Oecd Communications Outlook 2003

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© OECD, 2003. © Software: 1987-1996, Acrobat is a trademark of ADOBE. All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction, lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials and any elements thereof like any other copyrighted material. All requests should be made to: Head of Publications Service, OECD Publications Service, 2, rue André-Pascal, 75775 Paris Cedex 16, France.

OECD Communications Outlook 2003

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention).

Publié en français sous le titre : Perspectives des communications de l’OCDE : 2003

© OECD 2003 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.

FOREWORD This report, the seventh in a series of biennial Communications Outlooks, was prepared in the context of the OECD’s work on the analysis of communication policy in member countries. The report was drafted by the staff working in the OECD’s Directorate for Science, Technology and Industry, including Dimitri Ypsilanti, Sam Paltridge and Frédéric Bourassa as well as John Houghton from Victoria University. They are grateful for the contribution of information by telecommunication carriers and national delegations that responded in 2002 to an OECD questionnaire relating to industry regulation and data. When noted, the assistance of Netcraft and the International Telecommunication Union in providing data is gratefully acknowledged. The pricing comparisons are undertaken in co-operation with Teligen Ltd., and quarterly updates of some pricing indicators using the OECD methodology are available directly from Teligen. Many of the other indicators in this report are available in electronic format in the OECD Telecommunication Database 2003, covering the period 1980-2001. The draft of this report was presented to the OECD Working Party on Telecommunication and Information Services Policies at its meeting of 2-3 December 2002. The Committee for Information, Computer and Communications Policy subsequently recommended that the report be made available to the general public. It is published on the responsibility of the Secretary-General of the OECD.

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© OECD 2003

TABLE OF CONTENTS Introduction .....................................................................................................................................................

11

Policy and regulatory outlook............................................................................................................................................. The telecommunications market ....................................................................................................................................... Telecommunication market structure................................................................................................................................ Telecommunication crisis.................................................................................................................................................... Gradual transition or future shock .....................................................................................................................................

12 13 14 17 19

Recent Communication Policy Developments ...........................................................................................

27

Trends in competition ......................................................................................................................................................... Regulatory safeguards ......................................................................................................................................................... Foreign ownership ............................................................................................................................................................... Interconnection .................................................................................................................................................................... Number portability and carrier selection ......................................................................................................................... Local loop unbundling ........................................................................................................................................................ Regulation and the Internet ............................................................................................................................................... CATV development.............................................................................................................................................................. Household expenditures on communication...................................................................................................................

28 29 29 29 30 30 30 30 31

Telecommunication Market Size .................................................................................................................

59

Mobile communications...................................................................................................................................................... International communications............................................................................................................................................ Leased lines ......................................................................................................................................................................... Research and development ...............................................................................................................................................

63 65 67 68

Chapter 1.

Chapter 2.

Chapter 3.

Network Dimensions and Development .....................................................................................................

85

Mobile access ....................................................................................................................................................................... Digitalisation......................................................................................................................................................................... Investment ............................................................................................................................................................................

89 91 91

Chapter 4.

Chapter 5.

Internet and Broadband Infrastructure...................................................................................................... 119

Internet subscribers............................................................................................................................................................. Broadband access ................................................................................................................................................................ Internet hosts........................................................................................................................................................................ Web sites............................................................................................................................................................................... Secure servers ...................................................................................................................................................................... Links to secure servers........................................................................................................................................................ E-commerce access and supply......................................................................................................................................... Web hosting .......................................................................................................................................................................... Domain names...................................................................................................................................................................... Regional development of the Internet.............................................................................................................................. Chapter 6.

120 122 125 125 126 128 130 131 132 135

Main Trends in Pricing................................................................................................................................... 151

Dial-up Internet access pricing .......................................................................................................................................... Internet access pricing time series .................................................................................................................................... DSL pricing............................................................................................................................................................................ Residential and business telecommunication baskets .................................................................................................. Trends in residential and business rates..........................................................................................................................

© OECD 2003

154 154 157 158 158

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OECD Communications Outlook 2003

International rates................................................................................................................................................................ Mobile communications...................................................................................................................................................... Leased lines ......................................................................................................................................................................... Local loop unbundling ........................................................................................................................................................ Chapter 7.

Quality of Service............................................................................................................................................ 191

Connections .......................................................................................................................................................................... Payphones ............................................................................................................................................................................ Network faults and maintenance ....................................................................................................................................... Directory assistance ............................................................................................................................................................ Answer seizure ratios........................................................................................................................................................... Chapter 8.

161 163 164 166

192 193 194 195 195

Employment and Productivity....................................................................................................................... 207

Employment ......................................................................................................................................................................... 208 Productivity........................................................................................................................................................................... 211 Skills and occupational change in telecommunications ................................................................................................. 216 Chapter 9.

Trade in Communication Equipment .......................................................................................................... 227

Exports of communication equipment.............................................................................................................................. Imports of communication equipment ............................................................................................................................. Balance of trade in communication equipment .............................................................................................................. Composition of trade in communication equipment...................................................................................................... Direction of trade in communication equipment ............................................................................................................ Recent trends .......................................................................................................................................................................

228 231 232 234 236 238

Glossary ................................................................................................................................................................................ 251 Annex..................................................................................................................................................................................... 253 List of Boxes 5.1. 5.2. 5.3. 6.1. 8.1. 9.1. 9.2.

Mobile Internet .......................................................................................................................................................... The language of e-commerce ................................................................................................................................... Factors affecting the apparent location of Web content....................................................................................... Local telephony zones in Canada............................................................................................................................ Restructuring: the case of TPSA Poland .................................................................................................................. Notes on trade data................................................................................................................................................... Communication equipment in US merchandise trade, 1999-2001 ......................................................................

120 130 132 153 216 229 236

List of Tables

6

1.1. Major public telecommunication operators and Internet service providers in the OECD area with revenues greater than USD 1 billion, 2001..................................................................................................... 1.2. PTOs having spent more than USD 1 billion on UMTS spectrum fees ............................................................... 2.1. Number of operators in service, 2002 ..................................................................................................................... 2.2. Access line market share of new entrants .............................................................................................................. 2.3. Cable communications.............................................................................................................................................. 2.4. National long distance market shares of new operators ...................................................................................... 2.5. International market share of new market entrants .............................................................................................. 2.6. Cellular mobile competition in the OECD area, 2001 ........................................................................................... 2.7. Government ownership of public telecommunication network operators ........................................................ 2.8. Foreign ownership restrictions in telecommunications........................................................................................ 2.9. Fixed to mobile interconnection ............................................................................................................................. 2.10. Carrier number portability and carrier preselection............................................................................................. 2.11. Local loop unbundling .............................................................................................................................................. 2.12. Treatment of national and international voice telephony services provided over the Internet .................... 2.13. Final consumption household expenditure in the OECD area ........................................................................... 3.1. Telecommunication revenue in the OECD area .................................................................................................... 3.2. Telecommunication revenue as a percentage of GDP.......................................................................................... 3.3. Globalisation of selected telecommunication carrier revenues ......................................................................... 3.4. Mobile telecommunication revenue .......................................................................................................................

21 24 35 36 37 38 39 40 41 45 47 50 52 55 57 70 71 72 74

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Table of Contents

3.5. 3.6. 3.7. 3.8. 3.9. 3.10. 3.11. 3.12. 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. 4.7. 4.8. 4.9. 4.10. 4.11. 4.12. 4.13. 4.14. 4.15. 4.16. 4.17. 4.18. 4.19. 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. 5.8. 5.9. 5.10. 5.11. 5.12. 6.1. 6.2. 6.3. 6.4. 6.5. 6.6. 6.7. 6.8. 6.9. 6.10. 6.11. 6.12. 6.13. 6.14. 6.15. 6.16.

Telecommunication revenue ratios ......................................................................................................................... Cellular mobile telecommunication revenue per cellular mobile subscriber................................................... International telecommunication revenue ............................................................................................................. International telecommunication traffic.................................................................................................................. Leased line revenue, selected incumbents/countries.......................................................................................... R&D expenditures for PTOs and telecommunications equipment manufacturers ........................................... United States Patent and Trademark Office (USPTO): Number of patents granted to selected telecommunication operators .................................................................................................................................. Electric communication technique patents granted by the USPTO, filed to the European Patent Office (EPO) and the Japan Patent Office (JPO)...................................................................................................... Telecommunication channels in the OECD area ................................................................................................... Standard analogue telecommunication access lines in the OECD area............................................................. ISDN subscribers in OECD area............................................................................................................................... Residential lines ........................................................................................................................................................ Telecommunication channels per 100 inhabitants in the OECD area................................................................. Cellular mobile subscribers in the OECD area ...................................................................................................... Cellular mobile penetration, 2001 ........................................................................................................................... Mobile prepaid subscriptions.................................................................................................................................. Percentage of population coverage of mobile networks ...................................................................................... Digitalisation in the OECD area ............................................................................................................................... Availability of digital subscriber lines (DSL) in the OECD area .......................................................................... Public telecommunication investment in the OECD area (excluding spectrum fees)...................................... Licensing revenues in the OECD area..................................................................................................................... Telecommunication investment by region ............................................................................................................. Public telecommunication investment as a percentage of revenue ................................................................... Public telecommunication investment as a percentage of gross fixed capital formation (GFCF)................... Public telecommunication investment per access channel ................................................................................. Public telecommunication investment per access path ....................................................................................... Public telecommunication investment per capita................................................................................................. Internet subscribers to fixed networks, 1999-2001 ................................................................................................ Broadband access, 2000-2001................................................................................................................................... Broadband access to end June 2002........................................................................................................................ Leased lines connected to internet, 2000-2001 ..................................................................................................... Internet hosts by domain, 1998-2002 ...................................................................................................................... Web sites (servers) by country, 2000-2002.............................................................................................................. Secure servers in OECD countries, 1998-2002........................................................................................................ References to secure servers by domain, August 2002......................................................................................... References to secure servers by country, August 2002 ......................................................................................... Web pages by domain and country, August 2002 .................................................................................................. Domain name registrations under top level domains, 2000-2002....................................................................... Regional development of the Internet, 2000-2002 ................................................................................................ Pricing structures for residential users in the OECD area, 2002 .......................................................................... OECD Internet access basket for 20 hours at daytime discounted PSTN rates, September 2002 .................. OECD Internet access basket for 20 hours at evening discounted PSTN rates, September 2002 .................. OECD Internet access basket for 40 hours at daytime discounted PSTN rates, September 2002 .................. OECD Internet access basket for 40 hours at evening times discounted PSTN rates, September 2002........ OECD Internet access basket for 20 hours using discounted PSTN rates, 1998-2002....................................... OECD Internet access basket for 40 hours using discounted PSTN rates .......................................................... Internet access by DSL in OECD member countries, September 2002.............................................................. OECD basket of residential telephone charges, August 2002.............................................................................. OECD composite basket of residential telephone charges, August 2002 .......................................................... OECD basket of business telephone charges, August 2002................................................................................. OECD composite basket of business telephone charges, August 2002 ............................................................. OECD time series for telephone charges ............................................................................................................... OECD basket of international telephone charges, August 2002 .......................................................................... OECD basket of low user mobile telephone charges, August 2002 .................................................................... OECD basket of medium user mobile telephone charges, August 2002............................................................

© OECD 2003

75 76 77 78 79 80 82 83 97 98 99 102 103 104 105 106 107 108 109 110 111 113 114 115 116 117 118 137 138 139 140 141 142 143 144 145 146 148 149 168 170 171 172 173 174 175 176 178 179 180 181 182 183 184 185

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OECD Communications Outlook 2003

6.17. 6.18. 6.19. 6.20. 7.1. 7.2. 7.3. 7.4. 7.5. 7.6. 7.7. 8.1. 8.2. 8.3. 8.4. 8.5. 8.6. 8.7. 8.8. 9.1. 9.2. 9.3. 9.4. 9.5. 9.6. 9.7. 9.8. 9.9. 9.10. A.1. A.2. A.3. A.4. A.5. A.6.

OECD basket of high user mobile telephone charges, August 2002................................................................... OECD basket of national leased line charges, August 2002................................................................................. Trends in leased line pricing over different distances, 1992-2002...................................................................... Monthly prices for LLU and retail price for PSTN line rental (as of April 2002)................................................. Network access: waiting time for new connection ................................................................................................. Payphones in the OECD area ................................................................................................................................... Quality of service: payphones.................................................................................................................................. Quality of service: fault incidence ........................................................................................................................... Quality of service: repair time.................................................................................................................................. Directory assistance charges .................................................................................................................................... Answer seizure ratios ................................................................................................................................................ Employment in telecommunications, 1991-2001................................................................................................... Employment in mobile communications, 1995-2001 ............................................................................................ Telecommunications employment as a share of national employment, 1992-2001 ......................................... OECD telecommunications employment and revenue per employee, 1990-2001........................................... Telecommunications revenue per employee, 1991-2001..................................................................................... Mobile employment and productivity indicators, 1999-2001 .............................................................................. PTO labour productivity by company, 1999-2001 .................................................................................................. US telecommunications employment by occupation, 2000, and projected change to 2010 ........................... Communication equipment exports, 1991-2001 .................................................................................................... Communication equipment imports, 1991-2001.................................................................................................... Balance of trade in communication equipment, 1991-2001 ................................................................................. Composition of communication equipment exports, 2001 .................................................................................. Composition of communication equipment imports, 2001.................................................................................. Direction of communication equipment exports, 1991-2002 ............................................................................... Direction of communication equipment exports, 1996-2001 ............................................................................... Source of communication equipment imports, 1991-2002 ................................................................................... Source of communication equipment imports, 1996-2001 ................................................................................... US communication equipment trade, 1999-2001................................................................................................... Average annual exchange rates................................................................................................................................ Purchasing power parities ........................................................................................................................................ Gross domestic product............................................................................................................................................ Total population......................................................................................................................................................... Gross fixed capital formation ................................................................................................................................... Households ................................................................................................................................................................

186 187 188 189 198 199 200 201 202 204 206 218 219 220 221 222 223 224 225 240 241 242 243 244 245 246 247 248 249 254 255 256 257 258 259

List of Figures

8

1.1. 1.2. 1.3. 1.4. 2.1. 2.2. 2.3. 2.4. 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7. 3.8. 4.1. 4.2. 4.3. 4.4.

Access growth in the OECD area.............................................................................................................................. Competition in fixed network................................................................................................................................... Competition in mobile infrastructure ..................................................................................................................... Telecommunication sector defaults ........................................................................................................................ Changes in the proportion of communication in disposable household income ............................................. Monthly household expenditure on communications.......................................................................................... Trend of harmonised indices of consumer prices (HICP) for communication for the EU-15............................ CPI all items and CPI telephone services ............................................................................................................... Trends in public telecommunications revenue, investment and access paths, 1980-2001 ............................. Telecommunication revenue as a percentage of GDP for total OECD, 1985-2001 ............................................ Public telecommunication revenue per access path, 2000 and 2001 ................................................................. Mobile telecommunication revenue in OECD countries, 2001............................................................................ Public telecommunication revenue per capita, 1991 and 2001 ........................................................................... Cellular mobile telecommunication revenue per cellular mobile subscriber, 1998 and 2001 ........................ Share of mobile revenue in public telecommunication revenue, 1998 and 2001 ............................................. Minutes of outgoing international telecommunication traffic (MiTT), 2001 ....................................................... Access channels per 100 inhabitants in OECD countries, 1992, 1997 and 2001................................................. Mobile subscribers in OECD countries................................................................................................................... Cellular mobile subscribers per 100 inhabitants, 2001......................................................................................... Public telecommunications investment by region, 1990-2001 (excluding spectrum fees) ..............................

13 14 14 16 31 32 33 33 60 61 62 63 64 65 66 67 86 89 90 93

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Table of Contents

4.5. 4.6. 4.7. 5.1. 5.2. 5.3. 5.4. 5.5. 5.6. 5.7. 5.8. 5.9. 5.10. 5.11. 5.12. 5.13. 6.1. 6.2. 6.3. 6.4. 6.5. 6.6. 6.7. 6.8a. 6.8b. 6.9. 6.10. 6.11. 6.12. 6.13. 7.1. 7.2. 7.3. 8.1. 8.2. 8.3. 8.4. 8.5. 8.6. 8.7. 8.8. 8.9. 8.10. 9.1. 9.2. 9.3. 9.4. 9.5. 9.6. 9.7. 9.8. 9.9. 9.10. 9.11.

Public telecommunication investment as a percentage of PTO revenue and GFCF, 2001............................... Public telecommunication investment per capita................................................................................................. Public telecommunications investment per access path ..................................................................................... Internet subscribers per 100 inhabitants, December 2001 .................................................................................. Broadband access per 100 inhabitants, June 2002 ................................................................................................ Leased line connections per 100 000 inhabitants, December 2001.................................................................... Web sites per 1 000 inhabitants, July 2002 ............................................................................................................. Secure servers per 100 000 inhabitants, July 2002................................................................................................. References to secure servers by domain, August 2002......................................................................................... References to secure servers by country, August 2002 ......................................................................................... References to secure servers by language, August 2002 ...................................................................................... Internet subscribers and secure servers................................................................................................................. Share of Web pages hosted within domestic ISP IP address space, August 2002............................................. Share of Web pages that are gTLDs, August 2002 ................................................................................................. Growth in domain name registrations by domain, 2000-2002.............................................................................. Regional share of routes announced to the Internet, July 2002 ........................................................................... OECD Internet access basket for 40 hours at daytime using discounted PSTN rates, September 2002........ OECD Internet access basket for 40 hours at evening using discounted PSTN rates, September 2002 ....... OECD Internet access basket for 20 hours per month, using discounted PSTN rates, 1998-2002................... OECD residential tariff basket, August 2002 .......................................................................................................... OECD composite basket of residential telephone charges, August 2002 .......................................................... OECD business tariff basket, August 2002.............................................................................................................. OECD composite basket of business telephone charges, August 2002 ............................................................. Time series for residential telephone charges ...................................................................................................... Time series for business telephone charges.......................................................................................................... OECD basket of international telephone charges for business and residential users, August 2000.............. OECD basket of low user mobile telephone charges, August 2002 .................................................................... OECD basket of average user mobile telephone charges, August 2002............................................................. OECD basket of high user mobile telephone charges, August 2002................................................................... Trends in leased line pricing over different distances (2 Mbit/s), 1992-2002 .................................................... Payphones per 100 inhabitants in the OECD area, 1995 and 2001...................................................................... Answer seizure ratios, 2001....................................................................................................................................... Answer seizure ratio, 1990-2001 ............................................................................................................................... OECD telecommunications employment trends, 1989-2001 ............................................................................... US telecommunications employment, January 1992 to July 2002 ........................................................................ US communications equipment manufacturing employment, January 1992 to July 2002 ................................ US telecommunications employment, 1992-2002.................................................................................................. Access paths per employee, 1990-2001 .................................................................................................................. Telecommunications revenue per employee, 2001 .............................................................................................. Mobile subscribers per employee, 2001 ................................................................................................................ Mobile revenue per employee, 2001 ...................................................................................................................... PTO revenue per employee, 2001 ........................................................................................................................... Staff education levels, TPSA Poland........................................................................................................................ Communication equipment and merchandise trade, 1991-2001......................................................................... Communication equipment share of merchandise exports, 2001 ....................................................................... Communication equipment export growth, 1991-2001 ......................................................................................... Communication equipment share of merchandise imports, 2001....................................................................... Communication equipment import growth, 1991-2001......................................................................................... Communication equipment trade surplus/deficit per capita, 2001..................................................................... Composition of communication equipment exports, 2001 .................................................................................. Composition of communication equipment imports, 2001 .................................................................................. Direction of OECD communication equipment exports, growth 1991-2001....................................................... Direction of OECD communication exports, 2001.................................................................................................. Source of OECD communication equipment imports, growth 1991-2001...........................................................

94 95 95 121 123 124 126 127 129 129 130 131 133 133 134 136 155 155 156 158 159 159 160 160 161 162 163 164 165 166 194 196 197 209 210 210 211 212 213 213 214 215 216 228 230 230 231 232 233 234 235 237 238 239

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© OECD 2003

Chapter 1

INTRODUCTION

Abstract. This chapter provides an overview of the 2003 edition of the OECD Communications Outlook. It addresses the issue of policy and regulation, and examines the size and structure of the telecommunications market. It also provides insight into competition within the industry and the financial crisis that plagued it in 2001 and 2002. Finally, it touches upon some of the future challenges the industry will face.

11

© OECD 2003

OECD Communications Outlook 2003

T

his report is the seventh edition of the biennial OECD Communications Outlook. It provides a range of performance indicators for public communication services in the 30 OECD countries. The research has been carried out in the context of the work programme of the OECD’s Committee on Information, Computer and Communications Policy (ICCP) and its Working Party on Telecommunication and Information Services Policies (TISP). The tables presented in this report provide communication indicators in a harmonized format using the most recent data available. For the most part, data are presented on a country by country basis. This task is becoming increasingly difficult, based on traditional information sources, due to the rapid expansion in the number of firms supplying communication services to the public and the increasing participation by service suppliers in foreign markets. This is particularly true for telecommunication operators, once largely confined to national boundaries but increasingly entering each other’s markets. Technological convergence and the ability of firms to supply the same services over different networks are increasingly blurring traditional distinctions between industry segments. To complement the national figures, an extensive range of additional firm-level data is provided for leading service suppliers. In general, data from earlier years are displayed to enable analysis of developments over the past decade and to highlight future trends. Most comparisons of the telecommunication sector are for 2001, but some indicators, including tariff indicators, are provided for 2002. Data for Internet developments are also for 2002. Where countries use a reporting period for financial data which differs from and goes beyond the calendar year, these figures are taken to represent 2001. Policy and regulatory outlook The telecommunications industry has played, over the last decade, an important role in productivity growth and technological diffusion. As the supporting infrastructure for electronic commerce and the growth and diffusion of the Internet, the industry has been a key factor in the new economy and changes in economic structures. At the same time, in 2001 and 2002, the industry has been an important factor in the poor performance of stock markets, job losses, and financial losses. Reasons for these setbacks include exaggerated expectations arising from the “dot.com bubble”, resulting in rapid investment growth and poor management decisions, which led to a number of companies expanding their activities outside their traditional core business. The accumulated large debts of many companies could not be supported during a period of downturn in the market. Although this report mainly provides data up to the end of 2001, the underlying long-term trends of the industry remain propitious. Telecommunications traffic and revenues have grown in most areas, and the available 2002 data, at the time of writing, tend to confirm continued underlying growth in key areas of the industry. The crisis that has affected a number of firms in the industry does not provide any evidence for a reversal of government telecommunication policies or telecommunication regulatory frameworks which emphasize competition. Recent financial problems in the telecommunications sector should not be interpreted as arising from attempts by regulators to enhance competition in the sector and should not be used as a pretext to give more power back to incumbent telecommunication operators, or to lift asymmetric regulations, as argued in some quarters. The setbacks in investment and employment, while important, do not wipe out the increasingly important role the sector is playing in increasing GDP and in the underlying industrial and social fabric of OECD economies. 12

The return to a healthier industry will depend on continued market growth and investment. In turn, this demands that continued efforts be made by regulators to enhance conditions of access. This has © OECD 2003

Introduction

been one of the main preoccupations of OECD regulators in 2000 and 2001. Improving conditions of competition will continue to help the trend in decreasing prices, which has been occurring since the early days of market liberalisation. Policies aimed at facilitating interconnection, including reducing interconnection charges, easing market entry requirements, enhancing access through unbundling and reducing market power of dominant carriers remain important and should continue to be reviewed. The telecommunications market In 2001 the total revenues for telecommunication carriers with headquarters in the OECD area were around USD 878 billion. At the same time the size of the telecommunication services market in the OECD area was more than USD 831.3 billion, just over four-fifths of the world total. The two major drivers of growth continue to be wireless communications and the Internet. Revenues for cellular mobile services reached USD 264.8 billion in 2001. This represented a tenfold increase from a decade earlier and reflected the tremendous expansion of wireless access over that time. The impact of the Internet on growing telecommunication revenues is harder to determine because it cuts across a range of platforms and services. It has undoubtedly created a new revenue stream from Internet subscriptions but has also increased the demand for fixed network access, backbone capacity and leased lines. More recently, revenues for fixed network broadband access and wireless data services have begun to become significant. At the end of 1991 there were only 15 million cellular mobile subscribers in the OECD area. By the end of 2001 there were more than 600 million. The number of Internet users in the early 1990s was negligible. Arguably, as the service had not yet been commercialised, there were no subscribers. By the beginning of 2002, the number of Internet subscribers with access over a variety of platforms was more than 250 million and there were more than half a billion users of these subscriptions. Together with the development of the fixed network, particularly in countries with low penetration rates, the degree of access has expanded enormously in OECD countries (Figure 1.1). In 2001, OECD countries had 1.2 billion fixed and mobile subscriber lines, approximately 62% of the world total.

