Presentation on theme: "International interconnection:"— Presentation transcript:
1International interconnection: Part 1: Trends in international telecom trafficDr Tim Kelly,International Telecommunication Union (ITU)SSGRR, L’Aquila, 26 Oct 1999Note: 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 at1
2International Interconnect: A series of three lectures Part 1: Trends in international trafficPart 2: Managing the transition from revenue- sharing to cost-orientationPart 3: The Internet changes everything
3Agenda Trends in international traffic Regional breakdown of traffic Steady growth in voice trafficHigher percentage originating from mobilesExplosive growth of Internet trafficRegional breakdown of trafficMarket sharesCompetitive marketsTelecom Italia’s international positionITU/TeleGeography “Direction of Traffic” publication2
4Trends in international traffic minutes (billions) 1'200160143Fixed main lines1241401'000Mobile subscribers108120Total int'l traffic800941008272Fixed lines and mobile subscribersworldwide (millions)600Billions of minutes of international80telephone traffic625448604004438304020020199019911992199319941995199619971998199920002001Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
5The changing pie: Global telecom service revenue, 1998 Domestic fixed-Other (incl. Internet, leasedlines, telex), 10.6%line revenues,59.3%Mobileservicerevenues,21.2%The recent history of our industry is reflected in the shares of revenue which are generated by the different sub-sectors. Fixed-line telephone services still generate around two thirds of total telecommunications revenue worldwide, which was worth more than US$700 billion in The remaining third comes from mobile cellular and other services, such as leased lines, telex and the Internet.Internationalrevenues, 8.9%1998 Telecom service revenue. Total = US$724bnSource: ITU “World Telecommunication Development Report 1999: Mobile cellular”
6Projection of revenue growth (US$bn) 1'000ActualProjected900Other (e.g.,Internet, leased lines, telex)800700Mobile service revenues600500Service revenue (US$ bn)400International300200But this picture is changing. Revenue generated from domestic and international fixed-line services reached a peak shortly after TELECOM 95, and have subsequently been in decline. By the time of TELECOM 2003, they will contribute less than half of the total. Indeed, were it not for the continuing growth of the Internet and especially of mobile cellular, the industry as a whole would be shrinking rather than growing in value.Domestic fixed-line service revenues100Tele-com199619971998Tele-com200020012002Tele-com199519992003Source: ITU “World Telecommunication Development Report 1999: Mobile cellular”
7Growth trends: fixed-lines, mobilephones and estimated Internet users, millions Fixed-line telephones1'200Mobilephones1'000Estimated Internet users800600400200Forecasting the growth in the fixed-line telephone network is the most straightforward. Today, the number of telephone users worldwide was probably just short of 900 million, up from around 700 million at the last World Telecom. The number of telephone subscribers should have passed the one billion mark before the next Telecom.The development of the mobile market is more difficult to predict. As TELECOM 99 opened its doors, there were probably some 400 million mobile cellular users around the world. Of the five hundred million new users added to the world’s telecommunication networks since TELECOM 95, three hundred million are using mobilephones and two hundred million using fixed-line telephones.The remarkable growth of the mobile market is charted in the ITU’s new World Telecommunication Development Report, published today. Almost every forecast of the growth of mobile cellular market has proved to be an underestimate of its actual growth. At the risk of being proved wrong, I will forecast that there will be more mobile subscribers worldwide by TELECOM 2003 than there are telephone subscribers today.Most difficult of all to measure, let alone forecast, is the growth of the Internet. The most reliable estimates show that there are around 200 million active Internet users today compared with around 50 million four years ago. By TELECOM 2003, the number of users may exceed half a billion, and many of them may be accessing the Internet from mobiles rather than from fixed-line connections.199519961997199819992000200120022003Note: Columns show actual and projected users at end of year. Source: ITU.
8100 years of telephones Log scale: 1910-2010 Normal scale: 1990-2010 2'0001'0001'500FixedFixed1'00010MobileMobile500In this presentation, I have taken snapshots of the industry in 1995, 1999 and During that period, mobile communications will have changed from being primarily a complement for fixed-line telecommunications to being a potential substitute for it. The number of mobile subscribers around the globe overtook the number of Internet subscribers in the mid-1980s. In a handful of countries such as Cambodia, Italy, Finland and the Republic of Korea, the number of mobile subscribers is now greater that the number of fixed-line users. By the time we hold TELECOM 2007, there will probably be more mobile subscribers worldwide than fixed-line ones.But we at the ITU have long memories as well as short ones. What is remarkable about the development of the mobile sector is that it will have gone from zero to one billion subscribers within two decades. The telephone industry is more than 130 years old and has still not yet reached that point. The tendency of technological change to accelerate market development augurs well for the development of new services, such as 3G mobile, and also for the extension of those services to all the inhabitants of the world.19102030405060708090200010199020002010Source: ITU, “World Telecommunication Development Report: Mobile Cellular” 1999.
