per minute (US cents)Source: ITU World Telecom
Indicators Database.
Sources of telecom revenueSources of telecom revenueWorldwide, in US$ billionsWorldwide, in US$ billions
0
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.
Ser
vice
rev
enu
e (U
S$
bn)
Other: Data, Internet, leased line, etc.
Mobile
19%
38%
4.5%
38.5%
1212
Selected rates for call terminationSelected rates for call terminationIn Euro cents per minuteIn 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
MexicoSettlement/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.
1313
The The ““third comingthird coming”” of IP Telephonyof IP Telephony
l 1995-1999: Ø “Internet phone”, offered primarily over the public
Internet (e.g. FreeWorld Dial-up, DialPad)l 2000-2002Ø “VoIP”, offered as discounted telephony over IP-based
networks (e.g. Net2Phone, iBasis)Ø Collapse of dot.com bubble left many VoIP companies
struggling as incumbent PTOs also offered VoIP services or acquired VoIP operators (e.g. China Telecom, Teleglobe)
l 2003-presentØ “Voice over broadband”, offered as free or flat-rate chat
plus discounted calls to PSTN/mobile users (e.g. Vonage, Skype)
Ø “Corporate IP”, as users shift both data and voice to a unified IP platform
1414
Annual growth ratesAnnual growth ratesInternational 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
Regulatory status of IP Telephony Regulatory status of IP Telephony By region, 2003By region, 2003
146
5
57
8
6
4
4
2
6
4
1
38
9
29
6 21 2
0%
20%
40%
60%
80%
100%
Africa Americas Arab States Asia-Pacific Europe/CIS
No policy forIP Telephony
FullCompetition
PartialCompetition
Prohibited
Restricted
Note: Based on responses from 132 economies. “Prohibited” means no service is possible. “Restricted” means only licensed PTOs can offer the service. “Partial competition” means non-licensed PTOs may use either IP networks or the public Internet. “Full competition” means anyone can use or offer service.Source: ITU (2005, forthcoming): General Trends in Telecom Reform”
Regulatory dilemmasRegulatory dilemmasExamples of regulatory confusion or inconsistency in Examples of regulatory confusion or inconsistency in regulation of IP Telephonyregulation 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 offer IP Telephony, but users are not allowed
to use itBrazil Barbados Aghanistan Bhutan
Sri Lanka Algeria Congo DRSuriname Antigua & Barbuda Kyrgyzstan
TYFR Macedonia Indonesia TogoMalawi
MaliMoroccoOman
PakistanParaguayRwandaUganda
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.
1717
IP Telephony in five yearIP Telephony in five year’’s times timeMajor technological and regulatory trendsMajor technological and regulatory trends
l IP-based traffic indistinguishable from PSTNØ Around 100 bn minutes of IP-based international traffic in
2008, or >50% of totalØ Many carriers will have all IP-networksØ A majority of voice traffic will originate on wireless
networks and much of it will be IP-basedl Numbering convergenceØ ENUM will allow calls to and from IP voice on multiple
different devicesØ Numbering plan will allow for non-geographic and device-
indendent VoIP numbersl Voice over IP over mobileØ Voice will increasingly travel over data channel in mobile
networks to provide discounted calling prices
1818
Mini case study: IP Telephony in Mini case study: IP Telephony in JapanJapan
l In 2000, Japanese Ministry (now MIC) introduced new rules on unbundling local loop and co-locationØ Rapid rise of DSL connectionsØ Very low prices (<US$20 per month)Ø Service speeds in excess of 26 Mbit/s
l Yahoo BB! Entered marked in September 2001 with bundled DSL and VoIPØ MIC defined numbering plan (prefix 050) for VoIP,
allowing calls to be received on PCsØ November 2002, >7m VoIP numbers allocated to ISPsØ VoIP development consortium worked with MIC to
establish standards for QoS, interconnection, tariffs, number allocation etc.