Figure 1.1. Access growth in the OECD area Broadband Internet subscribers

Narrow-band Internet subscribers (fixed network)

Cellular mobile subscribers

Fixed network channels

Millions of subscribers 1 600

Millions of subscribers 1 600

1 400

1 400

1 200

1 200

1 000

1 000

800

800

600

600

400

400

200

200

0 1992 Source: OECD.

© OECD 2003

1993

1994

1995

1996

1997

1998

1999

2000

0 2001

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OECD Communications Outlook 2003

Telecommunication market structure By 2003 there was only one country with a monopoly for the provision of fixed network services remaining in the OECD area (Figure 1.2). The process of liberalisation has been faster in the wireless sector, where the last monopoly was eliminated in 1998 (Figure 1.3). Figure 1.2.

Competition in fixed network

Open competition

Monopoly

Duopoly

Number of countries 30

Number of countries 30

25

25

20

20

15

15

10

10

5

5

0

0 1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Source: OECD.

Figure 1.3. Competition in mobile infrastructure Four or more operators

Three operators

Monopoly

Duopoly

Number of countries 30

Number of countries 30

25

25

20

20

15

15

10

10

5

5

0

0 1989

14

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Source: OECD.

© OECD 2003

Introduction

In general, the methodology used in the Communications Outlook shows data on a country by country basis. Data are also included for the leading telecommunication operators in the OECD area on a company by company basis (Table 1.1). These data provide an additional perspective on industry development to complement data presented on a national basis because the increasing international investment by telecommunications operators means that the country by country analysis no longer wholly captures the dimensions of communication markets. These include records of market entry and market exit. In 2001 there were 78 providers of telecommunication and Internet access services with revenues greater than USD 1 billion. This compares with 71 in 2000 and, on a comparable basis, 72 in 1999. A number of mergers have occurred since the previous edition of the Communications Outlook. These include Bell Atlantic and GTE to form Verizon, KDD and DDI to form KDDI and Qwest and US West into Qwest. In other cases, independent firms have been purchased and fully incorporated in the accounts of larger carriers. One example is France Telecom purchasing Orange and Equant. The major forthcoming merger, at the time of writing, is between Telia and Sonera. Apart from the telecommunication carriers, three companies have been added due to their significance in the Internet access market. Two of these companies are headquartered in the United States and one in Japan. In the United States, AOL and Earthlink have Internet access rather than telephony as their primary focus. AOL is part of AOL-Time Warner but only the ISP subscription revenues are shown so as to exclude the group revenues from areas such as motion pictures and publishing. Time Warner Telecom is treated a separate entity. In Japan, Softbank’s BB Technologies launched broadband access in 2001 and then commercial Internet telephony services. By mid-2002, BB Technologies had more than 1 million broadband subscribers. That being said, the majority of Softbank’s revenues were not drawn from telecommunication or Internet access services in 2001. In Europe, Tiscali was the largest Internet service provider (ISP) independent of a telecommunication carrier, but the company did not have revenues above USD 1 billion in 2001. Firms with revenues greater than USD 1 billion that have exited the market since the previous edition of the Communications Outlook include Star Telecommunications and RSL Communications. In addition, Teleglobe, a subsidiary of Bell Canada, applied for bankruptcy in 2002 and sold or closed down most of its foreign operations. Prior to this, Teleglobe had ceased to be a stand-alone company when, in November 2000, BCE acquired all outstanding Teleglobe stock. However, the majority of firms exiting the market completely were those with revenues below USD 1 billion. By 2002 several of the companies with revenues over USD 1 billion had filed for bankruptcy protection (Chapter 11, as regards the United States) while they restructured their financial position. Some of the most notable financial restructuring was being undertaken by Worldcom, NTL, Global Crossing, XO, McLeodUSA, Williams Communications and United Pan-European Communications. However, in most cases these companies had not exited the market and continued to provide services. By the end of 2002, a number had emerged from bankruptcy protection or had their assets purchased by other companies. Companies to have emerged from bankruptcy protection include Covad, Flag Telecom, McLeodUSA, NTL, Williams Communications and 360Networks. One further company which has undergone financial restructuring can be added to this group. In 2000, Energis had more than USD 1 billion in revenue. In July 2002, trading of Energis shares on the London Stock Exchange was suspended and the company withdrew from European operations. Subsequently, the Energis operations in the United Kingdom were sold back into private ownership and continue to provide services. As a privately owned company, financial accounts are no longer published. The undoubted losers from firms exiting the market or defaulting on bonds have been investors. According to data collected by Standard & Poors in 2002, companies in the telecommunications sector defaulted on USD 97 billion (Figure 1.4). This was more than double the amount for all of 2001. In 2002 Worldcom recorded the largest individual default of some USD 31.8 billion. On the other hand, those telecommunication firms with strong balance sheets have been able to purchase assets at very low © OECD 2003

15

OECD Communications Outlook 2003

Figure 1.4. Telecommunication sector defaults Amount defaulted

Number of telecom defaults

Amount defaulted (USD billion) 100

Number of defaults 60

90 50 80 70 40 60 50

30

40 20 30 20 10 10 0

0 1996

1997

1998

1999

2000

2001

2002

Source: OECD and Standard & Poors.

prices in relation to what was originally paid for them. This has been true not only for firms filing for bankruptcy, but also those withdrawing to home markets. The firms purchasing the assets were, generally, those that continued to have stronger balance sheets. In some cases they represent new entrants extending their coverage in regional markets. A noticeable characteristic was that firms with headquarters outside North America have been among the buyers. One reason for this is that North American companies were among the first to expand into global markets. As some of these firms filed for bankruptcy protection (Chapter 11) or withdrew from certain regions their foreign assets became available at very low prices. PSINet, which filed for Chapter 11 in June 2001, provides one example. PSINet’s regional assets were sold separately. Cable & Wireless purchased PSINet’s assets in Japan and CITIC Pacific bought those in Hong Kong, China. At the same time, a group of investors purchased PSINet Europe while one of Hungary’s first Internet service providers, Elender, was bought back by its original owners from bankrupt PSINet. In Canada, PSINet’s assets were acquired by Telus. Cogent, a domestic broadband access provider, purchased PSINet’s assets in the United States.

16

In some cases, telecommunication carriers have acquired assets of firms in financial distress to augment their regional networks. In Europe, Telia purchased 360Networks cable assets in the United Kingdom while the latter was in bankruptcy protection. Telia also purchased KPN Qwest’s assets in France when that company went into liquidation. Indeed, KPN itself purchased the Belgian assets of KPN-Qwest. By way of contrast, relatively few foreign firms have purchased network assets of companies in the United States. A notable exception was the Cable & Wireless purchase of Exodus after the latter filed for bankruptcy protection. Apart from the very competitive availability of backbone capacity in the United States, some foreign firms appeared reluctant to commit as events progressed in 2002. One example was Telmex agreeing to take a stake in XO but subsequently seeking a release from that commitment for the payment of a fee. Moreover, Cable & Wireless and Telia announced that they were scaling back some domestic operations in the United States. © OECD 2003

Introduction

Some of the largest transactions of assets, albeit at very low prices, have been between North American players and those in the Asia-Pacific region. Telstra purchased Level3’s cable assets in Asia by agreeing to meet the ongoing capital and operational expenditure commitments. Global Crossing announced that it has signed an agreement under which Hutchison Telecommunications in Hong Kong (China) and Singapore Technologies Telemedia would invest a modest USD 250 million for a 61.5% majority interest in a newly constituted Global Crossing on its emergence from bankruptcy. This sum was around 2% of the book value of Global Crossing’s total assets before it filed for Chapter 11. In late 2002, China Netcom, China’s second largest fixed network operator, acquired the assets of Asia Global Crossing. Telecommunication crisis Analysts have put forward a number of factors to explain the financial difficulties experienced in 2001 and 2002 by some telecommunication carriers. Previous editions of the Communications Outlook have noted that the corollary of creating frameworks that enable market entry is that market exit is also possible. In some cases, market exit results because of decreasing demand for a product or service. On the whole this is not the case for the telecommunications market. While the telecommunications market grew more slowly in 2001 than in previous years, the overall size of the market expanded. Throughout 2002, the available evidence suggests that demand for telecommunication services did not decline. In some cases, of course, there may be a shift in demand between services. Examples might include DSL or cable modems replacing second residential lines, Internet protocol (IP) telephony substituting for public switched telecommunication network (PSTN) telephony or cellular mobile substituting for some fixed network services. To date, change in telecommunications has occurred at a relatively slow pace compared to what might be expected in the future. The factors that have resulted in market exit or extreme financial distress have not been, in large part, due to the shifting demand between services. One reason for this is that as the changes begin to impact telecommunication carriers, changes in pricing and service strategies have taken place in response to these challenges. Another reason is that many telecommunication carriers operate across all market segments. Accordingly, they may well be providing the services that are substituting for traditional services. A third factor is that the telecommunication sector continues to generate new services. Nonetheless, the longer-term change resulting from technological development is having an impact. If IP networks are less expensive to build and operate than PSTNs, carriers will need to make that transition if they are to be competitive. At the same time liberalisation has curtailed tremendously the monopoly rents extracted from long distance services, international services and leased lines. The transition to lower prices for some telecommunication services and the availability of new services, such as broadband access, are extremely beneficial for users and overall economic development. Liberalisation has, therefore, brought tremendous benefits to OECD countries and telecommunication carriers are adjusting to the new market conditions by increasing efficiency and improving levels of service. Where then do the roots of the financial difficulties faced by some incumbents and many new entrants stem from? If the overall telecommunication market is still growing, why have so many of the new entrants sought bankruptcy protection? At the same time, why are some incumbents announcing losses to their bottom line results for the first time in their recent history? Understanding the root causes of any “financial bubble” is a complex matter. The losses sustained by bond holders or by investors in telecommunication stock no doubt qualify the sector as having experienced a bubble during the late 1990s and that it burst from 2000 onwards. While many factors are involved, the basic premise of the bubble was that the telecommunication market would continue to grow at the very high rates experienced as liberalisation increased across the OECD. While the telecommunications market, including Internet, did continue to grow, it did not do so at the pace projected by many of the business models assembled by new entrants or in the strategic plans of incumbents. Much of the financial community appears to have had an unrealistic understanding of the time it would take new entrants to establish a competitive presence in local access and the ease with © OECD 2003

17

OECD Communications Outlook 2003

which multiple entrants could enter backbone markets. Contributing to this lack of understanding was the lack of reliable data in areas such as Internet traffic growth. Moreover, it now appears that some information was misleading and fraudulent. The result was that the financial community provided capital for unrealistic business models both in terms of entry into new geographical markets and new service markets. In the latter case, this involved providing financing that resulted in very high amounts being paid for universal mobile telecommunication system (UMTS, also referred to as third-generation or 3G) licences. In 2000, various OECD governments received nearly USD 93.5 billion in spectrum revenue compared to little more than USD 1 billion in 1999. In terms of geographical expansion, telecommunication carriers paid very high prices to acquire operators outside their traditional markets. The combination of these factors raised debt levels to record highs for some companies. For some of these companies, higher debt levels could be sustained because of the underlying strength of their core business and their dominant position in home markets. What could not be sustained was the valuation these operators carried in their accounts. Between 1999 and 2000, the total value of intangible assets that telecommunication operators carried on their books increased by around USD 414 billion. At the same time, the value of tangible fixed assets (i.e. property plant and equipment) increased by around USD 150 billion. Many point to overinvestment in facilities. This is true in some segments of the telecommunications market, such as backbone markets, but while overinvestment in facilities undoubtedly occurred the larger impact was the result of “acquisition excess”. As reassessments of the value of the tangible and intangible assets acquired in this period occurred against the prices paid, it was concluded that amounts carried as assets in the accounts of telecommunication carriers no longer equated to their market value. In 2001 the size of the intangible assets was cut by USD 243 billion. The value of fixed assets was reduced by a further USD 63 billion. The reductions were both the result of extraordinary write-downs and market exit. In 2002 this restructuring process was ongoing. Deutsche Telekom, for example, recorded a writedown of USD 33.1 billion for the third quarter of 2002. Although the underlying core business of most incumbent telecommunication carriers and some new entrants were sound, the write-downs in assets value had a negative impact on current levels of profitability. The impact of higher than expected UMTS spectrum licence fees on the financial state of some telecommunication companies was an ongoing debate in 2002. Nine telecommunication players were responsible for USD 84 billion of the total amount paid in UMTS spectrum fees. The largest participant was Vodafone, which paid USD 19.2 billion (Table 1.2). This company was followed by Deutsche Telekom (USD 13.8 billion), BT (USD 13.8 billion), France Telecom (USD 10.1 billion), KPN (USD 7.4 billion) and Hutchison-Whampoa (USD 7.0 billion). The amount Telefonica and Sonera collectively spent was USD 9.4 billion. Telecom Italia’s exposure was relatively modest, compared to the other operators, with that company outlaying USD 2.3 billion for UMTS spectrum in Austria, Greece and Italy. At the end of 2001, there were significant variations in the ratio of amounts spent on UMTS licences for firms spending more than USD 1 billion, relative to their non-current liabilities. On average, expenditure in foreign markets was more than twice that in these companies’ countries of incorporation. There are, of course, a number of exceptions with KT and SK Telecom only purchasing spectrum in their “home markets”. Telecom Italia and Deutsche Telekom also spent more in home markets than in foreign markets. In the case of the other operators, most expenditure on UMTS spectrum was in foreign markets. For some operators, such as Vodafone and Sonera, the amounts paid were more than the total non-current liabilities of those firms at the end of 2001. The relatively high level of UMTS spectrum expenditure to total liabilities was one of the reasons BT and KPN acted ahead of some other carriers in financial restructuring. In other cases the amounts spent on UMTS represent a significant, albeit smaller, proportion in relation to total non-current liabilities.

18

For some of these companies, the UMTS spectrum licence fees closely followed a series of mergers and acquisitions of wireless companies in foreign markets. Cash and the issuance of new shares generally paid for the transactions. The largest such transaction was Vodafone’s acquisition of Mannesmann for USD 128 billion. This deal also included Italy’s Omnitel and the subsequent sale of © OECD 2003

Introduction

Orange. Vodafone also expanded its interests in Ireland, Japan, Mexico, Spain, Switzerland and China. Deutsche Telekom’s expansion in the wireless sector included the acquisition of One-2-One in the United Kingdom for USD 9.7 billion and USD 30 billion for the acquisition of Voicestream and Powertel in the United States. Together with other acquisitions, Deutsche Telekom’s expansion into foreign wireless markets cost more than USD 40 billion. France Telecom’s acquisitions, since the beginning of 2000, amounted to some USD 34.4 billion, of which the various Orange properties represented USD 23.7 billion. The foregoing examples of mergers and acquisitions, mainly focused on wireless markets, draw out the high level of such activity between 1998 and 2001. Other notable transactions across the sector included Worlcom’s acquisition of MCI, the combination of Qwest and US West and Olivetti’s takeover of Telecom Italia. In all these cases, and others, telecommunication carriers subsequently needed to write down the value of the properties they had purchased. In most cases the results represented a loss to shareholders. In other cases, the rash of expansions was still reflected in high levels of debt compared to historical levels. In 2002, action to address this situation was underway with a number of telecommunication carriers selling foreign operations and seeking to reduce their debt. The actions of BT in this regard provide a good example. Recognising the need to put the company on a firmer financial footing and to allow its fixed and wireless operations to focus on their core operations, the company split off mmO2 and sold a number of foreign holdings. This provided evidence that the measures needed to restructure were in the hands of the companies concerned rather than requiring action by governments. Gradual transition or future shock At the close of 2002, the telecommunications sector had experienced two years of slower growth than many had expected at the end of the 1990s. Nevertheless, the data assembled in this edition of the Communications Outlook show that the sector as a whole continued to grow and increase its importance for economic and social development. Throughout 2002, all indications were that the leading players were acting to stabilise their financial position and undergoing the necessary restructuring to compete in the new environment. While basic access to fixed and cellular mobile had stabilised in countries with high penetration rates, the development of new services was making steady progress in an increasing number of countries. The number of broadband subscribers in OECD countries, for example, surpassed 50 million by the end of 2002. At the same, time it was of concern that in some countries service had not yet commenced or that in others prices were far higher than in countries with high growth rates. Those telecommunication carriers taking a proactive role in developing broadband appear to be best placed to be competitive as markets continued to develop following liberalisation. By October 2002, “Yahoo BB!” in Japan was serving more than 1 million subscribers for little more than USD 20 per month. In October 2002, Yahoo BB added more than 250 000 IP telephony subscribers and was headed to more than 1 million telephony customers by the end of the year. Not surprisingly, NTT and KDDI, together with their respective partners, announced that they would also launch IP telephony services. To compete effectively in this market segment, traditional telecommunication carriers will need to adopt radically different pricing structures. These pricing structures are not the transitional change that has typified steadily declining prices. They will entail radical structures that treat the price of call the same whether it is across one city or to another country. Pricing is also likely to undergo significant change in wireless markets. One reason is that operators of UMTS networks will have to find pricing structures that are attractive enough to customers to make them a viable platform for Internet access. They also need to ensure that pricing structures are sufficiently attractive to ensure existing second-generation mobile customers migrate to UMTS. In addition, they face a more competitive market than with the introduction of previous generations of wireless technology. This is because certain fixed wireless services, commonly referred to as wireless local area networks (W-LAN or WiFi) which provide high speed capabilities in more limited locations may become competitive with UMTS. In some OECD countries, the W-LAN or WiFi coverage of the © OECD 2003

19

OECD Communications Outlook 2003

central business districts of some cities and the entirety of some towns and individual locations (e.g. airports, hotels, cafes, train stations and so forth) is rapidly being developed. Although many technological and commercial questions remain to be answered about UMTS, W-LAN or WiFi and other wireless platforms, these are decisions that should be made by markets. The main challenge for OECD governments is to keep markets open such that all players can continue to compete and continue to develop the telecommunications market. Liberalisation has brought tremendous benefits to users and overall growth in the sector over the recent past. The restructuring that was ongoing in some firms during 2002 was the consequence of “irrational exuberance” and in other firms reflected long-term trends that increase efficiency. They were not the result of a slowdown of growth in demand for communications services. With that in mind, OECD governments need to keep markets open if these benefits are to be sustained and if growth is to continue. The key infrastructure issue (for stimulating broadband – fixed and wireless) is ensuring competition in local access markets.

20

© OECD 2003

© OECD 2003

Table 1.1. Major public telecommunication operators and Internet service providers in the OECD area with revenues greater than USD 1 billion, 2001 USD millions Name of PTO

Country

Revenue

Depreciation

Operating income

Net interest paid

Tax

Net income Total assets

Fixed assets

Debt

Capital expenditure

Total access lines

Mobile subscribers

Employees (units)

Personnel costs

Mobile revenue

NTT

Japan

96 121

20 969

7 795

..

-4891

-6683

171 819

138 232

44 751

18 859

61 888 000

42 705 000

213 000

..

42 553

Verizon

United States

67 190

9 332

11 532

3 288

2 176

389

170 795

74 419

45 657

17 400

71 000 000

29 400 000

247 000

..

17 393

AT&T

United States

52 550

6 856

3 754

3 242

-791

-6842

165 282

41 322

40 527

8 388

2 900 000

..

117 800

..

..

SBC Communications

United States

45 908

9 077

10 888

1 599

4 097

7 242

96 322

49 827

17 133

11 189

59 532 000

21 596 000

193 420

..

8 647

Deutsche Telekom

Germany

43 133

13 590

-2232

4 732

721

-3084

114 732

36 161

59 821

9 732

30 300 000

66 900 000

257 058

10 816

13 069

France Telecom

France

38 416

6 170

4 643

3 435

2 618

-7393

113 713

28 329

48 699

8 004

34 200 000

43 184 000

211 554

8 466

11 995

Worldcom

United States

35 179

5 880

3 514

1 400

148

1 501

103 914

38 809

30 038

7 886

1 500 000

..

61 800

..

..

Vodafone (Group)

United Kingdom

33 109

3 916

-17151

1 745

3 493

-23413

236 087

26 871

19 012

6 007

..

101 136 000

67 178

2 893

33 109

BT

United Kingdom

31 616

7 746

-2158

2 288

546

-4186

40 106

23 301

23 543

5 897

29 113 000

..

108 600

6 703

..

Telefonica

Spain

27 726

6 584

4 848

1 436

729

1 881

41 449

57 121

24 725

7 519

44 955 800

16 700 000

161 029

4 813

5 121 9 152

Telecom Italia

Italy

27 516

6 009

5 959

3 531

-654

-1846

55 955

19 426

19 591

7 289

27 353 000

23 946 000

109 956

4 166

Sprint

United States

26 071

4 217

-662

1 181

-624

-1402

45 793

28 977

22 883

9 046

8 200 000

13 600 000

83 700

..

9 725

Bell South

United States

24 130

4 782

6 341

1 315

1 447

2 570

52 046

24 943

15 014

5 125

25 422 000

8 638 000

87 875

..

5 227

KDDI

Japan

23 393

3 489

839

..

..

107

..

..

14 375

3 086

..

16 306 000

9 300

..

17 230

Qwest

United States

18 370

3 994

820

1 442

..

-4023

73 781

29 977

25 003

8 543

..

..

61 000

..

660

Japan Telecom

Japan

14 022

..

733

..

285

-543

15 275

11 690

3 005

3 854

..

12 185 000

3 300

..

11 063

BCE Inc.

Canada

14 007

..

1 110

1 011

1 004

295

35 055

17 161

9 588

4 772

13 339 000

3 460 000

75 000

..

1 032

AT&T Wireless

United States

13 610

2 502

598

386

130

-963

41 722

12 496

6 705

5 205

..

18 047 000

33 000

..

13 610

Korea Telecom

Korea

12 351

3 106

1 505

552

326

862

23 247

17 153

5 045

3 035

21 898 000

9 591 000

48 668

2 293

3 453

Telmex

Mexico

11 881

1 848

4 560

612

1 422

2 515

16 800

12 254

5 595

2 442

13 372 000

..

67 550

381

..

KPN Telecom

Netherlands

11 481

15 908

-12889

1 497

10

-6692

36 716

27 013

15 086

2 633

6 569 000

13 700 000

45 720

1 959

4 172

Telstra

Australia

10 778

1 693

3 221

399

931

1 897

19 480

12 135

5 986

1 809

10 010 000

5 176 000

44 977

1 679

1 680

Cable & Wireless

United Kingdom

8 567

1 571

-1194

-312

201

-7425

17 814

6 807

238

2 743

1 542 000

990 000

10 200

..