9Internet outgrowing voice Hongkong SAR, April‘98-July’99, Minutes of user per month, ‘000s 1'2001'000Dial-up Internet800(via PSTN)600Int'l voice/fax400(in + out)20046810122469898989898999999Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
10Trends in call volume, Deutsche Telekom, 1997-98 86.3%36.0%7.2%-7.1%-2.1%DomesticInt'lLocal callsCalls toCalls tolong-outgoingmobileInternet (T-distancecallsnetworksOnline)Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
11Changing regional shares of global international traffic, 1983 & 1997 Regional share of International traffic, 1983Africa, 1.9%LAC, 3.6%Europe, 68.0%Asia-Pacific,9.7%Regional share of int’l traffic, 1997Africa, 1.9%Europe, 43.0%LAC, 4.1%Asia-Pacific,North America,18.5%16.8%By origin, total = 10.2 billion minutesNorth America, 32.5%By origin, total = 81.8 billion minutesSource: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
12Compound annual growth rates in outgoing traffic, 1983-1997 Europe12.3%Africa16.0%World16.1%LAC17.1%Asia-Pacific21.6%N. America21.7%
13Trends in outgoing traffic, bn minutes 6050Developed countries403020Developing countries10-19901991199219931994199519961997Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
14Trends in incoming traffic, bn minutes 605040Developed countries3020Developing countries1019901991199219931994199519961997Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
15Top 10 PTOs by outgoing int’l traffic Source: ITU/TeleGeography Inc. “Direction of Traffic 1999: Trading Telecom Minutes”.
16Selected PTOs, performance 1997/98 % change in traffic % change in int’l rev.-2.1%DT-16.4%-2.9%SwissCom2.2%5.9%Telecom Italia0.6%8.2%-2.7%AT&T17.6%MCI WorldCom21.2%0.5%Sprint1.1%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”.
17Emerging global alliances, shares of int’l traffic market AT&T/BT, 17.2%Others,47.3%GlobalOne,14.3%Total, 1997:81.2 bn minutesHand-in-hand with the shift towards private ownership is the trend towards formation of global alliances. While the partnerships continue to change, there appears to be no slow down in the rush to form new alliances and to add new partners to existing ones.The international telecommunications traffic market provides particularly fertile soil for the creation of such agreements between companies. For the moment, the types of service which they provide are fairly conventional, but they are planning a new generation of services which are “global”, rather than merely “cross-border” in nature. As an example of this, AT&T and BT, two of the biggest names in the fixed-line world, are building a new international network, based on Internet Protocols, and have recently extended this co-operation to their mobile activities also.In the satellite world, global operators are emerging that are not bound by terrestrial borders. While the financial difficulties of GMPCS operators have been much publicised, the fact is that they are establishing a new type of venture which is different in nature from today’s primarily national operators. Their closest competitors are likely to be the new generation of private consortia establishing undersea cable networks, such as Project Oxygen or Global Crossing. The undersea cable business began, more than a hundred years ago, with privately-funded ventures and we are now returning to that model. Only the scale of the vision has changed.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”
18Emerging global alliances: Recent developments WorldCom merges with MCI.Following collapse of BT/MCI merger, BT & AT&T join forces in “Concert”AT&T and Telefonica withdraw from UnisourceGlobalOne 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
19Percentage of outgoing international traffic open to competition Mono-polyCompe-85%74%tition46%35%Number of countries permitting more than one operator for international telephony41429481990199519982005Note: 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.
20Level of competition in international services in WTO basic telecoms agreement MonopolyCompetitionSource: ITU Telecommunication Regulatory Database.
23Telecom Italia, revenues from int’l calls In Billion Lire ActualForecast2'6052'5542'5892'5112'4702'2882'1932'0181'7991'7511991199219931994199519961997199819992000Source: Telecom Italia. Forecasts from Salomon Smith Barney.
24Telecom Italia, revenues breakdown In Billion Lire Fixed charges, 20.7%billion LireOther 11.2%Equpt. 5.3%Mobile,22.1%Fixed charges, 21.5%Other 9.0%Equpt. 6.4%Internationalcalls, 6.2%Domestic calls, 34.5%Mobile,37.0%billion LireInternationalcalls, 4.8%Domestic calls, 39.7%Source: Telecom Italia. Forecasts from Salomon Smith Barney.
25International traffic trends: Conclusions Voice traffic continuing to grow, but the main action is now elsewhereMobile and the Internet will be the major demand drivers for the futureCompetitive markets will be the norm, monopolistic markets the exception in the futureAlliances will continue to be formed, but partnerships are still unstable
26Other reports launched at TELECOM ‘99 For more information ...For more information ...lPublication launch:10 October 1999(TELECOM ‘99)lAvailable on paper and on-line (PDF format)lAlso available withdatabase on CD-ROMlWebsite:itu.int/tiOther reports launched at TELECOM ‘99Other reports launched at TELECOM ‘99lWorld Telecom Development Report 1999: Mobile CellularlTrends in Telecom Reform 1999: Convergence & RegulationlInternet for Development (updated with latest data)