1919
Japanese broadband prices are among the Japanese broadband prices are among the lowest in the worldlowest in the world
32.9731.5031.2130.6130.1229.57
27.7127.7126.9226.6426.0726.0525.3825.3025.0025.0024.7723.9323.58
21.7121.1321.01
19.3918.68
17.4316.78
14.7714.0813.64
9.66
256256
400
256512
1024
1000512
256
512300
512
640256
512256
5122048
256
512
256384
256
1500512
1024
256512
256
512
0 10 20 30 40
Morocco 30Barbados 29
New Zealand 28Mexico 27
French Guiana 26Slovenia 25Germany 24
Netherlands 23Senegal 22Estonia 21
Brazil 20Malaysia 19
Hong Kong, China 18Greece 17Ukraine 16Cyprus 15
Czech Republic 14Korea (Rep.) 13
Israel 12Sri Lanka 11Australia 10
Croatia 9Taiwan, China 8Macao, China 7
Belarus 6Japan 5
Slovak Republic 4Jordan 3
Lithuania 2China 1
0 500 1000 1500 2000 2500Broadband monthly sub. prices, US$, July 2004
Overall subscription charges are important
0.920.860.86
0.550.430.42
0.380.310.290.280.260.24
0.200.180.180.180.170.170.150.13
0.100.090.070.060.060.040.040.020.010.00
Estonia 30Greece 29
Czech Republic 28New Zealand 27
Bahamas 26Ireland 25Iceland 24Austria 23
Slovenia 22Luxembourg 21
United Kingdom 20Israel 19
France 18Italy 17
Australia 16Finland 15
Netherlands 14Norway 13Denmark 12Germany 11
Switzerland 10Singapore 9
Belgium 8Canada 7
United States 6Hong Kong, China
Taiwan, China 4Korea (Rep.) 3
Sweden 2Japan 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.
X X
Traditional regime:Traditional regime:Joint provision of serviceJoint provision of service
Country A Country B
20
X
Emerging regime:Emerging regime:Market entry and interconnectionMarket entry and interconnection
XXCountry A Country B
Jointly provided circuit
Circuit provided by operator B
21
Country A Country B
Operator A Operator BPSTN
IWF
Interconnect
Leased lines
International simple resale (ISR)International simple resale (ISR)(By(By--passing accounting rate)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 transmissionTelephone service using data transmission(By(By--passing accounting rate)passing accounting rate)
Operator A
PSTN
Voice is packetized = data transmissionTelephone regulations do not apply
VSAT
Inter-connection
É
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
T e r m i n a t i n gN e t w o r k
L o c a l o r d i s t r i b u t e df u n c t i o n C a l l i n i t i a t e d f r o m P S T N / I S D N / P L M N
t o 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
L o c a l o r d i s t r i b u t e df u n c t i o n
O r i g i n a t i n gN e t w o r k
Call from International Telecommunication Network (ITN) to another ITN via IP-based Network
IP TelephonyIP Telephony
ADSLADSL
Or Call initiated by ADSL
A
C
B
C
B
A
Operator in A sends traffic tooperator in C under anarrangement of exclusivity
• Operator in A is a partnerof operator in C
• Settlement rates A/B > C/B
Origin A
Destination B Origin
C
Destinati
on B
Operator in C declares traffic to B on transit through A
Operator in B receives traffic at settlement rate C/B instead of A/B
Operator in C “re-labels” the traffic as originated in C
1
2
3
4
Refile Refile and other and other practices practices using using accounting accounting rate systemrate system
Mobile Mobile tromboning tromboning & high mobile & high mobile termination chargetermination charge
É ÈCalled BCaller 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
ÉCalled C
12
Origina ting internationalvoice traffic
Traditional bilateralsettlement rate
system
Traditional bilateralsettlement rate
system
Refile via athird countryRefile via a
third country
Sender keeps allexchange of trafficSender keeps all
exchange of traffic
Via a point ofpresence in the
terminating country
Via a point ofpresence in the
terminating country
Via a wholesale
carrier
Via a wholesale
carrier
Direct dealing with the
terminatingcountry
Direct dealing with the
terminatingcountry
30%20%
15%
70%65%
Delivering international voice Delivering international voice traffic in 2002traffic in 2002
Falling prices (1)Falling prices (1)
$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
Falling Price (2):Falling Price (2):SwissComSwissCom, price per minute of local call and call to US, price per minute of local call and call to US
57
28
43
5858
74
3444455
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-71983
TAT-81988
TAT-91991
TAT-101992
T-111993
T-12/131995
Gemini1998
TAT-142000
Co
st p
er v
oic
e p
ath
(US
$)
1
10
100
1'000
10'000
100'000
1'000'000
100'000'000
Cap
acit
y (v
oic
e p
ath
s)
Cost per voice path (US$), declining by
41% p.a.
Infrastructure capacity and costs,Infrastructure capacity and costs,TransAtlanticTransAtlantic cables, 1983cables, 1983--20002000
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
If distance is dead, and bandwidth is
infinite …
What do we bill for?