362

Swisscom

Switzerland

8 513

1 007

3 260

168

9

2 937

14 408

4 795

4 125

730

..

3 373 000

17 784

1 456

2 357

Nextel

United States

7 689

1 746

-1715

1 196

-135

-2625

22 064

9 274

14 865

3 510

..

8 666 500

13 400

..

7 689

AllTEL

United States

7 599

1 168

1 668

289

704

1 067

12 609

6 301

3 862

1 232

2 612 300

6 683 000

23 955

..

3 640

Cegetel / SFR

France

6 821

..

1 188

..

..

..

..

..

..

..

..

12 600 000

8 400

..

4 414

TDC

Denmark

6 500

1 018

521

182

217

158

11 086

7 868

4 159

1 322

4 740 000

6 316 000

19 130

1 105

2 085

MMo2 (Group)

United Kingdom

6 197

1 109

-1023

36

33

-1241

27 296

5 933

894

1 655

..

17 457 000

14 000

584

6 197

Telia

Sweden

5 537

1 370

529

41

252

181

12 398

9 178

2 722

1 715

6 464 000

4 936 000

17 149

1 110

1 588

AOL (ISP Subscription Revenue)

United States

5 353

..

..

..

..

..

..

..

..

..

..

..

..

..

..

Introduction

21

Revenue

Depreciation

Operating income

Net interest paid

Tax

Net income Total assets

Fixed assets

Debt

Capital expenditure

Total access lines

Mobile subscribers

Employees (units)

Personnel costs

Mobile revenue

Name of PTO

Country

Türk Telekom

Turkey

5 138

307

4 321

3

33

3 788

3 617

1 006

294

361

..

69 971

69 545

766

9

Telenor

Norway

5 121

807

353

100

433

787

9 191

7 241

2 165

1 294

2 292 000

2 237 000

21 000

1 127

1 015

Portugal Telecom

Portugal

5 113

854

1 004

268

171

274

15 747

4 903

4 871

1 175

4 301 000

3 905 000

17 822

465

1 244

Belgacom

Belgium

5 013

886

830

34

328

445

5 626

3 047

424

934

4 879 307

4 147 745

22 296

1 073

1 553

SK Telecom

Korea

4 824

851

1 707

..

..

883

8 232

6 226

2 509

961

..

11 867 000

4 268

170

4 824

Telus Corp.

Canada

4 647

964

540

403

60

293

12 430

8 232

5 581

1 681

4 967

2 578 000

27 765

1 109

..

America Movil

Mexico

4 429

479

650

53

321

-89

9 921

4 280

1 625

2 471

..

16 965 000

14 786

..

4 429

TPSA

Poland

4 236

936

465

349

173

133

8 282

6 573

3 619

1 546

10 069 796

2 785 000

60 120

950

405

NTL

United Kingdom

3 725

4 610

-20298

2 014

-92

-22891

13 026

10 840

..

1 648

2 596 800

..

..

..

..

OTE

Greece

3 643

523

1 007

61

321

512

7 625

6 771

1 738

1 306

5 607 759

2 943 532

18 545

697

581

Telekom Austria

Austria

1 530

3 521

937

139

168

55

49

9 032

4 805

2 930

725

3 166 900

2 849 900

16 586

573

Softbank (BB Technologies) Wind (Infostrada)

Japan

3 335

97

-222

112

69

-732

9 575

234

108

86

..

..

..

..

..

Italy

3 167

500

41

202

..

-698

8 132

2 412

4 732

1 777

..

7 900 000

8 428

..

1 298

Optus

Australia

2 577

466

399

125

9

-208

..

..

456

716

419 000

3 700 000

8 473

232

1 261

Telephone and Data Systems (TDS)

United States

2 559

450

436

89

-45

-168

8 047

2 558

1 575

700

847 000

3 461 000

9 300

..

1 895

Citizens Communications United States

2 457

632

-64

317

-14

-90

10 554

4 512

5 995

531

2 481 400

..

10 121

..

..

Global Crossing

United States (Bermuda)

2 437

1 168

-1972

349

..

-4334

25 511

12 058

7 647

3 282

..

..

..

..

..

Tele2 AB

Sweden

2 428

..

-131

61

..

-188

4 759

913

1 050

208

..

3 710 000

2 172

115

..

Bouygues Telecom

France

2 394

199

47

138

35

-54

4 196

2 134

1 922

356

..

6 500 000

7 132

..

2 394

Broadwing

United States

2 351

441

-171

168

80

-286

6 312

3 060

2 702

649

..

..

..

..

..

Telecom, NZ

New Zealand

2 326

342

589

174

153

-80

3 465

2 028

1 863

327

1 690 000

1 308 000

6 901

252

345

Mobilcom

Germany

2 313

150

-202

296

-38

-184

8 766

385

1 255

825

..

5 010 000

5 681

162

1 714

CenturyTel

United States

2 117

473

558

226

210

343

6 319

3 000

3 050

507

1 797 643

797 340

6 900

..

438

Auna (Amena, Retevision) Sonera

Spain

2 013

..

92

..

..

..

6 607

..

..

..

3 700 000

5 225 000

..

..

..

Finland

1 953

296

849

249

31

56

7 852

6 638

2 918

321

753 140

2 510 028

10 482

457

1 083

Eircom

Ireland

1 927

388

156

11

18

77

1 929

2 121

170

366

1 603 000

..

13 121

..

..

Matav

Hungary

1 912

407

417

46

41

288

3 854

3 398

1 582

446

2 151 346

2 537 800

16 633

188

694

Telewest

United Kingdom

1 826

2 345

-1901

694

7

-2804

7 912

5 070

971

794

2 207 310

..

10 650

372

..

McLeodUSA

United States

1 811

618

-3471

243

..

-3600

4 775

2 683

28

663

98 000

..

8 500

..

..

Turkcell

Turkey

1 781

..

217

..

..

-187

3 582

..

1 413

..

..

12 200 000

..

..

1 781

Aliant Inc.

Canada

1 678

283

275

102

94

78

2 382

1 514

942

300

1 550 000

478 000

10 621

..

161

LG Telecom

Korea

1 644

56

286

16

4

120

2 143

1 574

93

..

..

8 000 000

1 335

..

1 644

Level3

United States

1 533

1 122

-5448

485

..

-4978

9 316

6 890

7 318

2 325

..

..

3 178

..

..

OECD Communications Outlook 2003

22

Table 1.1. Major public telecommunication operators and Internet service providers in the OECD area with revenues greater than USD 1 billion, 2001 (continued) USD millions

© OECD 2003

100.0

BT (MMo2)

100.0

UK

47 928

28 981

7 626

5 841

45.5

15.9

20.2

© OECD 2003

Total Australia Austria Belgium France Germany Greece Ireland Italy Netherlands New Zealand Poland Portugal Spain Switzerland Sweden Total Austria Czech Poland United Kingdom Total France Germany Ireland Netherlands

Vodafone Pacific Vodafone AG Belgacom Mobile SFR Vodafone D2 Panfon Vodafone Vodafone Ireland Omnitel Vodafone Libertel Vodafone Polkomtel Telecel Vodafone Airtel Swisscom Europolitan

100.0 99.6 25.0 31.9 100.0 51.9 100.0 76.8 70.0 100.0 19.6 61.4 93.8 25.0 74.4

T-Mobile Austria RadioMobil PTC T-Mobile UK

100.0 60.8 45.0 100.0

SFR Viag Interkom O2 Telfort

20.8 100.0 100.0 100.0

11 479 131 101 34 176 7 576 157 102 2 186 677 12 114 89 117 7 0 6 273 153 56 261 5 803 8 039 115 7 435 102 387

Ratio of spectrum fee to non-current liablities (%)

Spectrum fee

8 643

Ratio of spectrum fee to non-current liablities (%)

DT Germany (T-Mobile Deutschland)

19 012

Company

Spectrum fee

100.0

Country

Total

% of ownership share

United Kingdom

Ratio of spectrum fee to non-current liablities (%)

Vodafone

Spectrum fee

Country

In other OECD countries

Non-current liabilities

Name of PTO

% of ownership share of mobile company

In country of incorporation

60.4

20 123

105.8

13.1

13 899

29.0

27.7

13 879

47.9

OECD Communications Outlook 2003

24

Table 1.2. PTOs having spent more than USD 1 billion on UMTS spectrum fees USD millions

© OECD 2003

Table 1.2. PTOs having spent more than USD 1 billion on UMTS spectrum fees (continued) USD millions

74.6

13 342

16 566

635

19

4.8

0.1

Total Austria Belgium Denmark Germany Italy Netherlands Poland Portugal Sweden Switzerland United Kingdom Total Belgium Germany United Kingdom Total Australia Austria Denmark Italy New Zealand Sweden United Kingdom

Connect Austria Mobistar Orange A/S MobilCom Wind Dutchtone PTK CenterTel Optimus Orange Sverige Orange Com Orange 3G Lmt

17.5 50.8 53.6 28.3 26.6 100.0 34.0 22.0 98.0 99.8 100.0

KPN Orange Belgium E-plus Hutchison 3G UK

100.0 77.5 15.0

Hutchison Telecom Australia Hutchison Austria Hi3G Access Hutchison 3G Italia TCNZ Hi3G Access Hutchison 3G UK

57.3 100.0 60.0 88.2 19.9 60.0 65.0

9 668 19 134 114 2 115 577 389 197 20 0 31 6 071 6 921 134 5 834 953 6 993 58 124 114 2 563 3 0 4 131

Ratio of spectrum fee to non-current liablities (%)

Hutchison Hong Kong Whampoa (China) (Hutchison 3G Hong Kong)

85.0

1.0

Spectrum fee

Netherlands

553

Ratio of spectrum fee to non-current liablities (%)

KPN (KPN Mobile)

56 434

Company

Spectrum fee

99.9

Country

Total

% of ownership share

France

Ratio of spectrum fee to non-current liablities (%)

FT (Orange)

In other OECD countries Spectrum fee

Country

Non-current liabilities

Name of PTO

% of ownership share of mobile company

In country of incorporation

17.1

10 221

18.1

51.9

7 556

56.6

42.2

7 012

42.3

Introduction

25

Telefónica Spain (Telefónica Móviles España)

100.0

Sonera

100.0

Finland

Telecom Italia Italy (Telecom Italia Mobile)

54.8

Korea Telecom Korea SK Telecom Korea

100.0 100.0

Total of above Note: Exchange rates used are for 2001. Source: OECD.

24 726

1 924

33 471

117

0

2 158

0.5

0.0

6.4

12 374 2 663

1 007 1 007

8.1 37.8

257 419

27 605

10.7

Total Austria Germany Italy Switzerland Total Germany Italy Spain Norway Total Greece Austria Total Total

3G Mobile Group 3G IPSE 2000 3G Mobile

100.0 57.2 45.6 100.0

Group 3G IPSE 2000 Xfera Mòviles Broadband Mobile

42.8 12.6 14.3 50.0

Stet Hellas Mobilkom

64.0 14.8

5 791 104 4 326 1 331 29 3 540 3 238 275 17 11 155 132 23 0 0 58 859

Ratio of spectrum fee to non-current liablities (%)

Spectrum fee

Ratio of spectrum fee to non-current liablities (%)

Company

Spectrum fee

Country

Total

% of ownership share

Ratio of spectrum fee to non-current liablities (%)

In other OECD countries Spectrum fee

Country

Non-current liabilities

Name of PTO

% of ownership share of mobile company

In country of incorporation

23.4

5 908

23.9

184.0

3 540

184.0

0.5

2 313

6.9

0.0 0.0

1 007 1 007

8.1 37.8

22.9

86 464

33.6

OECD Communications Outlook 2003

26

Table 1.2. PTOs having spent more than USD 1 billion on UMTS spectrum fees (continued) USD millions

© OECD 2003

Chapter 2

RECENT COMMUNICATION POLICY DEVELOPMENTS

Abstract. The telecommunications industry has played an important role in productivity growth and technological diffusion over the last decade. As the supporting infrastructure for electronic commerce and the growth and diffusion of the Internet, the industry has been a key factor in the new economy and changes in economic structures. This chapter examines trends in competition, regulatory safeguards, foreign ownership, interconnection, portability and carrier selection, local loop unbundling, Internet regulation and CATV. Household expenditure on communication is also discussed.

27

© OECD 2003

OECD Communications Outlook 2003

T

he telecommunications industry has played an important role in productivity growth and technological diffusion over the last decade. As the supporting infrastructure for electronic commerce and the growth and diffusion of the Internet, the industry has been a key factor in the new economy and changes in economic structures. At the same time, over the last year, the industry has been an important factor in the poor performance of stock markets, job losses and financial losses. Some of the reasons for these setbacks have been noted in Chapter 1. The return to a healthier industry will depend on continued market growth and investment. In turn, this demands that continued efforts be made by telecommunication regulators to enhance conditions of market access. This has been one of the main preoccupations of OECD country regulators in 2000 and 2001. Improving conditions of competition will continue to help to maintain the trend in decreasing prices, which has been occurring since the early days of market liberalisation. Policies aimed at facilitating interconnection, including reducing interconnection charges, easing market entry requirements, enhancing access through unbundling and reducing market power of dominant carriers remain important. Since the last Communications Outlook, new service growth has occurred mainly in broadband networks and services, and new services have emerged in the form of wireless local area networks. These wireless local area networks (commonly referred to as W-LAN or WiFi) are viewed as having important consequences in enhancing the availability of broadband. They are also viewed as potentially competitive, as well as complementary, to high-speed mobile networks. Existing mobile services have reached a level of maturity in a number of OECD countries and these second-generation (2G) networks are beginning to undergo transformation to third-generation (3G) mobile networks based on universal mobile telecommunications system (UMTS) standards. It is too early to determine the types of issues which may be raised by 3G development, but a fallout of the spectrum licensing process may be to focus more attention on spectrum allocation issues including resale of spectrum. This may help in alleviating pressure on firms in several OECD countries that may have exaggerated the economic value of 3G spectrum and consequently bid too high. For broadband, the implementation of unbundling policies which took place in many OECD countries during 2000-01 was an important regulatory initiative to support this new technology. In a number of countries, the implementation of unbundling, including collocation, and pricing issues related to unbundling will continue to be a priority over the next several years. Trends in competition At the beginning of 2003 only one OECD country, Turkey, still has a monopoly telecommunication market structure. Turkey has been preparing for competition as of 1 January 2004 and has begun to put in place the necessary regulatory framework to support a competitive market, including the creation of an independent regulator. This section examines market share, which is only one of the indicators of competition.

28

As Table 2.1 indicates, there are a large number of market entrants in many OECD countries. This number has expanded for most countries since the last Communications Outlook. Of particular note is the expansion in wireless local loop entrants (the data include narrowband and broadband operators) and the number of licensed 3G operators, which are not yet operational. Despite the many fixed public switched telecommunication network (PSTN) operators, facilities-based competition, as measured by new entrant’s share of access lines, has been slow to develop (Table 2.2). The United Kingdom and the United States, both early starters in introducing telecommunications competition, are ahead of most other OECD countries in the development of PSTN facilities-based competition with the market share © OECD 2003

Recent Communication Policy Developments

of access lines by new entrants at 19.8% in the United Kingdom and 10% in the United States. Other countries where facilities-based competition has made good progress are Denmark and the Netherlands. One of the main reasons for the success of the United Kingdom and the United States in facilities competition is the development of telephony services provided by cable networks (Table 2.3). Just over two-thirds of CATV-based telephony subscribers in the OECD area are in the United Kingdom. Other countries, such as Spain, where new entrants increased their share of access lines from just over 2% in 2000 to over 5% in 2001, have also benefited from telephony provided by cable networks. Although good comparable data across the OECD are not available to measure market share in terms of traffic (minutes), for those countries where such data are published it is clear that incumbents have been losing market share to new entrants as a result of carrier selection and pre-selection. For example, in Italy, where new entrants have just under 1% of access lines, they have 13% of local traffic minutes. In contrast to local access, the development of competition in the national and international long distance markets has been much more rapid across the OECD (Tables 2.4 and 2.5). Competition has been helped by the implementation of carrier selection and pre-selection in the last several years in many OECD countries. Mobile markets, as this report shows, have developed rapidly across the OECD area. Market shares are relatively better distributed across operators than is the case for PSTN services (Table 2.6), and since the previous Communications Outlook, incumbent cellular operators have in general lost some market share. The slowdown in growth of cellular mobile in a number of markets where penetration is close to saturation can be expected to result in more price competition among the market players. The challenge for the mobile sector is to make a successful transition to 3G services. This will require attractive pricing to induce customers to migrate from 2G, as well as attractive content packages. Regulatory safeguards In the previous Communications Outlook it was noted that that the speed of privatisation has been relatively slow. It continued to be slow through 2001-02. Poor stock market performance was a major reason for this. Two OECD countries (Luxembourg and Turkey) still have 100% ownership of the incumbent operator (Table 2.7) and although in a number of cases the government’s share in the incumbent has declined below the 50% level (Austria, Germany, Greece, Japan, Korea), commitments to further privatisation were not adhered to in most cases. The tendency of some governments to intervene in assisting their state-owned carriers that have accumulated large debts has again raised the issue of privatisation in order to avoid conflict of interest between regulation and ownership, and to ensure a level playing field for new entrants. A number of OECD countries still have laws requiring the state to maintain majority ownership (France, Norway, Switzerland). Foreign ownership Sixteen OECD countries report that they have no foreign ownership restrictions. Among countries which maintain restrictions on foreign ownership, some of these restrictions only apply to the incumbent public telecommunications operator (PTO) (Table 2.8). Canada, which has relatively extensive foreign ownership restrictions compared to most OECD countries, announced that it would be reviewing these restrictions. Several OECD countries maintain a “golden share” or some type of control, which is usually aimed at ensuring that the dominant telecommunication operator does not come under the control of a single investor (domestic or foreign). Interconnection Interconnection remains an important issue preoccupying regulators. The last several years have seen increased concern with regard to fixed to mobile interconnection where mobile operators terminating calls are viewed as having a bottleneck position. In a number of OECD countries rates for terminating calls on mobile networks have steadily decreased in the last several years. © OECD 2003

29

OECD Communications Outlook 2003

However, a number of initiatives have been taken by regulators to put further pressure on mobile termination charges. Within the European Union, the designation of mobile operators as having significant market power in the interconnection market has led to the imposition of cost-oriented termination charges which are applied on a non-discriminatory basis in a number of countries. Operators in some cases are required to publish their termination rates and some countries have intervened directly to set maximum termination prices, impose price caps or impose reductions on these charges (Table 2.9). Number portability and carrier selection The implementation of carrier number portability has improved considerably over the last several years. Mexico is the only country having opened its market to competition that has yet to introduce number portability. Twelve OECD countries have now implemented mobile number portability (Table 2.10) and a number of others plan to do so over the next few years. Some countries are planning to introduce mobile number portability between 2G and 3G mobile services. The implementation of carrier selection and preselection has also been implemented in the majority of OECD countries for all geographic calls. However, in countries such as Australia, Finland, Germany, Hungary, Korea, Mexico, New Zealand and Poland, there is no carrier selection for local calls. Local loop unbundling Between 2000 and 2002, local loop unbundling, including the details of its implementation, was a key regulatory issue for many OECD countries (Table 2.11). In several cases, initial decisions on unbundling were extended by imposing the requirement for sub-loop unbundling and bitstream access. A number of countries have also begun to use the long-run incremental cost method to set prices for unbundled loops. In view of the difficulty in implementing frameworks for unbundling, which had to encompass collocation principles as well, it is not surprising that there has been a slow take-up of unbundled loops. As is evident from Table 2.11, countries with an early history of unbundling have a much higher take-up of unbundled loops. The rapid increase in unbundling in Japan is noteworthy, reflecting the rapid demand for unbundled loops by new entrants to offer digital subscriber line (DSL) services. Regulation and the Internet There are an increasing number of regulators who have now taken the position that Voice over Internet Protocol (VoIP) services would be treated in the same way as voice service offered to the public over circuit-switched networks and made subject to the same conditions and obligations as these PSTN services (Table 2.12). Several countries, however, still state that they would consider these services as value-added network services not subject to the obligations of licensed telecommunication carriers. In Japan, where several Internet service providers (ISPs) have been providing VoIP services, broadband subscribers can call toll-free to subscribers with the same ISP and can call PSTN subscribers at flat-rate or low charges. Providers are expanding toll-free alliances and this is resulting in an increase in users. CATV development

30

As noted above, cable networks are providing some competition to traditional PSTN carriers. At the end of 2001 there were 152 million cable television subscribers (Table 2.3) in the OECD area and the percentage of homes passed was 51% on average. However, the development of cable communications networks varies significantly across the OECD. Greece, for example, has no CATV infrastructure, while in Turkey and Australia the percentage of homes passed by cable is low. On the other hand, Belgium has complete national coverage of cable networks, and in some countries more than four-fifths of homes are passed by cable networks (97% in the United States, 90% in Luxembourg, 82% in Germany and Portugal). Structural separation of cable TV activities from incumbent PSTN operators may help in growing the cable industry as well as providing alternate infrastructure competition to the PSTN. © OECD 2003

Recent Communication Policy Developments

Household expenditures on communication Access to communication services has grown significantly from 1990 through 2001. This reflects wider geographical coverage and the advent of new means of communication and services. The increased take-up in access also reflects the fact that services have become more affordable and pricing structures have been tailored to better suit different types of customers. In what manner is this reflected in the household consumption patterns of OECD member countries? One database providing a relatively long time series is the Statistics of National Accounts (SNA) database. On the other hand, it is not easy to harmonise the available indicators to evaluate the household expenditures for the greatest number of OECD member countries. Many national surveys are carried out on this subject, but because they are based on individual methodologies, indicators and years of reference vary across OECD countries. “Household expenditures on communication” from the SNA database is the best available source to evaluate the overall trend of expenditure on communication in comparison to the other consumption sectors within OECD member countries. However, two disadvantages must be noted. First, the “communication” indicator of the SNA database consists of telecommunication equipment and services as well as postal services. It is not possible to disaggregate these data. A second disadvantage is that, at the time of writing, year 2001 data were not yet available. Bearing those two caveats in mind some interesting trends are evident. Figure 2.1 shows the evolution of all consumption sectors in relation to available household income. The communication sector shows significant growth since the beginning of the decade. Unlike the other sectors, this growth began to accelerate in 1995. This can be explained by the substantial development of the Internet and mobile telephone services from this period onwards as well as increasing impact of liberalisation on traditional services.

Figure 2.1.

Changes in the proportion of communication in disposable household income

Communications* Recreation and culture

Health Transport

Households equipment

Clothing and footwear

Education Restaurants and hotels

Water, electricity and gas Alcohol, tobacco and narcotics Food

Index 1990 = 100 160

Index 1990 = 100 160

150

150

140

140

130

130

120

120

110

110

100

100

90

90

80

80

70

70 60

60 1990

1991

1992

1993

1994

1995

1996

1997

* Communications includes telecommunication equipment and services, and postal services. Note: Hungary, Norway, Slovak Republic, Switzerland and Turkey are not included in this index. Source: OECD, SNA database.

© OECD 2003

1998

1999

2000

31

OECD Communications Outlook 2003

The percentage of final consumption expenditure that households allocate to communication increased from an average of 1.6% to 2.3% between 1991 and 2000 (Table 2.13). This represents a supplementary annual spending of USD 399 (current dollars) per household from 1991 to 2000. The annual expenditures on communication increased from USD 534 in 1991 to USD 933 in 2000. This constant increase of 65% between 1990 and 2000 was the most significant of all consumption sectors. Because the SNA data do not provide the opportunity to disaggregate between telecommunication equipment and services and postal services, further examination was undertaken of national surveys to indicate the proportion between these three elements. Within countries which provide surveys with enough detail in order to evaluate shares of household expenditures, it can be observed that on average, postal services make up 2% of household budgets for all communications. By way of contrast, telecommunications equipment made up 8% and telecommunications services make up 90% of the total for communications. These proportions tended to remain relatively stable during the short period of time for which data are available. Figure 2.2, which was created from different national surveys, shows that monthly spending on communication, for most countries, falls between USD 40, based on purchasing power parity (PPP), to USD 106, for an average value of USD 62.50. This amount represents approximately 2.25% of total household spending. As noted, this proportion has tended to grow in recent years. This figure shows the household expenditures for the last available year in national surveys and gives, where available, the disaggregation between telecommunication equipment and telecommunication services and postal services. Figure 2.3 shows the annual harmonised index of consumer prices for the 15 countries of the European Union. It can be observed in this figure that prices for telecommunication equipment followed by telecommunication services declined significantly over the last five years. In comparison, the index for “all items” increased for the same period. From this we can conclude that telecommunication is tending to be more affordable for consumers and that the increase in consumption is due in part to decreasing prices for some services or the substitution of new services with lower prices for traditional services.

Figure 2.2. Monthly household expenditure on communications Post

Equipment

Total USD PPP 160

140

140

120

120

100

100

60

60

40

40

20

20

0

0

tra

Au s

Ita

Av lia er ag e Ire la n Be d lg iu Po m r tu ga l Ja pa n Fr an ce N or w a G er y m an D en y m ar k Sp ai n C ze Au st ch R r ia ep ub lic

80

ly

80

Sw itz er la nd Ko re a Ic el N an et d he Lu rlan d xe m s bo ur g U Can ni te ad d a St at es Fi nl an U G d ni re te e d Ki ce ng do m

32

Service

USD PPP 160

Note: The figure is not harmonized. Values are for the last available year: Australia (1999), Austria (2000), Belgium (2001), Canada (2000), Czech Republic (2001), Denmark (1999), Finland (2001), France (2001), Germany (1998), Greece (1999), Iceland (1999), Ireland (2001), Italy (2001), Japan (1999), Korea (2001), Luxembourg (2000), Netherlands (2000), Norway (2000), Portugal (1999), Spain (1999), Switzerland (1998), United Kingdom (2001), United States (2000). Source: National surveys.

© OECD 2003

Recent Communication Policy Developments

Figure 2.3.

Trend of harmonised indices of consumer prices (HICP) for communication for the EU-15 All items

Communication

Telephone and telefax services

Telephone and telefax equipment

Index 1996 = 100 115

Index 1996 = 100 115

110

110

105

105

100

100

95

95

90

90

85

85

80

80

75

75 70

70 1996

1997

1998

1999

2000

2001

Source: Eurostat.

Figure 2.4. CPI all items and CPI telephone services CPI all items

CPI telephone services

1982-1984 = 100 200

1982-1984 = 100 200

180

180

160

160

140

140

120

120

100

100

80

80

60

60

40

40

20

20

0 1921

1926

1931

1936

1941

1946

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

0 2001

Source: Bureau of Labor Statistics.

In the United States, the Bureau of Labor Statistics (BLS) collects a variety of information on telephone service as part of three separate programmes – the Consumer Price Index (CPI), the Producer Price Index (PPI), and the Consumer Expenditure Survey. A CPI for telephone services was first published in 1935. As liberalisation was introduced in the United States much earlier than in most other OECD countries, it is useful to examine the trend over a much longer time period. It is evident that from the mid-1980s, and the landmark divestiture of AT&T, telephone prices have tended to increase at a slower pace than most other prices. Figure 2.4 shows the levels of the overall CPI and the CPI for telephone services over time. © OECD 2003

33

OECD Communications Outlook 2003

In the United States, the CPI of telephone services is based on a “market basket” intended to represent the telephone-related expenditures of a typical urban household. It includes both local and long distance services. For 2001, the United States’ overall level of prices (measured by the CPI for all items) rose by 1.5%. The CPI for telephone services rose by 1.3% during 2001. The CPI for telephone services is composed of three subindices. During 2001, the local service component (including subscriber line charges) rose by 4.5%, while the price index for interstate long distance calls fell by 2.0%, and the price index for intra-state long distance calls fell by 1.7%.

34

© OECD 2003

Recent Communication Policy Developments

Table 2.1. Number of operators in service, 2002 Fixed PSTN (local, national and international)2

Network infrastructure capacity (only includes companies not licensed to provide voice services)

Cellular mobile

1

Wireless local loop (fixed wireless)

IMT-2000 operators (i.e. UMTS/ 3rd generation)

Australia

89

4

5

6

Austria

67

31

4

2

6

Belgium

22

17

3

Canada

75

8

25

Czech Republic

23

27

3

5

2

Denmark

15

15

4

5

4

Finland

85

66

4

4

France3

69

30

7

6

3 6

Germany

184

389

4

18

Greece

19

5

4

7

3

Hungary

10

62

3

0

0

Iceland

3

4

3

Ireland

0

86

..

3

6

3

Italy

206

65

4

73

5

Japan

359

32

26

15

12

Korea

4

14

3

1

3

Luxembourg

25

15

2

4

3

Mexico

37

10

4

Netherlands

26

6

New Zealand

11

2

3

3

180

3

Norway

43

Poland

56

Portugal

42

19

3

9

4

1

35

2

3

3

3

6

4

146

117

63

3

4

52

129

3

34

4

3

5

Slovak Republic Spain Sweden Switzerland Turkey United Kingdom

37

5 4

50

1 225

2

3

4 3

4

2 222 420 200+ United States4 1. As licensing practices differ across OECD countries, it is difficult to compare the number of operators. In several countries, licences do not differentiate between local, national and international PSTN, and some licences may be regional. Some countries licence services rather than networks. Resellers are not included. In a number of OECD countries, analogue mobile, which is being phased out, is a monopoly. 2. Some countries have included companies providing PSTN via carrier selection in data on fixed PSTN. 3. France has awarded two fixed wireless access (FWA) licenses in each of the country’s 22 regions. Only licences for continental France are included. 4. 93% of the US population has access to at least three competitors in their market and 33% has access to six or more. Source: OECD.

35

© OECD 2003

OECD Communications Outlook 2003

Table 2.2. Access line market share of new entrants Percentage of access lines

Australia

1997

1998

1999

2000

2001

0.41

1.04

3.97

6

7

0.2

1.8

4

7.1

0

0

0.1

0.1

0.5

1.6

2.6

3.4

3.2

0.3

0.34

0.46

0.49

0

0.89

0.37

18

12

0.38

0.46

5.5

4.6

4.9 0.5

Austria Belgium Canada Czech Republic Denmark Finland France

0

0

0.5

0.5

1

1.7

3

Greece

0

0

0

0

Hungary

0

0

23

21

Iceland

0

0

0

0

Ireland

0

2.4

0

0

Italy

0

0

0.4

0.98

1

1.3

Korea

0

0.3

1.52

1.5

Luxembourg

0

0

0.77

0.89

2

Germany

Japan

Mexico Netherlands New Zealand

0.06

0

0.4

0.1

0.1

3 15

2

3.5

3

3.7

Norway

0

0.4

0.14

0.28

Poland

3.7

5.3

6

0

0

Portugal Slovak Republic

0

Spain

0.5

0

2.3

5.2

Sweden

0.1

0.1

Switzerland

0.1

Turkey United Kingdom United States Source: OECD.

1.06

1.7

8 2.2

0

0

0

14.3

15.4

19.2

19.8

3.05

4.3

7.7

10.2

36

© OECD 2003

© OECD 2003

Table 2.3. Cable communications Percentage of homes passed by a cable television network

Number of cable television subscribers 199713 Australia Austria

199813

199913

2000

199913

2001 1

1

2000

2001

Number of subscribers to telephony services provided by cable networks 2000 2001

760 000

907 000

1 171 000

684 000

760 000

..

19

19

..

..

1 065 000

1 100 000

1 100 000

1 200 000

1 250 000

53

53

53

..

142 600 209 378

Belgium

3 686 001

3 725 191

3 751 795

3 788 650

3 814 949

100

100

100

152 539

Canada2

7 946 000

7 994 000

8 041 000

7 977 000

7 868 000

90

90

90

..

..

512 076

792 372

923 837

955 0003

956 0004

60

61

62

0

0 0

Czech Republic

1 000 000

1 050 000

1 350 000

1 040 598

1 078 483

70

701

701

0

Finland

875 000

906 000

933 000

950 000

1 000 000

63

58

59

0

0

France

2 136 000

2 392 000

2 662 000

3 055 400

3 375 200

32

34.51

34.51

40 300

62 000

18 020 000

18 650 000

20 400 000

21 100 000

21 800 000

86

81.9

82.6

Denmark

Germany Greece Hungary

14

20 000

14

20 000

0

0

0

0

0

0

0

0

0

0

1 490 000

1 520 000

1 543 000

1 458 000

1 560 0007

66

53.8

567

0

0 ..

Iceland

0

0

0

4 000

5 000

..

33

35

..

Ireland

430 000

535 000

596 000

630 000

613 000

50

76.14

77.69

..

..

44 200

61 000

82 000

50 000

10

5

0

1.4

8

0

0

Japan

6 719 744

7 936 093

9 470 882

10 480 000

5

20

21.8

27.1

6

..

..

Korea

6 678 300

6 423 538

7 041 993

8 402 584

10 831 666

48

56.2

71

..

..

..

..

115 000

120 000

121 000

73

75

75

0

0

Mexico

1 383 047

1 614 887

1 959 381

2 281 679

2 514 150

32

32

32

0

0

Netherlands

5 800 000

5 900 000

6 000 000

6 200 0003

6 200 0004

94

94

94

..

.. ..

Italy

Luxembourg

9 5

120 000

13 030 000

..

6 100

16 723

21 000

26 000

11

6.7

7.3

9.7

..

Norway

705 125

774 607

788 722

824 116

840 097

47

47

47

..

..

Poland

3 037 000

3 172 000

3 636 000

3 590 000

4 300 000

..

..

30

..

22 350 58 197

New Zealand

383 000

596 000

760 000

925 000

1 119 000

47

54

60

1 550

Slovak Republic

550 000

616 000

650 000

726 000

724 000

36.6

40.6

35.2

..

..

4 500

12 500

156 000

341 000

553 179

8

18.8

28.5

312 134

661 485

Sweden

1 930 000

2 000 000

2 000 000

2 155 800

2 110 000

65

65

65

..

..

Switzerland

2 516 803

2 550 291

2 585 814

2 628 639

2 684 016

73

73.5

75

0

0

511 706

611 057

750 290

884 574

908 662

..

6.15

13

..

..

Spain

Turkey United Kingdom

1 900 000

2 374 000

2 826 000

3 562 000

3 618 000

51

50

50

5 298 000

5 408 000

United States

64 900 000

66 100 000

66 700 000

68 500 000

69 000 00012

96

97

97.112

900 000

1 500 000

OECD

134 983 502

140 319 546

148 010 437

154 535 040

162 780 402

55.7

56.2

58.7

6 724 523

8 084 010

Notes: 1. Approximations. 2. From Statistics Canada. 3. Data from ITU. 4. Data from previous year. 5. Number of households. 6. Percentage of total number of households as of 2000. 7. Estimate. Statistical data for this year has not been compiled. 8. At the end of 2001 Fastweb was available in 36 000 buildings, corresponding to 319 000 or 1.4% of Italian households. 9. Approximation for Stream TV. 10. About 80 000 (Stream TV). In addition, the 40 000 subscribers (4th quarter 2001) to Fastweb, the main Italian fibre-to-the home provider, can access a selection of the state-owned TV company RAI’s channels, D+ (satellite TV operator) and Stream TV (satellite and cable TV operator). 11. For September 2001. 12. For June 2001. 13. Data from Chapter 6 of the OECD Communications Outlook 2001. (Source: OECD, ITU, OBS.) 14. Lower than 20 000. Source: OECD.

37

Recent Communication Policy Developments

Portugal

OECD Communications Outlook 2003

Table 2.4. National long distance market shares of new operators Share of switched minutes, percentages

Australia

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

0.0

0.5

2.0

7.6

11.7

13.9

17.3

15.0

16.4

16.0

29.0

..

15.0

40.0

54.7

Austria Belgium Canada

5.0

7.0

14.0

18.0

..

..

..

Czech Republic Denmark Finland

5.5

54.0

60.0

2001

..

..

..

15.3

26.1

27.9

37.4

35.8

0.0

0.9

2.75

25.0

0.0

5.0

10.0

38.0

37.0

36.0

60.1

59.6

63.0

62.0

63.0

63.0 21.0

France Germany1 Greece

5.0

20.0

13.0

30.0

40.0

34.0

40.0

0.0

0.0

0.0

1.75

Hungary

0.0

0.0

0.0

0.0

Iceland

0.0

4.0

5.0

8.0

Ireland

0.0

..

..

..

Italy

0.0

15.0

16.4

24.7

Japan

22.4

26.8

29.1

31.3

31.9

35.7

40.6

..

..

57.2

..

0.0

9.0

8.9

10.0

15.8

15.4

..

..

..

..

0.0

18.8

..

24.0

26.8

32.0

11.0

16.0

21.0

24.0

..

25.0

25.0

..

..

..

Norway2

3.0

13.0

21.0

24.0

Poland

0.0

0.0

3.3

27.0

Portugal3

0.0

0.0

12.0

9.4

Korea Luxembourg Mexico Netherlands New Zealand

12.0

18.0

19.0

21.0

22.0

Slovak Republic Spain

0.0

0.0

14

18.1 31

1.0

14.3

..

14.0

23

5.6

18.6

29.4

..

0.0

0.0

0.0

33.4

33.5

35.6

United States 37.8 39.5 39.8 41.5 44.5 47.8 48.6 61.3 62.9 1. New entrants’ share of total national call minutes was 5.9% in 1998 and 18.2% in 1999. 2. On 1 July 1999 the long distance charge zones were eliminated. Data represent share of local calls. 3. The percentage relates to all types of national calls. Source: OECD.

65.2

..

Sweden

0.0

5.0

10.0

17.0

Switzerland Turkey United Kingdom

9.0

10.7

14.0

16.5

18.6

21.0

24.0

30.7

38

© OECD 2003

Recent Communication Policy Developments

Table 2.5. International market share of new market entrants Share of minutes of international traffic, percentages 1984 Australia

1986

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

0

4.4

13

21

27.8

36.1

42.9

43.8

42.9

54

49

56

Austria

..

..

Belgium

..

..

36

57

45.3

41.4

0

0

0.73

25.0 47.2

Canada

0

7

20

26

33

33

Czech Republic Denmark

55 48.5

0

7.5

18.0

35.9

43.7

55.8

27.3

34.3

41.4

45.3

48.5

49

50

15.0

27.1

18

26

30

40

56

50

Greece

0

0

0

4.3

Hungary

0

0

15

25

Iceland

0

5

16

22

0

..

25

.. 50

Finland

0

9

France Germany

Ireland

0

Italy

..

32

37.5

Japan

26.7

30.4

33.1

33.7

33.8

35.1

40.6

..

..

47.2

..

Korea

0

20.1

25.5

31.3

27.4

26.5

32.0

32.9

38

43

51

..

..

25.2

28.0

Luxembourg Mexico

0

7

24

25

29

38

Netherlands

0

5

10

33

35

38

21.8

36.0

..

..

..

..

28

31

33

New Zealand

11

15

17.4

21.0

21.0

Norway Poland1

0

0

0

0

Portugal

0

0

19

27.2

0

0

Slovak Republic Spain Sweden

0

7.4

15

21

25

32

Switzerland

1

12.9

13.8

17.2

..

45

51

57

18

38.2

48.6

..

0

0

0

Turkey United Kingdom

14

22.3

26.3

30.5

30.3

40

51

51.6

54.6

47.5

53.1

20 .. 27.3 United States2 1. Monopoly for international services. 2. Based on revenue. Source: OECD.

31

37.5

40.9

44.4

50.6

54.6

56.9

61.8

67.5

..

39

© OECD 2003

OECD Communications Outlook 2003

Table 2.6. Cellular mobile competition in the OECD area, 2001 Mobile operator market share according to number of operators, percentage Number of operators Australia

1

2

3

4

47

34

17

2 4

Austria

43

34

19

Belgium

54

33

13

Canada

37

28

24

Czech Republic

47

41

12

5

Other

5

11

Denmark

42

24

15

7

7

Finland

58

29

6

5

2

France

48

34

18

Germany

41

39

13

7

Greece

37

36

27

0

Hungary

51

39

10

Iceland

72

24

4

Ireland

58

39

3

Italy

48

32

16

Japan

57

17

16

6

Korea

41

11

33

15

Luxembourg

59

41

Mexico

78

8

7

4

11

11

10

2

1

Netherlands

42

26

New Zealand

57

43

Norway1

65

27

5

Poland

38

33

28

Portugal

48

31

21

Slovak Republic

56

44

Spain

56

26

18

Sweden

51

24

24

4

64

18

17

1

Turkey

66

29

3

2

United States2 1. Three operators in Norway are resellers. 2. There are 72 carriers reporting to the FCC. Source: OECD.

3

1

Switzerland United Kingdom

4

27

26

24

23

23

17

14

10

35

40

© OECD 2003

© OECD 2003

Table 2.7. Government ownership of public telecommunication network operators (December 2002) Operator

Status

Australia

Telstra

State ownership: 51%.

Austria

Telekom Austria AG

State ownership: 47.8%.

Belgium

Mobilkom Austria AG

Telekom Austria: 75% - 1 share.

UTA Telekom AG

1.49% owned by the federal government via VTÖB. Regional governments are shareholders via electricity providers.

Belgacom

State ownership: 50% + 1 share in accordance with the law of 21 March 1991.

Belgacom Mobile B-Telecom MET IRISNET ALE IGEHO SEDITEL INATEL SIMOGEL TELELUX

75% 100% 100% 100% 99.9% 34.26% 50% 33.3 43.45% 50%

SaskTel owned by province of Saskatchewan.

Czech Republic

ýHVNê7HOHFRP

State ownership: 51%

Denmark

Tele Danmark

Private ownership.

Orange

Banestyrelsen: 14%

Finland

Sonera Ltd.

State ownership: 53.1%

Elisa

Private ownership (state ownership: 0.78%)

France Telecom

State ownership: 56.45%

Télécom Développement

~ 50% of capital (indirectly, via the SNCF)

France

Government in process of further privatisation.

In June 2000 the Finnish Parliament authorised the government to lower the state’s holding to zero.

The FT Law (Law No. 96-660 of 26 July 1996) provides for a portion of the share capital of France Telecom to be held by shareholders other than the French state, but requires that the French state remain the majority shareholder.

41

Recent Communication Policy Developments

Canada

Control of PSTN

Operator

Status

Control of PSTN

Germany

Deutsche Telekom AG

State ownership: 42.77%

Greece

OTE

Government in process of finding a strategic partner. State ownership: 33.76%. OTE also owns a number of subsidiaries which provide other telecommunication services: 1) 58.98% of COSMOTE (active in the mobile services sector). 2) 99.99% of OTESAT (active in the satellite services sector). 3) 80.2% of OTENET (active in the Internet services sector). 4) 99.99% of OTEGlobe (active in the international services sector).

EVERGY S.A.

Owned by Wind-PPC Holding N.V, a joint venture in which 50% - 1 of the share capital is owned by PPC Telecommunications Services S.A., a subsidiary of the Public Power Corporation (PPC S.A.), a state-owned company.

FORTHnet S.A.

The Greek state owns 23.1% through the Public Foundation of Technological Research. FORTHnet S.A. holds 60% of the Mediterranean Broadband Access S.A.

Hungary

Hungarian Telecommunication Private ownership, one golden share owned by state that Co. gives certain voting rights. Antenna Hungária

87%

Vodafone Hungary

Indirect state interest through 30% ownership by Antenna Hungária.

Local governments hold small amounts of shares of local telecommunication operators. Iceland

Iceland Telecom

State ownership: 95%

Ireland

Eircom

Private ownership.

Neither German law nor the Memorandum and Articles of Association (Satzung) of Deutsche Telekom restricts the right of non-resident or foreign share owners to hold or vote the shares. The German government has indicated its intention to substantially reduce its shareholding in DT.

OECD Communications Outlook 2003

42

Table 2.7. Government ownership of public telecommunication network operators (continued) (December 2002)

© OECD 2003

© OECD 2003

Table 2.7. Government ownership of public telecommunication network operators (continued) (December 2002) Operator Italy

Status

Control of PSTN

Telecom Italia

The Ministry of the Treasury holds 3.46% of TI’s share capital plus another 0.62% of the capital in the form of saving shares.

WIND – Infostrada

ENEL, the Italian national energy utility, holds 73.4% (34.7% directly and 38.7% through ENEL Investment Holding BV) of the share capital of Wind – Infostrada. The Treasury Ministry, in turn, holds 67.25% of the share capital of ENEL.

Japan

NTT Corp.

The government currently holds 46% of the issued shares The NTT Law stipulates that the government shall always hold one-third of NTT Corp. or more of the total number of the outstanding shares of NTT Corp. (holding company), and the law also stipulates that NTT Corp. shall always hold all the shares of NTT East Corp. and NTT West Corp. Therefore, the government does not have any direct ownership shares in NTT East Corp. and NTT West Corp.

Korea

Korea Telecom

Private ownership.

Luxembourg

P&T Luxembourg

State ownership: 100%

Mexico

Telefonos de Mexico

Private ownership.

The Foreign Investment Law and Regulations and the Concession require that Mexican shareholders retain the power to determine the administrative control and the management of Telmex. Non-Mexican investors are not permitted to own more than 49% of the capital stock of a public telecommunication operator. Mexican corporation engaged in the telephone business. Foreign investment in cellular telephony may be authorised up to 100%.

Netherlands

KPN Telecom BV

State ownership: 34.7% plus 1 special share.

The special share gives the right to approve decisions that lead to fundamental changes in KPN’s structure.

New Zealand

Telecom New Zealand

Private ownership. A convertible preference share in The Kiwi Share Obligation imposes universal service obligations on the Telecom (“the Kiwi Share”) is held by the Kiwi Shareholder incumbent. (the Minister of Finance). The New Zealand government purchased the Kiwi Share for $1 when Telecom was privatised in 1990.

Telenor

State ownership: 77.7%

Bane Tele AS

State ownership: 100%

State will remain majority owner.

43

Recent Communication Policy Developments

Norway

Pursuant to the Golden Share Decree, the Italian government can have special powers to prevent acquisition of shares.

Operator

Status

Poland

Telekomunikacja Polska Spolka Akcyjna (TPSA)

State ownership: 22.61%

Portugal

PT Comunicações Brisatel CPR Marconi SA Oni Telecom Oni Infocomunicações SA Optimus PT Prime Portugal TMN – Telecomunicações Móveis Refer Telecom

State ownership: 6.63% State ownership: 19.31% State ownership: 6.63% State ownership: 19.31% State ownership: 13.2% State ownership: 5% State ownership: 5.9% State ownership: 6.63%

Control of PSTN

State ownership: 100%

Slovak Republic Slovenské Telekomunikácie, a.s.

State ownership: 49%

34% of shares owned by the state and 15% by the Fund of National Property.

Spain

Telefónica

Private ownership.

When Telefónica de España, S.A. was privatised, a “golden share” regime was created requiring prior administrative authorisation for the direct or indirect acquisition of shares in Telefónica de España’s capital stock when this involves at least 10% of this capital). The same regime is applied for Telefonica’s subsidiary that manages the mobile telephone service (Telefónica Móviles España, S.A.U.)