What do we bill for?What do we bill for?l Bill for network connectionØ Increasing integration of monthly telephone
subscription and Internet subscription prices
l Bill for privacy/advertisingØ Privacy-protected customer pays premiumØ Customer agreeing to receive advertising pays less
l Bill for quality of serviceØ Differentiated by transmission quality, waiting time,
bandwidth on demand, value-added secretarial support, mail functions etc.,
l Bill for BillingØ Customising of billing: by service, by user, by site
Internet, price and service trendsInternet, price and service trends
l Towards a flat-rate price structureØ All you can eat for US$20.00
l Towards lower service qualityØ “Best efforts” service delivery at lowest price
l Death of distanceØ Message to other side of earth costs same as a
message sent next door l Cross-promotion of Internet and other servicesØ “Free PC” with three year’s ISP subscription Ø “Free Internet” with residential local loop charges
l Tendency towards industry concentrationØ AOL’s subscriber base > next ten ISPs added together
Challenges for developing countriesChallenges for developing countries
l Service, tariff and technical issuesØAlternative calling proceduresØ Public switched network to IP based networkØChallenges related to mobile service
lRegulatory issuesØ Interconnection rulesØ Implementation of USOØ Tariff Rebalancing
l Internet connectivity in developing countriesØGuideline for negotiating IICØ Traffic based negotiation
Declining prices for mobile access, Declining prices for mobile access, global average, in US$, 1992global average, in US$, 1992--20002000
Note: CAGR = Compound Annual Growth rate.Source: ITU “World Telecommunication Development Report 1999: Mobile cellular”
547
410
231
180
86 75
1992 1994 1996 1998 1999 2000
Connection charge, in US$
CAGR, 1992-2000 = -32.1% p.a.44.9
38.134.2
31.3
20.216.6
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 revenueper user (ARPU)
Exp
end
itu
re p
er m
on
th
40 per cent of low-spending customers
generate 3% ofrevenue
14 per cent of high-spending customers
generate 53% ofrevenue
Cultivate the highCultivate the high--spendersspenders
Source: Price Waterhouse Coopers, based on Canadian data.
Mobile and Fixed-line ARPU in Japan
278
230
158
878891929496981009998979898
160152141
127134
272284275
265252
0
50
100
150
200
250
300
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Years
Yen 100
Fixed lineMobile
3838
0.00
0.05
0.10
0.15
0.20
0.25
Lith
uani
a
Nor
way
Finla
ndCz
ech
Rep.
Swed
en
Denm
ark
Irel
and
Icel
and
Slov
ak R
ep.
Pola
nd
Spain
Latv
ia
Aus
tria UK
Luxe
mbo
urg
Belg
ium
Hun
gary
Germ
any
Fran
ce
Slov
enia
Ital
yN
ethe
rland
s
Gree
ce
Mal
ta
Esto
nia
Port
ugal
Switz
erlan
d
Countries
Euros
PeakOffpeakTotal
Average Mobile Termination RateAverage Mobile Termination Rate(European countries, July 2004)(European countries, July 2004)
3939
Mobile and fixed Settlement rates, Mobile/Fixed ratioMobile and fixed Settlement rates, Mobile/Fixed ratio
0.0545
0.095
0.062
0.047
0.095
0.1385
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
South Africa Zimbabwe Zambia
2.231.16 1.00
Africa
0.0515
0.0104 0.0125
0.055
0.128
0.159
0
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 Ratio
15.29
10.24
0.94
Europe
0.085
0.1525
0.0229
0.0624
0.13210.12
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
Chile Brazil Jamaica
5.24
1.15
Latin America & the Caribbean
1.36
0.13
0.0295
0.0170.0228 0.025
0.152
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Australia Japan Malaysia
5.7
1.18
8.94
Asia Pacific
From FCC data
Notice of Inquiry
October 2004
Network ExternalityNetwork Externality
l Universal Service Obligation Fund = Cross SubsidyØ Not recognized as cost
l Network extremity = increase utility of a network to usersØ operators to provide incentives for users to join the
network = this can be added to the usage price or to the monthly subscription fee
l 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 ratesØ 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 A2Access network A1
International operator B
Access network B2Access 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 operators in A
enough incentive to agree prices above
cost?
If so, how much?
International externalitiesInternational externalities
InterInter--regional Internet connectivityregional Internet connectivity
Asia /Pacific
LatinAmerica
USA / Canada
Europe
Africa,Arab
162Gbit/s
0.1 Gbit/s
0.77 Gbit /s
Note: Gbit/s = Gigabits (1’000 Mb) per second.Source: ITU adapted from TeleGeography.
41.8Gbit/
s
0.4 Gbit/s
14 G
bit /
s0.4
5 Gbit
/s
4343
IntInt’’l Internet Connectivity (IIC)l Internet Connectivity (IIC)l In 2001, for telephony services, settlement
payment to developing countries amount to around : 5 billion US$lNow with decrease of accounting rates, they
receive less and because of Internet payment developing countries pay some 2 billions US$l SG3 adopted Recommendation D.50 on IICØ Fair sharing of Int’l Internet backbone network
lBarriers to Internet ConnectivityØRegulatory BarriersØ Economic Barriers
lWhat need to do?Ø Internet Exchange Point (IXP)=cost and service gains