Sweden

Telia

State ownership: 70.6%

Requirement for minimum state ownership of 51% abolished in June 2001.

Switzerland

Swisscom

State ownership: 62.7%

The state is required to retain its majority shareholding in Swisscom.

Turkey

Türk Telekom

State ownership: 100%

There is a legal restriction limiting foreign ownership of Turk Telekom (shares of up to 45%) [Law 4673]. Up to 100% of Turk Telekom can be privatised. State maintains a golden share.

Aycell

State ownership: 100%

United Kingdom BT

Private ownership: 100%

United States

Private ownership: 100%

Source: OECD.

AT&T, regional Bell operating companies

OECD Communications Outlook 2003

44

Table 2.7. Government ownership of public telecommunication network operators (continued) (December 2002)

© OECD 2003

© OECD 2003

Table 2.8. Foreign ownership restrictions in telecommunications Total foreign shareholding in Telstra is limited to 35% of listed capital, with any individual foreign person or associations shareholding limited to 5% of listed capital. There is a legislative requirement ensuring that Telstra’s Chair and the majority of Telstra’s directors are Australian citizens and Telstra’s head office, base of operations and place of incorporation remains in Australia. Prior approval is required for foreign involvement in the establishment of new entrants to, or investment in existing businesses in, the telecommunications sector.

Austria

No foreign ownership restrictions.

Belgium

No foreign ownership restrictions.

Canada

Foreign ownership is limited to a maximum of 20% of voting shares in any facilities-based carriers and at least 80 % of the board of directors of facilities-based carriers must be Canadian. In addition, these facilities-based carriers must be Canadian controlled. Investor companies in such carriers are treated as Canadian if at least 66 % of voting shares are held by Canadians. There are no limits on non-voting shares, while resellers can be foreign owned and controlled.

Czech Republic

No foreign ownership restrictions except as regards land ownership.

Denmark

No foreign ownership restrictions.

Finland

No foreign ownership restrictions.

France

There is a 20% limitation on direct foreign investment (for companies outside of the European Economic Area) for the mobile communications sector, but no limitation on indirect participation.

Germany

No foreign ownership restrictions.

Greece

No foreign ownership restrictions.

Hungary

No foreign ownership restrictions.

Iceland

No foreign ownership restrictions.

Ireland

No foreign ownership restrictions. The incumbent must notify the ODTR of any changes in shareholdings/ownership.

Italy

No foreign ownership restrictions.

Japan

There are no restrictions on individuals and corporations investing in the incumbent PTO(s) in Japan. However, foreign capital participation, direct and/or indirect, in NTT Corp. that holds all the shares of NTT East Corp. and NTT West Corp. is restricted less than one-third.

Korea

Foreign governments, foreigners or domestic corporations with over 80% of its stock held by a foreign government or foreigners cannot hold more than 49% of a share issued by a company in Korea.

Luxembourg

No foreign ownership restrictions.

45

Recent Communication Policy Developments

Australia

Mexico

Concessions are only granted to individuals or corporations of Mexican nationality. Foreign investment can be no greater than 49% except for cellular telephony services where permission is required from the Commission of Foreign Investment for a greater level of foreign participation.

Netherlands

No foreign ownership restrictions.

New Zealand

According to the Constitution of Telecom Corporation of New Zealand Limited (Clause 6) no person shall have a relevant interest in 10% or more of the total voting shares for the time being without, and except in accordance with the terms of, the prior written approvals of each of the Kiwi Shareholder and the Board given and no person who is not a New Zealand national shall have a relevant interest in more than 49.9% of the total voting shares for the time being without, and except in accordance with the terms of, the prior written approval of the Kiwi Shareholder. There are no restrictions on other operators.

Norway

The PTO is a limited company in which the state must own shares. A change in ownership requires approval by Parliament. No foreign ownership restrictions.

Poland

No foreign ownership restrictions. The President of the Office of Telecommunications and Post Regulation may impose on a PTO, within the provisions of the granted telecommunications authorisation, the obligation to inform the URTiP, within 14 days of the date of receiving such information, on each case when a shareholder took the right to over 10%, 30% and 50% votes on a general shareholders’ meeting (Art. 13.1 of the Telecommunications Law).

Portugal

No foreign ownership restrictions.

Slovak Republic

No foreign ownership restrictions.

Spain

According to the General Law on Telecommunications direct or indirect investment in Telefonica and Telefonica Moviles by foreign persons may not exceed 25% of share capital unless otherwise provided for by the applicable international treaties and agreements, including the Fourth Protocol of the General Agreement on Trade in Services. Citizens of the European Union, including entities domiciled in those countries, are not considered foreign persons.

Sweden

No foreign ownership restrictions.

Switzerland

No foreign ownership restrictions. The federal government is required to retain majority shareholding in Swisscom.

Turkey

Foreigners are not allowed to have more than 49% shares of telecommunications operators that require concession agreements directly or indirectly.

United Kingdom

No foreign ownership restrictions.

United States

The Telecommunications Act allows the FCC to deny radio licenses to corporations with greater than 25% foreign investment only if the public interest is served by this refusal. Wireline common carriers are not subject to these restrictions.

Source: OECD.

OECD Communications Outlook 2003

46

Table 2.8. Foreign ownership restrictions in telecommunications (continued)

© OECD 2003

© OECD 2003

Table 2.9. Fixed to mobile interconnection Publication of termination rates

Determination of fixed to mobile termination rates

Regulation of termination rates

No

Commercially negotiated between operators.

GSM (and CDMA) termination is a declared service. The ACCC has indicated that the pricing methodology that it will use for determining access prices in an arbitration will be based on benchmarking of retail mobile prices rather than a cost-based approach.

Austria

Yes

Fixed to mobile rates are agreed through commercial negotiations between operators. The regulatory authority may settle disputes.

Mobile termination rates have to be cost oriented if operators have significant market power.

Belgium

For operators with significant market power.

Termination rates are in principle determined by operators. The regulator has advised that a 15% maximum difference between the termination tariffs of various operators should be respected.

Operators with significant market power in the mobile telephony market have to apply non-discriminatory termination tariffs. Operators with significant market power in the interconnection market are subject to a cost orientation obligation and termination tariffs have to be approved by the regulator.

Canada

Receiving party pays pricing system used in Canada.

Termination rates not imposed.

Not applicable.

Czech Republic

Regulated prices of interconnection are published.

Commercial agreement. If there is no agreement the method of calculation and prices can be set by the regulator.

Only where commercial agreement cannot be reached.

Denmark

Yes

Commercial negotiation.

Only if an operator where designated as having significant market power.

Finland

No

France

Yes for operators that have been designated as having significant market power in the interconnection market.

Determined by the mobile operators.

Operators with significant market power in the interconnection market are required to have non-discriminatory termination charges which are cost oriented. The regulator has already imposed two reductions of 20% between 1999 and 2000 and has put in place a proposal for a further reduction of 40% between 2002 and 2004.

Germany

No

Commercial negotiation.

Mobile termination rates could be the subject of regulation if an operator has significant market power or if termination in the mobile network has been the subject of an interconnection decision.

Greece

Yes

Commercial negotiation

Operators with significant market power must apply the principle of nondiscrimination.

Hungary

No

Commercial negotiation.

Prices must be cost oriented if operators have significant market power.

47

Recent Communication Policy Developments

Australia

Publication of termination rates

Determination of fixed to mobile termination rates

Regulation of termination rates

Iceland

Rates made available on request.

Commercial negotiation. The regulator intervenes if there is a need to resolve disputes.

Cost orientation required.

Ireland

Yes

Commercial negotiation.

If the operator has been designated as having significant market power then charges must be cost-justified.

Italy

Yes for the two operators deemed as having significant market power.

The regulator has set a price ceiling on the two notified operators.

Yes. Non-discriminatory rules apply to operators with significant market power.

Japan

Operators with significant market power are obliged to publish interconnection tariffs that indicate termination rates.

Termination rates are commercially agreed between carriers. The Ministry intervenes when no agreement is reached.

The Ministry can order changes in termination rates if it deems that operators with significant market power have set rates which exceed reasonable cost levels and a reasonable profit.

Korea

Yes

The government sets the conditions for rate determination and these are published.

The government makes public the criteria for calculating the interconnection fee and calculates mobile termination rates accordingly.

Luxembourg

No

Commercial negotiation.

Tariffs of operators with significant market power are regulated.

Mexico

No

Netherlands

No

Commercial negotiation, but from 1 December 2002 mobile network operators are only allowed to set charges below a maximum reasonable level as set out in guidelines published by the regulator.

The regulator has set maximum reasonable average charges for mobile operators.

New Zealand

No

Commercial negotiation

No

Norway

Yes

Commercial negotiation

Poland

No

Portugal

No. Maximum prices set by regulator.

Cost-oriented rates for the operator with a significant market position. No

The regulator published the prices of some interconnection services applied by mobile operators.

None of the mobile operators has been declared as having significant market power on the interconnection market so that cost orientation does not apply. A regulatory decision of 24 January 2002 set the maximum average prices in 2002 for national termination in the mobile network for calls originating from the fixed network.

OECD Communications Outlook 2003

48

Table 2.9. Fixed to mobile interconnection (continued)

© OECD 2003

© OECD 2003

Table 2.9. Fixed to mobile interconnection (continued) Publication of termination rates

Determination of fixed to mobile termination rates

Regulation of termination rates

No

Commercial negotiations.

Dominant operators must have cost-oriented prices.

Spain

Interconnection prices with mobile operators not published. The regulator must make available to all interested parties, whenever this does not affect commercial secrets, the interconnection agreements made with dominant operators.

Commercial negotiations.

Dominant operators are required to have prices that are cost oriented and must provide the regulator externally audited accounts on a yearly basis.

Sweden

An operator with significant market power must declare rates to the regulator and these are available to other operators.

Rates are commercially negotiated between operators.

Operators with significant market power must use cost-oriented pricing for mobile termination.

Switzerland

Providers with a dominant position in the market must publish a basic offer every year.

Commercial negotiations between operators.

Dominant operators must use cost-oriented prices.

Turkey

Under consideration.

Commercial negotiation. If the operators fail to reach an agreement, the national regulatory authority shall be authorised to set such terms, conditions and prices. Such terms, conditions and prices are valid until the parties agree otherwise.

Interconnection providers that are designated by the national regulatory authority have to determine cost based termination rates.

United Kingdom

Mobile operators with significant market power must publish interconnect agreements.

Termination rates for two mobile operators are subject to a charge control of RPI-9. The regulator has proposed that the control be extended to the other two mobile operators.

Charges are regulated and the control is designed to reflect cost.

United States

Most mobile networks operate under a mobile party pays regime. In general interconnection rates for mobile networks are not regulated.

Interconnection between incumbent local exchange carriers and mobile operators are regulated. “Reciprocal compensation” rules apply which require that the rate a fixed operator charges the mobile operator for termination equal the rate the mobile operator charges the incumbent fixed operator unless the mobile operator can prove that its costs are higher.

Termination rates for fixed to mobile calls are initially commercially negotiated. If operators cannot reach agreement, they are generally arbitrated by local public utilities commissions.

Source: OECD.

49

Recent Communication Policy Developments

Slovak Republic

PSTN carrier number portability Australia Austria Belgium Canada

Czech Republic Denmark

Finland France

Germany

Local number and non-geographic number portability available. Mobile number portability available. Geographic portability only available if consumer stays within a local area. Implemented. Service level agreements introduced for number portability in fixed networks. Mobile number portability introduced in September 2002. Local number portability (LNP) implemented in major centres. Incumbent carriers required to implement LNP in smaller centres upon request by competitive local exchange carriers. Portability of toll free numbers implemented. Implemented at end of 2002. Implemented between fixed networks within the same geographic area and includes ISDN. By 1 January 2001 total portability, including between fixed and mobile, introduced. Mobile portability implemented on 1 July 2001. Geographic number portability available including nation-wide portability. Plans for mobile portability by mid 2003. Implemented for fixed geographic areas. For non geographic numbers portability introduced in July 2001 for freephone numbers, in January 2002 for the numbers with shared charges, and it is expected to be introduced in December 2002 for number where revenue is shared. For mobile numbers portability is expected to be introduced at the latest by 30 June 2003. Implemented for fixed geographic areas and for non-geographic numbers. Mobile number portability came into effect in November 2002.

Greece

Introduced on 1 January 2003.

Hungary

Implemented from 1 January 2002.

Iceland

Number portability introduced 1 September 2000, and geographic portability on 1 June 2001. Number portability for mobile calls will be available from 1 July 2003. Non-geographic portability introduced on 1 January 2000. Geographic number portability was established by June 2001. Full mobile number portability introduced by end of 2002. Geographic number portability introduced within the local area only. Nongeographic portability restricted to toll free, shared cost, and premium services. Mobile number portability introduced including porting numbers from 2G to 3G services.

Ireland

Italy

Carrier preselection Implemented, including fixed to mobile calls, but not available for local calls. Implemented and covers all types of geographic calls Implemented and covers all type of geographic calls including 0800 numbers. Service level agreements introduced for carrier select and pre-select. Implemented for long distance and international calls.

Carrier selection implemented in June 2002 and preselection at end 2002. Implemented for all geographic calls

Implemented for long distance and international calls Implemented for long distance and international calls. Carrier selection and preselection introduced for fixed to mobile calls from 17 November 2001. From 1 January 2002 carrier selection and preselection introduced for local calls. Implemented for long distance and international calls and for fixed-mobile calls. Preparations are underway to introduce carrier selection and preselection for local calls. Carrier selection introduced on 1 January 2002. Introduction of carrier preselection was available on 1 December 2002 for international calls and from 1 February 2003 for long distance calls, calls to mobiles and local calls. Carrier selection introduced 1 January 2002. There are no plans for carrier selection for local calls. Implemented for all geographic calls.

Implemented for all geographic calls.

Implemented for all geographic calls.

OECD Communications Outlook 2003

50

Table 2.10. Carrier number portability and carrier preselection

© OECD 2003

© OECD 2003

Table 2.10. Carrier number portability and carrier preselection (continued) PSTN carrier number portability Japan

Korea

Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland

United States

Source: OECD.

Number portability in the fixed network available since 30 June 2001 and for mobile networks since 1 January 2002. Number portability has to be introduced in fixed networks by 31 December 2004 at the latest. Geographic and non-geographic portability implemented. Geographic and non-geographic portability implemented. Available for digital mobile services from 1 September 2001. Geographic portability within the same numbering area and non-geographic portability implemented. From 29 March 2002 full national geographic portability. Mobile number portability implemented. Not applicable until the monopoly ends on 31 December 2003 Geographic and non-geographic portability implemented including mobile number portability from 1999. Local number portability and non-geographic portability implemented. Wireless carriers in the largest Metropolitan Statistical Areas required to support local number portability by November 2003. This will include mobile to mobile and fixed to mobile number portability.

Implemented for all geographic calls in May 2001.

Implemented for national long distance.

Implemented. Implemented for national and international long distance services. Implemented for all geographic calls. Implemented for all geographic calls and for fixed to mobile calls. Implemented for all geographic calls. Carrier selection and preselection introduced for long distance services in 2001. There is no carrier selection for local calls. Implemented for all geographic calls. Carrier selection introduced from 1 January 2003. Implemented for national and international long distance services. Implemented for national and international long distance services, mobile calls and for local calls. Implemented for all geographic calls, including fixed to mobile calls. Mobile operators required to allow users to choose on a call-by-call basis service providers for international calls. Not applicable until the monopoly ends on 31 December 2003. Interim carrier preselection using autodiallers was withdrawn at the end of 2001. Switched based preselection. Implemented for all geographic calls.

51

Recent Communication Policy Developments

Turkey United Kingdom

Number portability for PSTN and ISDN numbers to be provided from 2001. Geographic portability within the same numbering area is not an obligation but is provided by telecommunication carriers. Mobile number portability is being examined. The decision to adopt number portability was taken in January 2001 for local calls and toll-free services. Full adoption will take place by 2004. A decision to adopt mobile number portability was taken in February 2002. This will be implemented first for 3G, eventually for 2G and then for the transition from 2G to 3G services. Implemented. Not implemented. Implemented. Mobile portability available. Number portability is a designated service which imposes an obligation on telecommunications carriers to provide the service. Geographic and non-geographic portability implemented. Mobile number portability introduced on 1 November 2001. Number portability for geographic PSTN introduced at end of 2002.

Carrier preselection

Number of unbundled loops (mid-2002)

© OECD 2003

Regulatory requirement for local loop unbundling

Cost methodology for unbundled loops

Australia

Unconditioned local loop service, mandated in July 1999, was made available in the second half of 2000 by the incumbent. A draft decision made by the ACCC in April 2002 that a line sharing service would be in the long-term interests of end users, but that if Telstra offered reasonable commercial terms to access seekers the ACCC would exercise regulatory forbearance.

Total service long run incremental cost plus contribution to indirect costs.

5 000

Austria

Implemented on July 1999. Sub-loop unbundling and penalties in case of incumbent’s failure to meet lead times have been implemented. The incumbent, since September 2001, has to make available shared access for local loops.

Cost-oriented (FL-LRAIC) based on a bottom-up cost model calculation. The cost for shared access for a local loop is 50% of the monthly charge for the full unbundled line. Costs are 50% of the monthly charge for the full unbundled line.

4 800

Belgium

Full unbundling, shared access and sub-loop unbundling in place since 1 March 2001.

Recurring charges are based on a “retail minus” formula and non-recurring charges on a LRIC methodology.

1 190 full unbundled; 684 shared access.

Canada

Announced in May 1997. Facilities that were classified as essential are subject to mandatory unbundling. Rate reductions of 30%-40% have been implemented since 1997.

Incremental costs plus a mark-up to recover fixed and common costs. The mark-up was reduced from 25% to 15% in 2002.

144 360 (end 2002)

Czech Republic

Legislative process ongoing; due to elections the date of coming into force was postponed.

Under consideration.

n/a

Denmark

Implemented in July 1998. Line sharing mandated in January 2001. Bitstream access available since 2000.

Based on historic costs, and as of 1 January 2003 on LRAIC.

41 321 (December 2001)

Finland

Implemented in 1997.

France

Available from 1 January 2001. Includes raw copper unbundling and line sharing.

Long run incremental costs.

500

Germany

The incumbent has been obliged to offer access to the local loop since 1998. In 2001 the obligation to offer shared access was implemented.

Long run incremental costs.

700 794 (March 2002)

Greece

Unbundling came into effect on 1 January 2001.

Prices for full unbundled loops as well as shared access are based on LRAIC methodology using current costs.

93

Hungary

Unbundling came into force on 1 July 2001 and the first reference unbundling offer was accepted in 2002. From 2002 full unbundling and shared access available.

Individual approvals using the fully distributed cost methodology in 2002 and from 2003 a long run incremental cost methodology.

Iceland

Came into force on 1 October 2000.

Using a cost-based tariff model using historic costs.

458 (end 2001)

Ireland

Bit stream unbundling available from 2000. Full unbundling in April 2001.

Prices are reviewed by the regulator and based on historic costs.

20

OECD Communications Outlook 2003

52

Table 2.11. Local loop unbundling

© OECD 2003

Table 2.11. Local loop unbundling (continued) Regulatory requirement for local loop unbundling

Number of unbundled loops (mid-2002)

Cost methodology for unbundled loops

Italy

During 2000 different decisions of the regulator led to full implementation of unbundling. This was supplemented in January 2001 by decisions to implement shared access and sub-loop unbundling.

Historical cost methodology used.

25 000 (April 2002)

Japan

The Ministry issued a document in August 1999 clarifying that the incumbent was required to provide interconnection to the main distribution frame and line sharing. Unbundling of optical fibre implemented in April 2000. Full unbundling and line sharing implemented in September 2000.

Costs for unbundled lines are calculated using the interconnection accounting information.

1 411 126 (December 2001).

Korea

Full unbundling and line sharing available

Luxembourg

EC Directive applied. Not available.

Netherlands

Unbundled access to the local loop available since December 1997. In March 1999, OPTA laid down guidelines indicating the way in which it would settle any disputes over unbundled access. Implementation of EC Directive came into effect in January 2001.

New Zealand

The Telecommunications Commissioner is required to report to the Minister by December 2003 on whether access to the unbundled elements of the incumbent’s local loop should be regulated.

Norway

From 6 February 2001 the incumbent is obliged to offer full access, shared access and bitstream access.

Poland

Draft amendments to the Telecommunication Law contain provisions for local loop unbundling.

Portugal

The EC regulation on unbundling came into force in January 2001.

Slovak Republic

The Telecommunication Act will be amended to allow for unbundling.

Spain

Since 2001 the dominant carrier has been required to provide full unbundled access, shared access and bitstream access.

Prices are regulated and subject to cost orientation which means the cost of the service plus a reasonable profit margin.

208 224 (May 2002)

Prices should be cost oriented.

.

Cost estimations and international bench-marking for reference purposes. Cost estimations used the incumbent’s cost accounting system, based on historical costs. When assessing new services for which historical information was not available, certain present costs were used.

20

Based on costs justified by the operator to the regulator.

72 unbundled loops (May 2002)

53

Recent Communication Policy Developments

Mexico

18

Number of unbundled loops (mid-2002)

Regulatory requirement for local loop unbundling

Cost methodology for unbundled loops

Sweden

The EC regulation brought unbundling into force in January 2001. The incumbent offers full unbundling, shared access and sub-loop unbundling.

Costs are calculated with a top down fully distributed cost model based on current costs. Tariffs for ULL are set on a geographically averaged basis.

3 393 fully unbundled lines 1 670 shared lines (end June 2002)

Switzerland

A process is underway to introduce full access and shared line access.

Turkey

Monopoly. LLU not applicable.

United Kingdom

From January 2001 the incumbent has published a reference offer that includes fully unbundled loops, shared lines and sub-loop unbundling.

Charges are cost-oriented and geographically averaged.

785 (July 2002)

United States

The Telecommunications Act of 1996 required incumbent local exchange carriers to provide unbundled network elements on a non-discriminatory basis. In 1999 the unbundling rules were reviewed and changes made to the list of network elements required to be unbundled. In December 1999 line sharing was mandated for xDSL-based services. 72% of exchanges are able to offer unbundled local lines.

Based on forward-looking economic costs.

9 461 000

OECD Communications Outlook 2003

54

Table 2.11. Local loop unbundling (continued)

© OECD 2003

© OECD 2003

Table 2.12. Treatment of national and international voice telephony services provided over the Internet Voice over Internet Protocol service providers (who use managed, dedicated IP-based networks) would be treated the same as carriage service providers. That is, they would be subject to telecommunication consumer and industry codes, universal service obligations and cost, services to the disabled and emergency service access. Voice over Internet telephony which uses the public Internet would not be subject to obligations.

Austria

Voice telephony services provided over the Internet have to be notified according to section 13 of the Telecommunications Act. No licence is required.

Belgium

Such services are not considered voice telephony and, as a result, it is not necessary to obtain a licence to provide this service. A declaration is sufficient.

Canada

The CRTC determined that most Internet service providers are not facilities-based telecommunications carriers and consequently they are not regulated. If an ISP should wish to become a facilities-based carrier then it would be subject to the same conditions and obligations as other facilities-based carriers.

Czech Republic

These services are considered as telecommunication services and providers have only to be registered according to the General Licence obligations. No licence is required.

Denmark

As with any other type of voice telephony services, no specific restrictions apply.

Finland

For VoIP services no licence or notification is required although most ISPs prefer to notify in order to facilitate relations with licensed operators.

France

French law defines telephone service provided to the public in a way which is independent of the technology used. Under these circumstances, the provider of telephone service to the public is subject to the same rules whether using Internet or any other platform. The provision of telephone services to the public also requires ministerial authorisation.

Germany

Voice communication over the Internet is not a voice telephony service as defined in the Telecommunications Act or by the European Union and is therefore not subject to a licence. Such services must only be notified.

Greece

General authorisation is required. In order to obtain this, entities have to submit a registration form to EETT specifying the services they shall provide.

Hungary

Licenses are not needed for VoIP; only registration is required. Between 1998 and 2002, there were some voice quality restrictions due to the exclusive rights of the incumbents. Since liberalisation these restrictions have been lifted.

Iceland

IP telephony is treated in the same manner as any other form of voice telephony. A license is required. Obligations are similar to obligations of other telephony operators.

Ireland

If the service was provided by an operator other than the incumbent, it would probably not be regulated. Obligations on Eircom would include network obligations and provision of service level agreements, as well as other service obligations.

Italy

VoIP is not regulated and is only subject to general authorisation.

Japan

Type II telecommunication carriers can provide national and international voice telephony services over the Internet.

55

Recent Communication Policy Developments

Australia

Korea

Facility-based telecommunication operators with an existing licence for voice services can also provide VoIP service. When providing a VoIP service over the network of a facility-based service provider the entity has to meet registration qualifications in areas such as technological capabilities, financial capabilities, plans for consumer protection, etc.

Luxembourg

Following European Commission recommendations, two special provisions are foreseen for entities other than a PTO. A licence is required from the regulator for interconnection to the public network.

Mexico

National or international voice telephony services over the Internet would require a concession as any other voice telephony service provider, and they would have to comply with the voice telephony regulatory framework which would have to be adapted to this new technology.

Netherlands

An entity providing international voice services over the Internet would, according to existing legislation, be regarded as a public telecommunication operator and thus require registration.

New Zealand

Under New Zealand law, national and international voice telephony services provided over the Internet by entities other than a PTO are defined and treated the same as such services provided by a PTO.

Norway

National and international voice telephony services provided over the Internet will be defined and treated as a public telephony services, with an obligation to register, if the quality of service is as good as voice on the PSTN. If the service provider has significant market power a licence will be required.

Poland

International telephone service can only be provided by PTOs.

Portugal

Voice over IP requires a licence, while voice over the Internet requires registration.

Slovak Republic

VoIP is generally licensed if no limited resources are used (numbers) and individually licensed if limited resources are used. The delay for VoIP must be more than 250ms.

Spain

If communications is telephone to telephone an individual licence is required; if it is made between two data terminals, a general authorisation is required and, if it is made between both types of terminals, a provisional authorisation is required.

Sweden

The same regulations apply to all undertakings that provide fixed telephony services.

Switzerland

Voice telephony over the Internet is regarded as a telecommunication service and is consequently subject to telecommunication legislation. It is not considered as forming part of the universal service provision and is therefore not subject to the legal requirements applicable to that service and to its providers. Service providers offering national and international voice telephony services on Internet would be subject to a number of legal obligations which are applicable to service providers using the PSTN such as interconnection, secrecy of communications, etc.

Turkey

Voice services are a legal monopoly until 31 December 2003.

United Kingdom

For VoIP service, OFTEL considers this should be regulated as a publicly available telephone service if any of the following apply: the service is marketed as a substitute for traditional PSTN services, or the service appears to customers as a substitute for public voice telephony, or the service provides the customer’s sole means of access to the traditional circuit switched PSTN.

United States

Not subject to regulation.

© OECD 2003

Source: OECD.

OECD Communications Outlook 2003

56

Table 2.12. Treatment of national and international voice telephony services provided over the Internet (continued)

© OECD 2003

Table 2.13. Final consumption household expenditure in the OECD area Percentages

Food and non-alcoholic beverages

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

13.4

13.1

12.8

12.6

12.4

12.0

11.6

11.3

11.1

10.7

Alcoholic beverages, tobacco and narcotics

3.1

3.1

3.0

3.0

3.0

2.9

2.8

2.9

2.9

2.8

Clothing and footwear

6.9

6.8

6.6

6.5

6.4

6.2

6.1

6.0

5.8

5.7

19.3

19.4

19.8

20.0

20.3

20.3

20.1

20.0

19.8

19.7

Furnishings, household equipment, routine maintenance

6.4

6.3

6.1

6.1

6.0

6.0

5.9

5.9

5.8

5.7

Health

7.7

7.8

8.1

8.1

8.2

8.4

8.8

9.0

9.0

9.3

11.9

12.0

11.7

11.9

11.9

12.1

12.1

11.9

12.0

12.1

1.6

1.7

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.3

Housing, water, electricity, gas and other fuels

Transport Communications Recreation and culture

9.0

8.9

9.0

9.0

9.2

9.2

9.2

9.2

9.2

9.2

Education

1.7

1.7

1.8

1.8

1.8

1.8

1.9

1.9

1.9

2.0

7.5

7.4

7.4

7.4

7.5

7.4

7.5

Restaurants and hotels 7.5 7.5 7.5 Note: Hungary, Norway, Slovak Republic, Switzerland and Turkey are not included in this average. Source: OECD, SNA Database.

Recent Communication Policy Developments

57

Chapter 3

TELECOMMUNICATION MARKET SIZE

Abstract. OECD telecommunication service revenues reached USD 831 billion in 2001. This represented a 2% increase over the same figure for 2000. While the sector was still growing, there was a considerable slowdown in the rate of growth from previous years. This chapter provides information on the size of the telecommunications market. It specifically examines the wireless market, international communications, leased lines and research and development.

59

© OECD 2003

OECD Communications Outlook 2003

O

ECD telecommunication service revenues reached USD 831 billion in 2001 (Table 3.1). This represented a 2% increase over the same figure for 2000. While the sector was still growing, there was a considerable slowdown in the rate of growth from previous years. The increase in 2001 contrasted to an increase of more than 7% between 1999 and 2000. In 2001, revenue increased by USD 16 billion compared to USD 84 billion in 1999 and USD 58 billion in 2000. In 2001, the main factor underlying the slowdown in revenue growth was the decrease in the pace of access expansion compared to the two previous years as major markets in the industry reached a stage of maturity. The performance also reflected the dynamics of access expansion. While the number of wireless subscribers was still increasing, prepaid customers – who tend to generate lower amounts of revenue per new addition – accounted for a significant proportion. In 2000 and 2001, prepaid customers made up the equivalent of 57% of all new cellular mobile additions. At the same time, sources of potential new revenue growth, such as wireless data services, were still only in a nascent stage. In 2001, NTT DoCoMo led the way with some 18% of average revenue per user (ARPU) being generated by wireless data. However, Japan’s experience with i-mode had yet to be replicated in any other OECD countries, where the majority of the relatively small wireless data revenues were generated by short message services (SMS). Given the relatively high rate of cellular mobile penetration and the slowing rate of subscriber expansion, wireless operators will depend on data revenues for new growth. In respect to the fixed network, although the number of Internet subscribers was still increasing, the proportion of broadband subscribers was still too small in most OECD countries to have a

Figure 3.1. Trends in public telecommunications revenue, investment and access paths, 1980-2001 Revenue (left scale)

Investment (left scale)

Access lines (right scale)

Access paths (fixed lines and mobile subscribers) (right scale) Revenue and investment (billions of current USD) 900

Access paths (millions) 1 200

800 700

1 000

600 800 500 600

400 300

400

200 200 100 0

0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

60

Source: OECD.

© OECD 2003

Telecommunication Market Size

Figure 3.2. Telecommunication revenue as a percentage of GDP for total OECD, 1985-2001 % of telecommunication revenue in GDP 4

% of telecommunication revenue in GDP 4

3

3

2

2

1

1

0

0 1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Source: OECD.

significant impact on revenue growth. Korea Telecom (KT) led the way by increasing its broadband revenue by 341% in 2001. In 1999, broadband did not warrant a separate line in KT’s accounts. In 2001, some 7% of KT’s revenue was generated by broadband access. This was by far the largest proportion for any incumbent telecommunication carrier. Telecommunication revenues continue to increase in proportion to GDP. Across the OECD area telecommunication revenues increased from 2% in 1990 to 3.35% in 2001 (Table 3.2). In 2001, despite the relative slowdown in growth of the telecommunication sector, the sector still grew faster than the overall economy. In 2001, telecommunication services increased their share of GDP by 0.16% compared to 0.18% and 0.20% respectively in 1999 and 2000. Clearly, the general economic downturn across the OECD during this period also contributed to the slowdown in telecommunication growth. Despite this, the increasing use of telecommunication services meant that the sector’s overall share of GDP continued to rise. Liberalisation has been fundamental in the growth of the telecommunication sector. The opening of markets has promoted competition, and in turn, brought a tremendous expansion of access and increasing innovation in services. It has also made it possible for telecommunication carriers to better serve their customers outside their “home country” and to seek new opportunities for growth in foreign markets. One reflection of this trend is the growing proportion of revenue that telecommunication carriers earn outside their “home markets”. In the past, most telecommunication carriers did not disclose earnings from foreign markets because they were not significant. Cable & Wireless has long been the exception due to the company’s global holdings. All other telecommunication carriers earned the bulk of their revenues from their “home market”. Following widespread liberalisation there is an increasing trend to report revenue by geographical market. These data reveal an increasing globalisation of industry revenue. Some companies that sought foreign opportunities before others now earn the majority of their revenues in © OECD 2003

61

OECD Communications Outlook 2003

foreign markets. TDC, for example, earned 54% of that company’s revenue outside Denmark in 2001 compared to 41.8% in 1999 (Table 3.3). In 2001, some 83.5% of Vodafone’s revenue was earned outside the United Kingdom, compared to 63.2% in 1999. In terms of size, Vodafone is the largest beneficiary of foreign revenues, earning some USD 27 billion outside the United Kingdom in 2001. France Telecom and Deutsche Telekom were the second and third-ranked companies, by the scale of foreign earnings, with USD 13.7 billion and USD 11.7 billion respectively. Telefonica had previously been ranked first in 1999 and second in 2000. However, Telefonica’s foreign revenues declined due to the weakness of economies and currencies in Latin America. Cable & Wireless foreign revenues have also been declining, as the company has divested several foreign operating companies and sought to transform itself into an “Internet carrier”. The foreign revenues of British Telecom (BT) have also decreased as the company sought to reduce debt by selling several foreign operations and divesting mmO2. Most significant in this process was that the divestiture of mmO2 split off BT’s wireless holdings in several European markets. Aside from the creation of a specialist wireless company, a significant factor in BT’s actions was its desire to reduce its level of debt. In 2002, a number of other operators that had built up substantial levels of debt through foreign acquisitions were also seeking to sell foreign operations. By way of contrast, a number of others with relatively strong balance sheets were seeking greater exposure to opportunities for growth in foreign markets. These companies were seeking to purchase assets from companies that had exited the market or those selling foreign assets to reduce their debt levels. One caveat needs to be noted in relation to the data on foreign revenues shown by company. This concerns the different accounting treatment given to foreign revenue. Some companies fully consolidate foreign operations. In such cases all revenue and costs are included in those companies’

Figure 3.3.

Public telecommunication revenue per access path, 2000 and 2001 2000

2001

USD 1 200

USD 1 200

1 000

1 000

800

800

600

600

400

400

200

200

0

U

ni

te

d

St

at e Sw Ja s itz pan er la U ni n te No d d rw Ki a ng y do O m EC C D an Au ada st ra Fi lia nl D an en d m a Ire rk G lan er d m Be any lg iu N Sw m ew e Ze den al an N Ice d et la h n Lu erl d xe an m ds bo u Au rg st ri Sp a a Po in rtu g M al e H xico un ga Fr ry an G ce re ec e Sl Ita ov l ak Ko y R rea ep u C ze P blic ch ol R and ep ub Tu lic rk ey

0

62

Source: OECD.

© OECD 2003

Telecommunication Market Size

Figure 3.4. Mobile telecommunication revenue in OECD countries, 2001 USD million (logarithmic scale) 100 000

USD million (logarithmic scale) 100 000

10 000

10 000

1 000

1 000

100

10

10

1

1

U

ni

te

d

St

at e Ja s G pa er n m U an ni y te d I Ki tal ng y do m Ko re Sp a a Fr in an C ce an ad N Me a et xi he co rla Au nds Sw str itz alia er la n Au d st r Be ia lg iu Po m la Po nd rtu g G al re ec Fi e nl a Sw nd e de C ze n ch Irel a R nd ep u H blic un ga N ry or D wa en y m ar k N ew Tur Sl k ov Ze ey ak al R an Lu ep d xe ub m lic bo u Ic rg el an d

100

Source: OECD.

accounts. Other companies use the equity method. Under this accounting treatment, only the net income or net losses from their equity share in foreign operations are counted as revenue. Companies such as SBC (United States) and NTT (Japan) use the equity method in treating foreign revenues. Accordingly, the foreign revenues shown for these companies are much less than those consolidating foreign operations even though these companies have significant offshore holdings. SBC, for example, has significant investments in North America and Europe. NTT has foreign holdings in Southeast Asia, Europe and North America. Mobile communications The size of the wireless communications market in the OECD area was USD 264.8 billion in 2001 (Table 3.4). In 1999, one in every four dollars of telecommunication service revenue earned was attributable to mobile communications. By 2001, the same ratio was just under one in three. In five countries – Austria, the Czech Republic, Ireland, Japan and Korea – more than 50% of all revenues are attributable to mobile communications. In a further seven countries, more than 40% of all revenue is derived from wireless services. Revenues per access path (i.e. fixed lines plus mobile subscribers) have tended to fall over recent years (Table 3.5). The main reason for this is the trend toward lower revenue per wireless user. Users of prepaid cards generate much less revenue than post-paid wireless customers. By way of contrast, revenue per capita has increased due to the expansion of fixed and wireless access across the OECD. In the early 1990s most users of mobile telephones were business users. In 1992 the average revenue per user was around USD 972. In some countries, such as the Czech Republic, Japan and Luxembourg, the annual revenue per user was more than USD 3 000 at that time. In the following © OECD 2003

63

OECD Communications Outlook 2003

Figure 3.5. Public telecommunication revenue per capita, 1991 and 2001 1991

2001

USD 1 400

USD 1 400

1 200

1 200

1 000

1 000

800

800

600

600

400

400

200

200

0

U

ni

te

d

St a N tes or w a J y U Sw ap ni itz an te e d rla K n Lu ing d xe do m m bo u Fi rg nl a Sw nd e D de en n m a Ic rk el an N O d et E he CD rla G nd er s m Au an st y r Be alia lg i C um an ad Ire a la N A nd ew us Ze tria al an Sp d Po ain rtu g Fr al an G ce re ec e Ita l Ko y C ze Hu rea c Sl h R nga ov e ry ak pu R bli ep c ub Po lic la M nd ex ic Tu o rk ey

0

Source: OECD.

decade the average revenue per user has decreased to USD 433 (Table 3.6). The countries with the highest mobile revenue per user tend to be those with a low proportion of prepaid users. Canada, Finland, Japan, Korea and the United States all generate more than USD 400 in mobile revenue per user and all have relatively low proportions of prepaid users. The main exceptions are Ireland and to a lesser extent Iceland and Switzerland. These countries also generate more than USD 400 but they have higher proportions of prepaid users. Japan has the highest annual mobile revenue per user. There are several reasons for this occurrence. One reason is that NTT DoCoMo, the largest Japanese mobile company, derived 19.6% of its total revenue from equipment sales. In many other countries equipment sales are made through independent entities so that the cost and revenue from these transactions do not appear in their accounts (or appear to a much lesser extent). If equipment sales were removed from the Japanese data the average revenue per user would be less than USD 800 instead of USD 1008. This is still the highest in the OECD for several other reasons.

64

NTT DoCoMo’s annual ARPU for cellular mobile subscribers is USD 864 per annum. Wireless data revenues in other OECD countries are still very small compared to Japan and this is an additional reason that companies such as NTT DoCoMo generate higher ARPU. Some 18% of NTT DoCoMo’s annual ARPU from cellular mobile subscribers (USD 156) is derived from i-mode services. The remaining USD 708 is attributable to telephony. This is still relatively high compared to operators outside Japan with the main subsequent factors being the type of subscription, level of usage and price. Japan has a very low proportion of prepaid users compared with most OECD countries. In general, this translates into higher usage and revenue per subscriber. For example, the average use by an NTT DoCoMo cellular mobile subscriber in 2001 was 178 minutes per month (130 outgoing and 48 incoming). This is © OECD 2003

Telecommunication Market Size

Figure 3.6. Cellular mobile telecommunication revenue per cellular mobile subscriber, 1998 and 2001 1998

2001

USD 1 200

USD 1 200

1 000

1 000

800

800

600

600

400

400

200

200

0

Sw Ja itz pan er la n U ni Ire d te la d nd St at Au es st Ic ria el an O d EC Fi D nl a C nd an ad Ko a r N ea or w B a N elg y et he ium rla Au nd st s r Po alia rtu ga Sp l G a er in m H any un D ga Lu enm ry U xe a ni te mb rk d ou N Kin rg ew gd Ze om al Sw and ed Po en la nd Ita Fr ly a C ze G nce ch re R ece ep u Sl ov M blic ak e R xico ep ub Tu lic rk ey

0

Source: OECD.

much higher, for example, than prepaid cards that are used, on average in a number of OECD countries, for less than 60 minutes per month. Mobile operators in the United States have also been successful in generating relatively high amounts of revenue per user. In 2001, for example, Nextel’s 8.6 million customers had an ARPU of USD 852 per annum. These revenues are firmly driven by much higher levels of usage. Nextel’s users averaged 565 minutes per month whereas the highest amount for most mobile operators, in other OECD countries, rarely exceeds 180 minutes. International communications Revenue from international telecommunications was once one of the most closely scrutinised indicators. In the past, the very high prices for international telephony and high costs of terminating international calls made this segment a significant part of the revenue of telecommunication carriers. In 1992, more than a third of carriers in the OECD area relied on international traffic for more than 20% of their revenue. A decade later, international traffic amounted to no more than 10% in virtually all OECD countries and represented less than 5% in more than half. Several factors are at work in the declining proportion of international revenue in relation to the total. A significant factor, of course, has been the growth of mobile communications which has meant that overall industry revenues have increased at a rapid rate. At the same time, liberalisation has pushed prices closer to the cost of providing international services. This has caused a sharp increase in the volume of international traffic even at a time of increasing substitution of public switched © OECD 2003

65

OECD Communications Outlook 2003

Figure 3.7. Share of mobile revenue in public telecommunication revenue, 1998 and 2001 1998 % of mobile revenue in total revenue 70

2001 % of mobile revenue in total revenue 70

60

50

50

40

40

30

30

20

20

10

10

0

0

C

ze c

h

Au s

tri Ko a R rea ep ub l Ja ic pa Ire n la Ic nd el Po and rtu ga l Ita Fi ly Sw nl itz and er la n Sp d a Be in lg Sl ov P ium ak ol R and ep u H bli un c ga N Gre ry et he ece rla nd O s EC Lu Fr D x an N em ce ew bo Ze urg al a M nd e G xic er o m Au an st y ra N lia or w Sw ay ed D U en en ni te ma d St rk U a ni C tes te a d na Ki d ng a do Tu m rk ey

60

Source: OECD.

telecommunication network (PSTN)-based international communications. Some of the services substituting for international PSTN telephony and fax traffic include Internet telephony and e-mail. iBasis, a company specialising in Voice over Internet Protocol (VoIP), increased the number of international minutes its network carried from 600 million to 1.4 billion in 2001. The company expects to carry more than 2 billion minutes in 2002. The largest customers of iBasis are traditional carriers who outsource a portion of their international carriage to the company. Internet telephony is also growing apace with various combinations of PC-to-PC, PC-to-Phone and Phone-to-Phone internet protocol (IP) telephony. These combinations radically alter the traditional definition of an international telephone call. One new service, for example, allows foreign users to select a telephone number in the area code of their choice in another country. Users in that area code then only pay the price of a local call to reach that number. For their part, the international receiver of the call pays a fixed monthly fee of less than USD 10 for an unlimited number of calls.

66

Notwithstanding the substitution of services, or new forms of carriage, minutes of international traffic continue to grow in most OECD countries. This is particularly true of countries having liberalised more recently than 1998. In Spain, Telefonica’s outgoing minutes increased 30.7% in 2000 and 18.4% in 2001. Countries that liberalised international service much earlier are, however, also still growing. The outgoing minutes of international traffic from the United Kingdom grew by 7% in 2000 and 9% in 2001. In the United States, minutes of international telephone service increased 11% during 2001 from 30.1 billion to 33.3 billion. Accordingly, on a per capita basis, international traffic is increasing in most countries (Tables 3.7 and 3.8). IP telephony can be expected to further increase the amount of international minutes, but also further blur the distinction between domestic and international calls. In Japan, one broadband access company is providing IP telephony at USD 0.02 per minute to any part of Japan and the United States. © OECD 2003

Telecommunication Market Size

Figure 3.8. Minutes of outgoing international telecommunication traffic (MiTT), 2001 Outgoing MiTT per capita

Outgoing MiTT per access paths (fixed + mobile)

MiTT 1 000

MiTT 1 000

900

900

800

800

700

700

600

600

500

500

400

400

300

300

200

200

100

100

0

bo u itz rg er N l ew an Ze d al an Be d lg i D um en U m ni ar te k d St at e s U N ni or te w d a Ki y ng do m Ic el an d Au st r Sw ia ed N et he en rla nd G er s m an Fi y nl an d M ex ic o Sp ai n Sl ov Gre ak ec e R ep ub l Po ic rtu ga l Ita l y H C ze un ga ch ry R ep ub lic Tu rk ey Po la nd

xe m

Sw

Lu

0

Source: OECD.

Leased lines While the number of leased lines continues to increase in nearly all OECD countries, the trends in revenue are mixed across different incumbent telecommunication carriers. The advent of the Internet has created significant new demand for leased lines. In countries where competition had already pushed down the price of leased lines, such as the United States, the demand for additional leased capacity has pushed revenues from USD 18.7 billion in 1997 to USD 33 billion in 2000 (Table 3.9). In countries where there has been a decrease in revenue, it is generally not because of any volume decrease. Rather, it suggests increasing competition in a market or geographical segments that previously faced little competition. Australia provides a good example of the impact increasing competition can have at a time of growing demand. In Australia, there was a duopoly for the provision of international infrastructure until mid-1997. Given the time it takes to build new undersea cable connections, the first independent capacity on new facilities came on stream in 2000. In 2001 Telstra’s revenue from international leased lines decreased by 51%, which it attributed to “multiple participants and excess capacity driving down prices”. Meanwhile, domestic leased line revenue remained relatively constant even with greater competition and increasing demand for capacity. The main reason for this is that it is easier for competitors to offer a wholly substitutable international service than national service due to the reach of their facilities. In the future, asymmetrical and symmetrical digital subscriber line (DSL) services are expected to increasingly substitute for local leased lines. As these services are much less expensive, this should © OECD 2003

67

OECD Communications Outlook 2003

place pressure on the prices of local leased lines, and should have an increasing impact on revenue in that segment of the market. Research and development Although data are not available for all telecommunication carriers, research and development expenditure by leading carriers continues to be in the range of USD 6 to USD 7 billion (Table 3.10). The majority of this expenditure is impacted by government regulation. In a number of OECD countries regulation requires telecommunication carriers to allocate a certain amount of their turnover for research and development. In Japan, the NTT Law, amended in June 1997, requires NTT to conduct research relating to telecommunications technologies. The NTT Law stipulates that NTT (including NTT East and NTT West) are responsible for promoting research in telecommunications technologies and disseminating the results of such research. In Korea, under the Telecommunications Basic Law, the Ministry for Information and Communications may recommend that network service providers contribute a percentage of their total annual revenues to telecommunication research. These recommendations may apply to the level of internal R&D made by carriers as well as to external contributions. The external contributions are made to a fund administered by MIC, which then distributes funding to Korean research institutes. In France, government regulation requires France Telecom to spend 4% of its unconsolidated revenues on research and development. This amount has declined relative to the growth of consolidated revenues and represented 1.3% of France Telecom’s turnover in 2001. Mobile operators in Canada are also required, as part of their licence obligations, to invest 2% of adjusted gross revenues in research and development. Apart from Canada, France, Japan and Korea, telecommunication carriers in most OECD countries are not required by regulation to engage in a specific amount of R&D. It is noteworthy, however, that some carriers with significant state ownership tend to spend the greatest proportion of revenue on R&D among those countries that do not have regulatory requirements relating to R&D. For example, Telia and Sonera respectively spend 2.2% and 3.7% of their revenue on R&D. On the other hand, Elisa, which is 100% privately owned, also spends 2.5% of turnover on R&D. This means that there may be other factors at work that are more significant than ownership or regulation in particular markets. Worthy of note is that BT, without a regulatory obligation and 100% privately owned, spent more on R&D than France Telecom in 2001. In some cases, telecommunication carriers spent much less in 2001 than they did in 1997 or 1999. Carriers such as AT&T, KPN and Telecom Italia are spending less on R&D. This does not mean that fewer products and services have less of an R&D component. In liberalised markets, and free of regulatory requirements, telecommunication carriers tend to focus R&D expenditures on applying technology and services developed by others such as equipment companies. This contrasts with the era of monopolies when some telecommunication carriers did significant amounts of fundamental research. This does not mean that less R&D is being conducted in the sector. In fact, the reverse is the case. In competitive markets, telecommunication carriers have become increasingly demanding customers for the technologies and applications developed by others. The impact of this is readily evident in the trends in R&D expenditure among the leading equipment suppliers. In 2001, telecommunication equipment companies spent more than USD 38 billion on R&D. This compares to around USD 27 billion in 1997 – the last year in which monopolies over telecommunication services existed in the majority of OECD countries.

68

Although experiencing a sharp downturn in the market for equipment, telecommunication equipment companies generally increased their R&D in 2001. Ericsson led the way in 2001 with R&D expenditure of USD 4.5 billion, representing some 20.1% of the company’s turnover. Other companies that increased R&D expenditure included Motorola, Cisco, Nortel and Alcatel. In other cases, companies such as Lucent maintained levels of R&D expenditure in the face of falling demand, meaning that R&D increased as a proportion of total revenue. © OECD 2003

Telecommunication Market Size

As measured by the number patents filed with the United States Patent and Trademark Office (USPTO), the level of R&D undertaken by telecommunication equipment companies has also increased significantly following widespread liberalisation across the OECD. In 2001, the leading equipment manufacturers were awarded 11 500 patents by the USPTO. This was nearly double the number of patents awarded in 1997. The number of patents awarded to telecommunication carriers has also increased. In 2001, nearly 600 patents were awarded to leading telecommunication carriers in OECD countries by the USPTO (Table 3.11). This was around three times the number of patents awarded in 1997. Data on patents granted by the USPTO by country are also available (Table 3.12).

69

© OECD 2003

© OECD 2003

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD Source: OECD.

Revenue 1991 (USD m) 9 554 2 934 2 820 12 667 485 2 389 2 140 20 527 28 430 1 345 466 89 1 271 18 155 52 115 6 112 154 5 390 5 192 1 484 2 204 1 160 1 671 0 10 066 5 717 5 173 2 744 26 031 153 942 382 426

Revenue 1996 (USD m) 13 109 4 012 4 480 13 361 1 130 3 491 2 693 30 591 42 067 3 133 1 841 156 1 952 24 189 111 574 14 919 318 6 755 8 413 2 142 3 437 2 535 3 822 417 11 630 7 577 7 687 3 066 30 539 222 256 583 293

Revenue 1997 (USD m) 13 463 3 736 4 244 17 080 1 452 3 485 3 071 28 620 43 698 3 285 2 138 151 2 131 23 880 109 958 9 097 306 8 770 7 890 2 249 3 609 2 593 3 959 451 14 254 6 910 6 794 3 983 35 782 256 801 623 841

Revenue 1998 (USD m) 12 850 4 120 5 101 18 539 1 833 3 760 3 634 28 878 49 091 4 304 2 513 167 1 912 26 468 105 886 12 784 341 9 207 9 491 2 041 5 018 3 620 4 215 480 15 961 7 393 7 699 5 017 45 000 272 801 670 122

Revenue 1999 (USD m) 14 098 4 997 5 896 18 472 2 110 4 146 4 041 33 153 50 707 4 254 3 071 191 2 448 26 696 136 760 13 557 364 10 537 10 719 2 173 4 910 4 592 4 730 444 18 202 7 421 7 535 5 462 50 806 301 648 754 140

Revenue 2000 (USD m) 14 656 4 440 6 095 20 072 2 316 4 173 4 004 27 186 51 038 4 297 3 210 253 2 249 24 590 157 582 18 168 342 13 196 10 150 2 224 4 562 5 427 4 981 804 18 652 6 867 7 559 6 215 54 608 335 023 814 938

Revenue 2001 (USD m) 13 382 5 043 6 716 20 102 2 558 4 216 4 233 29 270 57 075 4 995 3 613 216 2 478 26 930 141 943 18 131 372 14 890 11 607 2 117 5 130 6 583 5 431 942 21 745 7 219 7 879 5 888 55 828 344 762 831 294

Revenue CAGR 2000-2001 -8.7 13.6 10.2 0.1 10.4 0.5 5.7 7.7 11.8 16.3 12.5 -14.8 10.2 9.5 -9.9 -0.2 9.0 12.8 14.4 -4.8 12.4 21.3 9.0 17.1 16.6 5.1 4.2 -5.3 2.2 2.9 2.0

Revenue CAGR 1996-2001 0.4 4.7 8.4 8.5 17.7 3.8 9.5 -0.9 6.3 9.8 14.4 6.7 4.9 2.2 4.9 4.0 3.2 17.1 6.6 -0.2 8.3 21.0 7.3 17.7 13.3 -1.0 0.5 13.9 12.8 9.2 7.3

Revenue CAGR 1991-2001 3.4 5.6 9.1 4.7 18.1 5.8 7.1 3.6 7.2 14.0 22.7 9.2 6.9 4.0 10.5 11.5 9.2 10.7 8.4 3.6 8.8 19.0 12.5 .. 8.0 2.4 4.3 7.9 7.9 8.4 8.1

OECD Communications Outlook 2003

70

Table 3.1. Telecommunication revenue in the OECD area

Telecommunication Market Size

Table 3.2. Telecommunication revenue as a percentage of GDP 1985

1990

1995

1997

1998

1999

2000

2001

GDP per capita 2001 (USD)

Australia

1.92

2.81

2.99

3.24

3.45

3.47

3.76

3.85

17 817

Austria

1.68

1.75

1.82

1.82

1.95

2.39

2.36

2.68

23 145

Belgium

1.27

1.37

1.56

1.74

2.03

2.35

2.68

2.93

22 323

Canada

2.21

2.12

2.09

2.71

3.05

2.85

2.85

2.90

22 325

..

1.69

1.91

2.74

3.23

3.86

4.56

4.53

5 484

Czech Republic Denmark

1.49

1.77

2.07

2.06

2.18

2.38

2.60

2.61

30 154

Finland

1.50

1.62

1.95

2.50

2.82

3.15

3.33

3.51

23 212

France

1.65

1.55

1.94

2.04

1.99

2.30

2.09

2.24

22 079

Germany

1.60

1.49

1.87

2.08

2.29

2.41

2.75

3.10

22 378

Greece

1.33

1.55

2.38

2.70

3.54

3.40

3.78

4.60

10 213

Hungary

..

..

3.45

4.68

5.34

6.39

6.89

6.96

5 098

Iceland

1.29

1.35

1.92

2.07

2.06

2.25

2.98

2.80

27 016

Ireland

2.31

2.76

2.65

2.67

2.21

2.58

2.37

2.40

26 848

Italy

1.48

1.46

1.68

2.05

2.22

2.26

2.30

2.48

18 943

Japan

1.58

1.52

2.01

2.55

2.69

3.04

3.31

3.43

32 556

Korea

2.05

2.05

2.17

1.91

4.03

3.34

3.94

4.29

8 917

Luxembourg

1.03

1.33

1.66

1.74

1.81

1.86

1.82

1.96

42 968

Mexico

0.52

1.53

2.27

2.19

2.19

2.19

2.28

2.54

5 926

Netherlands

1.45

1.71

2.05

2.10

2.41

2.70

2.76

3.06

23 725

New Zealand

2.46

3.33

3.44

3.41

3.77

3.88

4.38

4.51

12 199

Norway

1.91

2.02

2.14

2.33

3.40

3.20

2.82

3.24

35 087

..

0.88

1.69

1.80

2.28

2.96

3.45

3.93

4 334

2.66

1.93

2.83

3.70

3.76

4.13

4.72

4.96

10 889

Poland Portugal Slovak Republic

..

..

1.72

2.21

2.25

2.25

4.17

5.13

3 411

Spain

1.44

1.69

1.89

2.54

2.72

3.03

3.34

3.75

14 417

Sweden

1.78

2.24

2.91

2.89

3.08

3.06

3.00

3.44

23 583

Switzerland

2.15

2.14

2.62

2.65

2.94

2.91

3.16

3.19

34 123

Turkey

1.03

1.37

1.08

2.10

2.50

2.95

3.12

3.98

2 157

United Kingdom

2.36

2.59

2.50

2.69

3.14

3.50

3.81

3.89

23 890

United States

2.67

2.54

2.71

3.11

3.13

3.28

3.42

3.51

34 419

OECD 2.13 2.00 2.25 2.63 2.81 Note: Using current exchange rates and current market prices. Source: OECD.

3.00

3.20

3.35

21 814

71

© OECD 2003

1999

Name of PTO

Country

Major foreign telecom operator shareholders, 2001

Telstra

Australia

Telekom Austria

Austria

Telecom Italia (29.78)

Belgacom

Belgium

SBC (17%), TDC (16.5%), Singapore Telecom (12.5%)

1

Revenue (USD m)

Group foreign revenue (USD m)

2000 Foreign revenue as % of total

Revenue (USD m)

2001

Group foreign revenue (USD m)

Foreign revenue as % of total

Revenue (USD m)

Group foreign revenue (USD m)

Foreign revenue as % of total

12 800

370

2.9

13 362

618

4.6

10 778

793

7.4

3 966

..

..

3 575

136

3.8

3 521

251

7.1

Bell Canada Enterprises

Canada

SBC (20%)

9 540

728

7.6

11 669

881

7.5

14 007

2 063

14.7

Telus

Canada

Verizon (23.7%)

3 941

..

..

4 098

..

..

4 647

..

..

Czech Republic

KPN (6.5%), Swisscom, AT&T (27%)

1501

..

..

1 482

..

..

1 470

..

..

TDC (TeleDanmark)

Denmark

SBC (41.6%)

5 762

2 407

41. 8

5 787

2 690

46.5

6 500

3 522

54.2

Elisa

Finland

1 138

57

5.0

1 141

90

7.9

1 285

48

3.7

Sonera

Finland

1 841

92

5.0

1 887

139

7.4

1 953

133

6.8

France Telecom

France

29 000

3 843

13. 3

30 894

7 982

25.8

38 416

13 750

35.8

4 087

23

0.6

4 835

150

3.1

6 821

1 132

16.6

Czech Telecom

BT (26%), Vodafone (15%), SBC (15%)

Cegetel / SFR

France

Deutsche Telekom

Germany

35 325

2 988

8.5

37 559

7 156

19.1

43 133

11 786

27.3

OTE

Greece

3 622

17

0.5

3 299

56

1.7

3 643

68

1.9

Siminn

Iceland

191

..

..

224

..

..

187

..

..

29 425

1 739

5.9

24 926

3 290

13.2

27 516

3 742

13.6 11.0

2

Telecom Italia

Italy

Matav

Hungary

1 623

..

..

1 580

..

..

1 912

210

Eircom

Ireland

2 313

..

..

1 806

20

1.1

1 927

..

..

NTT

Japan

91 156

..

..

105 912

6

..

96 121

51

0.1

KT

Korea

9 914

..

..

11 970

..

..

12 351

..

..

P&T

Luxembourg

327

..

..

283

..

..

285

..

..

Telmex

Mexico

10 075

..

..

11 262

..

..

11 881

..

..

America Movil

Mexico

1693

168

9.9

3 181

723

22.7

4 429

974

22.0

9 722

921

9.5

12 395

1 859

15.0

11 481

2 526

22.0

2 299

471

20.5

2 562

813

31.7

2 326

757

32.5

4 291

748

17.4

4 270

379

8.9

5 121

731

14.3

KPN Telecom

Netherlands

Telecom, NZ

New Zealand

Telenor

Norway

Deutsche Telekom (59.52%)

SBC (8.1%)

Verizon (21.5%)

OECD Communications Outlook 2003

72

Table 3.3. Globalisation of selected telecommunication carrier revenues

© OECD 2003

© OECD 2003

Table 3.3. Globalisation of selected telecommunication carrier revenues (continued) 1999

Name of PTO

Country

Major foreign telecom operator shareholders, 2001

TPSA

Poland

France Telecom (33.93%)

Portugal Telecom

Portugal

Slovak Telecom

Slovak Republic

Telefonica

Spain

Deutsche Telekom (51%)

Revenue (USD m)

Group foreign revenue (USD m)

2000 Foreign revenue as % of total

Revenue (USD m)

2001

Group foreign revenue (USD m)

Foreign revenue as % of total

Revenue (USD m)

Group foreign revenue (USD m)

Foreign revenue as % of total

3 317

..

..

3 650

..

..

4 236

..

..

3 429

303

8.8

4 721

1 508

31.9

5 113

1 252

24.5

445

..

..

399

..

..

416

0

0.0

24 459

14 214

58. 1

26 133

11 349

43.4

27 726

10 611

38.3

Tele2

Sweden

992

187

18. 8

1 358

485

35.7

2 428

1 551

63.9

Telia

Sweden

6 310

649

10.3

5 902

829

14.0

5 537

1 050

19.0 27.8

Swisscom

Switzerland

7 440

676

9.1

8 393

2 441

29.1

8 513

2 363

Cable & Wireless

United Kingdom

14 840

10 366

69. 9

12 271

9 021

73.5

8 567

5 139

60.0

Vodafone

United Kingdom

12 698

8 019

63. 2

22 733

17 515

77.0

33 109

27 655

83.5

Colt

United Kingdom

648

353

54. 5

1 041

697

67.0

1 313

940

71.6

BT

United Kingdom

35 327

2 506

7.1

31 921

8 315

26.0

31 616

7 807

24.7

MMo2

United Kingdom

..

..

..

5 812

1 667

28.7

6 197

2 130

34.4

Bell South

United States

25 224

2 358

9.3

26 151

2 906

11.1

24 130

2 910

12.1

Level3

United States

515

22

4.3

1 184

125

10.6

1 533

174

11.4

Verizon

United States

58 194

1 714

2.9

64 707

1 976

3.1

67 109

2 337

3.5

SBC

United States

49 531

255

0.5

51 374

328

0.6

45 908

185

0.4

518 922

56 194

10.8

567 712

86 151

15.2

585 161

108 641

18.6

Total of above

1. Bell Canada Enterprises purchased SBC shares in June 2002. 2. Telecom Italia announced its intention to sell its stake in Telekom Austria in 2002. Source: OECD.

Telecommunication Market Size

73

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD Source: OECD.

1995 (USD m) 1 776.71 .. 419.50 1 662.84 112.11 312.14 512.36 2 140.68 6 828.67 293.53 286.38 13.15 .. 2 847.88 25 292.37 2 216.80 15.34 449.53 859.70 206.12 478.86 .. 397.36 3.57 613.47 848.11 539.83 55.18 2 539.68 18 627.00 70 348.89

% of total revenue 15.96 .. 9.73 13.65 11.26 8.37 20.23 7.10 14.77 10.49 18.58 9.92 .. 15.41 23.72 20.87 5.11 6.92 10.15 9.83 15.29 .. 13.04 1.13 5.57 12.13 6.69 3.03 8.90 9.35 13.05

1998 (USD m) 3 564 937 1 167 2 958 597 829 1 295 4 385 12 472 1 127 712 36 490 7 706 45 697 3 798 26 815 2 164 315 1 272 668 1 155 25 4 327 1 351 1 237 336 6 000 37 032 144 492

% of total revenue 27.74 22.75 22.88 15.96 32.58 22.05 35.64 15.18 25.41 26.18 28.33 21.41 25.60 29.12 43.16 29.71 7.57 8.85 22.81 15.42 25.35 18.46 27.40 5.31 27.11 18.28 16.07 6.69 13.33 13.57 21.56

1999 (USD m) 3 861 1 823 1 600 3 155 850 993 1 588 6 393 16 428 1 564 764 46 987 8 785 60 028 7 284 81 1 350 2 580 481 1 350 1 416 1 549 13 6 295 1 532 2 527 670 7 903 50 152 194 047

% of total revenue 27.38 36.48 27.14 17.08 40.28 23.95 39.30 19.28 32.40 36.76 24.89 24.18 40.33 32.91 43.89 53.73 22.23 12.81 24.07 22.16 27.49 30.83 32.75 2.84 34.59 20.65 33.53 12.28 15.56 16.63 25.73

2000 (USD m) 3 686 2 587 2 052 3 747 1 162 983 1 666 7 120 15 478 1 670 1 043 111 1 341 9 444 74 948 10 905 82 2 944 3 412 625 1 239 1 931 1 980 276 7 544 1 571 2 776 861 10 455 63 280 236 918

% of total revenue 25.15 58.27 33.67 18.67 50.16 23.56 41.61 26.19 30.33 38.88 32.49 43.76 46.48 38.40 47.56 60.02 24.04 22.31 33.62 28.10 27.16 35.59 39.74 34.30 40.45 22.88 36.72 13.85 19.14 18.89 29.07

2001 (USD m) 3 488 3 006 2 707 4 287 1 414 1 032 1 796 8 803 16 204 1 802 1 312 104 1 649 11 986 75 382 10 800 112 4 247 4 129 612 1 304 2 621 2 495 354 8 954 1 772 3 322 758 11 864 76 474 264 793

% of total revenue 26.06 59.60 40.30 21.33 55.29 24.48 42.42 30.07 28.39 36.08 36.32 48.18 50.52 44.51 53.11 59.57 29.98 28.52 35.58 28.91 25.43 39.81 45.94 37.62 41.18 24.55 42.17 12.88 21.25 22.18 31.85

OECD Communications Outlook 2003

74

Table 3.4. Mobile telecommunication revenue

© OECD 2003

© OECD 2003

Table 3.5. Telecommunication revenue ratios 1998 (USD)

847.27 683.58 748.71 729.62 388.71 701.13 602.58 627.66 812.59 565.47 550.22 591.11 741.24 565.98 918.00 366.92 931.26 693.51 853.96 676.33 995.10 346.78 586.14 239.25 669.45 707.73 1 178.33 245.11 987.93 1 060.78 834.90

1999 (USD)

Per capita

Per access path (fixed + mobile)

684.95 509.97 499.93 612.89 178.03 708.93 705.13 494.51 598.46 409.29 248.47 608.93 516.11 464.02 837.13 276.19 799.64 96.23 604.24 538.26 1 132.41 93.63 422.88 89.09 404.54 835.25 1 082.83 77.44 759.66 1 008.47 605.42

825.06 611.97 697.95 668.98 363.93 666.13 613.12 568.48 711.71 442.96 563.54 530.39 768.51 467.22 1 068.64 267.09 761.50 564.71 653.01 658.17 829.29 319.39 531.36 190.46 557.80 636.44 927.62 211.17 880.04 1 067.16 792.78

2000 (USD)

Per capita

Per access path (fixed + mobile)

742.63 617.47 576.61 605.67 205.19 779.08 781.47 565.54 617.72 403.73 305.07 688.82 653.59 467.71 1 079.52 290.81 840.52 107.98 677.87 570.09 1 100.42 118.79 473.54 82.36 459.35 837.77 1 054.78 82.98 853.88 1 105.16 676.79

745.05 441.61 559.02 653.99 281.83 583.24 553.47 395.07 518.56 360.94 446.06 618.84 589.07 349.12 1 109.55 335.73 545.60 498.50 475.09 565.16 682.47 272.30 453.73 282.51 436.65 525.21 765.48 185.64 695.36 1 078.90 720.96

2001 (USD)

Per capita

Per access path (fixed + mobile)

Per capita

762.33 547.53 594.55 652.33 225.47 781.39 772.85 461.62 620.86 405.30 320.27 899.36 593.95 429.98 1 241.53 386.49 778.91 135.51 637.29 580.65 1 015.90 140.42 497.73 148.92 467.14 773.96 1 052.14 92.13 913.84 1 216.62 727.18

598.04 471.15 523.56 622.50 231.00 541.05 552.87 379.99 525.92 353.26 392.81 504.86 534.94 340.53 951.97 322.27 477.76 418.37 497.12 505.67 732.04 242.85 439.59 247.15 443.63 520.25 739.28 157.52 684.09 1 074.04 676.36

686.80 620.50 654.41 646.75 248.66 786.80 814.77 494.49 693.41 470.20 354.71 756.02 645.42 469.59 1 115.81 382.96 844.10 150.24 726.04 549.93 1 136.40 170.37 539.83 175.06 540.03 811.48 1 089.65 85.82 930.27 1 209.59 731.74

75

Telecommunication Market Size

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD Source: OECD.

Per access path (fixed + mobile)

OECD Communications Outlook 2003

Table 3.6. Cellular mobile telecommunication revenue per cellular mobile subscriber USD 1994

1995

1996

1997

1998

1999

2000

2001

881

792

533

548

725

611

431

313

..

..

..

747

407

424

423

445

Belgium

1 933

1 785

..

679

664

502

365

352

Canada

703

642

610

490

552

456

428

395

2 965

2 452

755

705

618

437

267

204

Australia Austria

Czech Republic Denmark

462

380

507

528

429

378

292

261

Finland

505

493

464

425

455

485

447

430

France

875

1 487

1 329

818

391

310

240

238

1 129

1 829

1 571

1 234

896

701

321

288

215

1 075

915

839

548

402

282

226

1 021

1 073

1 284

1 088

687

477

339

264

428

426

434

413

337

267

515

441

Germany Greece Hungary Iceland Ireland

..

..

876

725

518

617

664

595

886

726

724

564

380

292

224

240

Japan

3 132

2 160

1 388

1 140

966

1 056

1 122

1 008

Korea

1 232

1 351

1 338

506

272

311

407

372

960

571

465

335

199

388

271

258

Mexico

1 570

653

501

378

243

175

209

195

Netherlands

Italy

Luxembourg

1 543

1 601

732

843

647

380

310

318

New Zealand

412

488

..

292

251

312

286

253

Norway

488

488

572

495

604

492

368

354

Poland (TPSA) Portugal Slovak Republic Spain Sweden

..

..

..

453

347

363

286

244

1 176

1 166

1 023

653

376

332

297

313

..

290

..

..

55

19

249

165

842

660

767

735

614

423

315

304

407

422

444

348

329

299

247

248

1 007

1 210

1 134

906

728

826

598

630

Turkey

353

126

339

353

96

86

57

41

United Kingdom

488

448

573

609

462

330

241

256

United States

630

593

588

597

535

583

578

595

Switzerland

OECD 924 944 854 746 589 540 461 433 Note: Data for 1999 are missing for Iceland (TAL), Netherlands (Dutchtone, Telfort, Ben), Luxembourg (P&T), Turkey (Telsim). Source: OECD.

76

© OECD 2003

© OECD 2003

Table 3.7. International telecommunication revenue International revenue (USD m) 1998 1 279 .. .. .. 228 302 226 1 772 2 761 589 181 15 .. 1 544 2 422 522 .. 1 367 .. 217 65 .. .. 59 760 312 968 131 2 333 20 056 38 108

International revenue (USD m) 1999 1 161 295 369 .. 182 191 203 1 312 2 044 576 185 17 .. 1 283 2 235 483 .. 1 599 678 185 53 .. .. 45 751 287 799 164 2 258 20 360 37 713

International revenue (USD m) 2000 1 006 218 273 .. 100 233 154 1 105 1 269 373 147 10 .. 978 2 069 536 .. 1 768 545 161 42 343 241 39 1 037 234 468 110 1 818 23 325 38 603

International revenue (USD m) 2001 .. 200 226 .. 58 115 .. 1 005 1 245 336 123 7 .. 875 .. 486 .. 1 470 527 150 42 327 340 34 930 153 .. 139 1 594 17 885 28 268

As % of total national revenue 2000 6.86 4.90 4.48 .. 4.33 5.59 22.8 4.06 2.49 0.03 4.57 4.04 .. 3.98 1.31 2.95 .. 13.40 5.37 7.25 0.93 6.32 4.83 4.90 5.56 3.42 6.19 1.78 3.33 6.96 4.74

As % of total national revenue 2001 .. 3.97 3.37 .. 2.27 2.73 .. 3.43 2.18 6.73 3.39 3.36 .. 3.25 .. 2.68 .. 9.87 4.54 7.10 0.81 4.97 6.25 3.60 4.28 2.39 .. 2.36 2.86 5.19 3.40

Per total national access paths (fixed + mobile) (USD) 2001 .. 18.68 17.62 .. 5.24 14.74 .. 13.05 11.47 23.78 13.33 16.96 .. 11.07 .. 8.64 .. 41.30 22.56 35.93 5.94 12.06 27.49 8.90 18.98 11.04 .. 3.72 19.53 55.72 23.00

77

Telecommunication Market Size

Australia Austria Belgium Canada1 Czech Republic2 Denmark (TDC) Finland France (France Telecom) Germany Greece (OTE) Hungary (Matav) Iceland (Telecom) Ireland Italy Japan (KDD) Korea (Korea Telecom) Luxembourg Mexico Netherlands (KPN) New Zealand (Telecom) Norway Poland (TPSA) Portugal (Telecom) Slovak Republic Spain Sweden Switzerland (Swisscom) Turkey United Kingdom United States OECD 1. Total revenue for Teleglobe. 2. Cesky Telecom only for 2001. Source: OECD.

International revenue (USD m) 1997 1 276 .. 552 1 441 241 370 213 2 164 2 836 548 124 .. 358 1 467 2 604 690 .. 1 887 1 067 303 .. .. 478 74 922 353 948 143 2 459 20 355 43 872

Outgoing MiTT Outgoing MiTT Outgoing MiTT per access path per access path per capita (fixed + mobile) (fixed + mobile) 1999 1998 1999 Australia 90.1 111.4 111.4 123.8 Austria 137.8 184.7 145.6 144.3 Belgium 143.1 214.3 122.2 147.9 Canada 158.9 189.1 191.2 211.1 Czech Republic 33.0 72.0 .. .. Denmark 109.7 108.5 123.2 105.4 Finland 79.8 68.2 83.4 65.4 France 68.4 86.9 74.8 75.2 Germany 71.6 97.2 96.3 110.9 Greece 65.1 89.9 69.3 76.0 Hungary 29.3 64.9 32.4 59.9 Iceland 166.1 161.2 181.7 139.9 Ireland 238.9 343.1 271.0 318.7 Italy 40.1 48.9 44.6 44.5 Japan 14.4 15.7 15.4 15.3 Korea 19.5 25.9 20.6 18.9 Luxembourg 688.9 802.3 737.8 668.4 Mexico 13.8 99.1 16.0 83.8 Netherlands 114.9 162.4 136.0 131.0 New Zealand (Telecom) 124.7 156.7 149.8 173.0 Norway 124.1 109.0 143.0 107.7 Poland 15.6 57.7 16.1 43.4 Portugal 47.2 65.4 41.0 46.0 Slovak Republic 28.6 76.9 30.1 69.6 Spain 34.6 57.3 41.7 50.7 Sweden 143.0 121.2 171.1 130.0 Switzerland 286.1 311.3 337.9 297.2 Turkey 9.9 31.5 11.4 29.1 United Kingdom 97.9 127.3 116.0 119.5 United States 89.6 94.3 104.5 100.9 OECD 61.6 85.0 71.4 83.6 Notes: MiTTs are minutes of international telecommunications traffic. OECD is a weighted average. Source: OECD, ITU. Outgoing MiTT per capita 1998

Outgoing MiTT per capita 2000 .. 156.8 150.5 234.8 35.0 164.0 90.3 .. 112.2 .. 32.9 151.3 .. 48.8 17.2 13.7 867.8 19.3 .. 163.9 149.4 17.5 51.1 30.0 53.7 142.7 392.0 10.8 123.8 109.3 68.1

Outgoing MiTT per access path (fixed + mobile) 2000 .. 126.5 141.5 235.4 43.8 122.4 64.7 .. 93.7 .. 45.8 104.1 .. 39.6 15.3 11.9 607.9 71.1 .. 159.6 100.4 33.9 46.5 57.0 50.2 96.8 285.2 21.9 94.2 96.9 67.5

Outgoing MiTT per capita 2001 .. 128.4 172.2 .. 31.3 160.5 104.1 .. 111.0 64.7 30.5 147.6 .. 53.5 .. .. 894.7 20.6 133.0 158.2 155.9 11.1 54.7 32.1 66.7 152.1 383.9 9.8 135.0 116.8 64.9

Outgoing MiTT per access path (fixed + mobile) 2001 .. 97.5 137.8 .. 29.1 110.4 70.6 .. 84.2 48.6 33.8 98.5 .. 38.8 .. .. 506.4 57.3 91.1 145.5 100.4 15.8 44.5 45.4 54.8 97.5 260.5 18.1 99.3 103.7 60.0

OECD Communications Outlook 2003

78

Table 3.8. International telecommunication traffic

© OECD 2003

© OECD 2003

Table 3.9. Leased line revenue, selected incumbents/countries USD millions

1997

1998

1999

2000

2001

Leased line revenue as a % of total company revenue 1999

Leased line revenue as a % of total company revenue 2001

Change 1998-99 (%)

Change 2000-01 (%)

Telstra

Australia

..

..

..

264.0

173.1

..

1.6

..

Telekom Austria

Austria

..

213.3

231.4

208.9

229.1

2.3

6.5

8.5

9.7

All operators1

Belgium

256.0

270.8

354.4

305.6

300.6

6.0

4.5

30.9

-1.6

Czech Telecom

Czech Republic

Tele Danmark

Denmark

Sonera

-34.4

48.2

51.7

54.1

51.3

63.1

3.6

4.3

4.5

22.9

175.0

178.5

184.1

182.4

187.3

3.2

2.9

3.1

2.6

Finland

18.9

24.9

31.9

47.7

50.0

1.7

2.6

28.0

4.8

France Telecom

France

909.0

1 106.6

1 108.6

1 151.4

1 150.9

4.0

3.0

0.2

0.0

All operators2

Germany

1 087.6

865.5

1 250.0

1 132.0

1 226.0

2.3

2.6

44.4

..

OTE

Greece

..

..

155.2

146.9

166.2

..

4.6

..

13.1

Matav

Hungary

40.7

48.9

58.3

58.3

62.9

3.6

3.3

19.0

7.8

Telecom Italia

Italy

1 782.0

1 702.4

1 376.1

1 339.3

5.8

4.9

-4.5

-2.7

NTT

Japan

4 034.7

3 874.3

4 388.6

4 583.8

4 311.7

4.8

30.8

13.3

-5.9

KT

Korea

..

486.6

796.6

931.1

864.5

..

7.0

63.7

-7.2

Telenor

Norway

115.9

114.8

103.9

100.5

115.7

1.4

2.3

-9.5

15.2

TPSA

Poland

..

..

110.1

130.5

126.6

3.3

3.0

..

-3.0

Portugal Telecom

Portugal

102.2

114.3

144.6

143.8

145.0

4.2

2.8

26.5

0.9

Telefonica

Spain

670.2

756.0

821.9

893.4

833.2

3.4

3.0

8.7

-6.7

Telia

Sweden

204.5

179.8

188.9

102.0

120.3

3.0

2.2

5.1

18.0

Swisscom

Switzerland

..

..

253.3

231.4

200.6

..

2.4

..

-13.3

Türk Telekom

Turkey

BT

United Kingdom

Local and long distance carriers

United States

8.0

8.4

100.0

132.3

2.7

2.6

4.5

32.3

1 888.0

1 830.6

1 653.0

1 505.8

5.2

4.8

-3.0

-8.9

18 786.0

22 355.0

26 083.0

33 053.0

38 368.0

8.6

11.1

16.7

16.1

28 314.1

34 319.0

39 860.0

46 847.0

51 672.0

3.9

30.7

16.1

10.3

79

Telecommunication Market Size

Total of above 1. Belgacom only for 1997-98. 2. Deutsche Telekom only for 1997-98. Source: OECD.

6.9 1 858.1

PTO NTT Deutsche Telekom

R&D expenditure (1997)

R&D as a % of total revenue (1997)

R&D expenditure (1999)

R&D as a % of total revenue (1999)

R&D expenditure (2001)

R&D as a % of total revenue (2001)

2 388

3.1

3 140

3.4

3 216

3.3

692

1.8

697

2.0

804

1.9

BT

502

2.0

556

1.6

525

1.7

France Telecom

918

3.5

632

2.2

506

1.3

AT&T

829

1.6

550

0.9

325

0.6

Korea Telecom

113

2.2

258

2.6

293

2.4

Telefonica

153

0.8

96

0.4

153

0.6

Telia

202

3.3

190

3.0

126

2.3

..

..

352

1.2

123

0.4

SK Telecom

41

1.7

89

2.4

119

1.8

Vodafone

55

1.4

74

0.6

104

0.3

113

3.1

68

1.6

102

2.0

Telecom Italia

Telenor Sonera

52

3.5

64

3.5

73

3.7

KPN Telecom

60

0.8

59

0.6

41

0.4

Elisa

..

..

16

1.4

32

2.5

Telekom Austria

..

..

20

0.6

19

0.5

Hanaro Telecom

..

..

6

28.4

10

1.6

Dacom

3

0.6

6

1.0

4

0.5

Telecom New Zealand

4

0.2

5

0.1

3.4

0.1

Qwest

..

..

36

0.9

..

..

Telstra

43

0.3

19

0.1

..

..

..

..

11

0.3

..

..

18

0.4

7

0.1

..

..

169

1.2

18

0.1

..

..

6 355

1.7

6 970

2.5

6 578

1.5

OTE Belgacom Cable & Wireless

© OECD 2003

Total/average of above

OECD Communications Outlook 2003

80

Table 3.10. R&D expenditures for PTOs and telecommunications equipment manufacturers USD millions

© OECD 2003

Table 3.10. R&D expenditures for PTOs and telecommunications equipment manufacturers (continued) USD millions R&D expenditure (1997)

Manufacturer

R&D as a % of total revenue (1997)

USPTO patents granted (1997)

R&D expenditure (1999)

R&D as a % of total revenue (1999)

USPTO patents granted (1999)

R&D expenditure (2001)

R&D as a % of total revenue (2001)

USPTO patents granted (2001)

Ericsson

3 175

14.5

181

4 201

16.0

657

4 511

20.1

775

Motorola

2 748

9.2

1 058

3 440

11.1

1 192

4 300

14.3

778

Cisco

1 050

12.4

..

1 663

13.7

45

3 922

17.6

163

Lucent

3 023

11.5

768

3 563

13.2

1 152

3 520

16.5

1 109

Nortel

2 147

13.9

64

2 724

13.9

240

3 292

18.8

461

Fujitsu

3 199

7.8

903

3 520

7.6

1 192

2 878

7.0

1 116

NEC

2 880

7.0

1 095

2 767

5.5

1 842

2 745

6.5

1 953

Nokia Alcatel Siemens1 2

879

8.7

47

1 793

8.9

268

2 665

9.6

291

2 844

8.9

68

2 181

9.5

115

2 589

11.3

315

2 312

..

454

2 446

18.8

722

2 461

10.1

793

1 213

8.3

582

1 697

6.5

1 455

1 690

6.2

1 450

..

..

746

994

12.1

1 124

1 128

12.9

1 440

GEC Marconi

407

6.5

7

611

7.1

13

910

14

3

LG Electronics

457

4.7

110

353

4.0

224

588

4.6

245

Corning1

117

6.5

264

245

9.8

340

474

10.6

241

Qualcom

349

10.4

45

340

10.6

110

415

15.5

173

3Com

270

12.9

..

611

14.1

90

286

19.3

220

..

..

..

42

40.4

..

156

17.5

..

12.4

10 781

38 529

12.9

11 526

Samsung Electronics

Matsushita Communications3

Juniper Networks

Total/average 27 071 9.5 6 392 33 190 of above 1. Siemens and Corning R&D expenditure data are proportional for communications sales. 2. Samsung R&D expenditure for 2001 are 2000 data. 3. Matsushita patent data for 2001 are for Matsushita Electrical and Industrial. Source: OECD.

Telecommunication Market Size

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OECD Communications Outlook 2003

Table 3.11. United States Patent and Trademark Office (USPTO): Number of patents granted to selected telecommunication operators 1995 AT&T1

1996

1997

1998

1999

2000

2001

Total (1995-2002) 1 057

..

..

46

150

278

294

289

BT

55

48

35

70

77

70

94

449

France Telecom

35

47

36

63

47

39

35

302

NTT (including mobile)

3

12

25

49

32

67

78

266

Telecom Italia (SIP and CSELT)

7

15

16

11

7

7

11

74

Telia

1

5

9

13

10

9

4

51 50

Deutsche Telekom

0

0

2

8

9

6

25

Qwest Communications International

..

..

..

..

..

..

40

40

KPN

0

0

0

0

13

16

1

30

Telstra

1

3

3

5

5

0

3

20

Telefonica

0

2

1

8

1

2

0

14

SK Corportation

..

..

0

0

1

6

5

12

Korea Telecom

0

1

0

0

4

0

6

11 10

Bell Canada

2

0

1

1

2

2

2

Sonera

..

..

0

0

2

2

1

5

Total 104 133 174 378 1. Data for AT&T prior to 1997 include Lucent. Reports: www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_01.pdf Telecom definition: www.uspto.gov/go/classification/uspc379/defs379.htm Source: USPTO.

488

520

594

2 391

82

© OECD 2003

Telecommunication Market Size

Table 3.12. Electric communication technique patents granted by the USPTO, filed to the European Patent Office (EPO) and the Japan Patent Office (JPO) Patent families by country of invention

Australia

CAGR 1995-2000

1995

1996

1997

1998

1999

2000

2

8

7

14

13

17

51.3 34.1

Austria

3

8

5

5

9

11

Belgium

15

25

14

34

22

19

4.8

Canada

16

32

23

52

46

38

18.2

0

0

0

1

0

0

..

Czech Republic Denmark

3

7

3

2

9

9

21.6

Finland

28

42

41

77

102

98

28.3

France

117

134

111

142

171

158

6.2

Germany

8.8

102

117

93

143

131

155

Greece

0

1

1

1

0

0

..

Hungary

0

1

1

2

1

2

.. 14.9

Iceland

1

1

0

1

1

2

Ireland

0

3

1

2

0

3

..

14

19

22

21

23

16

2.3

Japan

805

867

680

1 037

934

970

3.8

Korea

25

47

48

53

56

57

17.9

Italy

Luxembourg

0

0

0

0

0

0

..

Mexico

0

0

0

0

1

1

..

Netherlands

95

91

63

94

101

92

-0.8

New Zealand

0

0

1

2

1

0

..

Norway

0

2

2

3

1

2

..

Poland

0

0

0

1

0

1

..

Portugal

0

1

1

0

0

0

..

Slovak Republic

0

0

0

0

0

0

..

Spain

1

5

3

5

3

3

24.6

Sweden

48

79

69

105

134

134

22.9

Switzerland

17

11

18

18

28

20

2.8

0

0

0

0

0

0

..

United Kingdom

106

113

110

165

197

156

8.2

United States

867

965

895

1 264

1 237

1 183

6.4

2 263

2 579

2 211

3 241

3 222

3 143

6.8

Turkey

OECD European Union World

530

644

537

794

903

852

9.9

2 280

2 604

2 234

3 277

3 260

3 182

6.9

OECD as % of world 99.3 99.0 99.0 98.9 98.8 98.8 Note: Electric communication technique corresponds to class H04 from the International Patent Classification. The reference for counting and year is the USPTO grant. Source: OECD, Patent Database, September 2002.

83

© OECD 2003

Chapter 4

NETWORK DIMENSIONS AND DEVELOPMENT

Abstract. Access to communication networks continues to expand across the OECD area. At the end of 2001 the total number of fixed channels and mobile subscribers was 1.2 billion. This represented an 8.7% increase from 2000. This chapter examines investment in network expansion and development, and specifically looks at the process of digitalisation and mobile access.

85

© OECD 2003

OECD Communications Outlook 2003

A

ccess to communication networks continues to expand across the OECD area. At the end of 2001 the total number of fixed channels and mobile subscribers was 1.2 billion (Table 4.1). This represented an 8.7% increase from 2000. During a decade in which all OECD countries increasingly liberalised fixed and mobile markets, a compound annual growth rate of 10.9% was achieved. In the context of market liberalisation, 1998 was significant in the OECD area. It was the year when, for the first time, countries with open entry into fixed markets and three or more mobile operators represented the majority of OECD countries. Since that time more than half a billion fixed and mobile connections have been added to networks. With fixed and mobile access expanding by 148 million and 179 million connections respectively, 1999 and 2000 were banner years for the expansion of telecommunication connectivity. Access growth continued to expand in 2001, but at a slower rate than the previous two years. Just under 100 million fixed and mobile connections were added in 2001. While all the available evidence points to a continuation in growth during 2002 and beyond, the trend toward ever increasing growth in the number of new connections appears to be over. This is not to suggest that demand for telecommunication connectivity has declined, but rather that this demand is being expressed in different ways as fixed and wireless telecommunication networks continue to evolve. New access technologies are changing traditional platforms, in particular through the development of greater capacity for fixed and mobile connections, as well as making them closer substitutes.

Figure 4.1. Access channels per 100 inhabitants in OECD countries, 1992, 1997 and 2001 1992

1997

2001

Access channels per 100 inhabitants 90

90 80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0

Lu xe m

bo u Sw rg Sw e d itz e er n la N nd or D wa en y m C ark an ad U ni Fra a te n d ce St a Ic tes el an N Fin d et la he n rla d U ni Ge nds te r m d Ki an ng y do m Ja p G an re Au ece st ra l Ko ia re O a EC D I Be taly lg iu Au m st r Ire ia la n N ew S d p Ze ain al a Po nd rtu g Po al C ze Hu land c n Sl h R ga ov e ry ak pu R blic ep ub Tu lic rk M ey ex ic o

80

86

Source: OECD.

© OECD 2003

Network Dimensions and Development

It is worth considering these developments in greater detail, beginning with the fixed networks that still provide the core infrastructure for all telecommunication networks. In 2001, fixed access channels grew by only 0.1% compared to a compound annual growth rate of 3.9% for the previous decade. In nearly a third of OECD countries there was a slight decline in the number of fixed connections. One reason for this is that some substitution of cellular mobile connections for fixed connections is taking place. For some users, a mobile connection may simply meet all their requirements without the need for a fixed line. For other users, wireless service may be the most economical option in light of their usage patterns. Some users with low usage, for example, find prepaid cards to be the best way to budget for their needs. Alternatively, some high users may forego a fixed line connection because they have a mobile telephone provided by their employer for which personal use incurs little or no additional cost under certain tariff options. However, much of this substitution is taking place at the margin and it raises the question of why, despite the number of mobile phones exceeding the number of fixed connections by early 2002, more users are not giving up fixed connections. There are several factors at work. One reason that the number of fixed network channels is still expanding in the OECD area is that growth continues apace in countries with relatively low penetration rates for fixed networks. Moreover, for all but very low users with prepaid cards, wireless service is still priced at a premium compared with the fixed network. A further factor is that fixed networks are used for more purposes than telephony. Internet access, for example, is a prominent use for fixed networks. While cellular mobile networks can potentially substitute for some services that are akin to Internet access, they still do so in a limited way. In countries with relatively high penetrations of telecommunication networks, significant factors in the growth of connectivity during the latter half of the 1990s were second residential lines and additional channels via ISDN. Prior to the advent of the Internet, neither of these options had been greatly used. In the United States, between 1990 and 2000, the percentage of additional lines for households with a telephone service increased from 4% to just under 27%. In Germany, the demand for additional channels was met with a rapid increase in the residential take-up of ISDN. To a lesser extent, encouraged by the take-up of Internet use, the same trend toward additional residential lines, either through second lines or ISDN, was also evident in other OECD countries. Thus, as wireless penetration increased, users did not give up their fixed line connection; the advent of the Internet was in fact a cause for the increase in the number of fixed line connections. However, as technology evolved, in particular with the appearance of asymmetrical digital subscriber lines (ADSL), greater demand for Internet access is now contributing to a decrease in the number of fixed network connections in some countries. In these cases, second lines may be given up in favour of a single DSL-enabled connection. In a number of countries with relatively high penetration rates, the expansion of fixed network access has been due to the additional channels enabled by ISDN rather than an increase in stand-alone connections. This is readily evident from the decline in the number of standard analogue telephone lines during 2001 in all but a small number of OECD countries, and the increase in the number of ISDN channels in most countries (Table 4.2, Table 4.3). One way to exclude the impact of ISDN is to count each such connection as one line and add that total to the number of standard analogue lines. In this way it is possible to show the change in the number of connections. This number is a more likely indicator of the impact of cellular mobile substitution for fixed connections. In 2001 the largest decreases occurred in the Slovak Republic and Norway, where the number of fixed connections decreased by 8.35% and 8.59% respectively. The Slovak Republic recorded the largest increase in mobile subscribers in 2001 – up 93.5%, which lifted that country’s penetration from 20.5 to 39.9 subscribers per 100 inhabitants. Austria, Belgium, Germany, Luxembourg, the Netherlands, Switzerland and the United States were other countries to experience an over 4% decrease in standard fixed lines. The increasing impact of very high cellular mobile penetrations is no doubt a factor in most of these countries. At the same time, in those countries with the leading broadband penetration, another phenomenon is residential users replacing “second lines” with DSL or cable modem connections. © OECD 2003

87

OECD Communications Outlook 2003

The widespread decrease in the number of fixed line connections suggests that wireless is substituting for some standard analogue fixed lines. In some countries with relatively low fixed network penetration rates, the fixed network is still growing but at a reduced rate. For example, Telmex added 1.9 million fixed network lines in 2001 but also experienced 615 000 disconnections. At the same time, the number of mobile subscriptions increased by nearly 8 million subscribers. Just under 92% of Mexican mobile subscribers use prepaid cards and one inference that might be drawn is that users who cannot afford the monthly subscription have substituted prepaid mobile service. In response to this development, Telmex has introduced a tariff option for the fixed network that is very similar to prepaid mobile options. In this case, users pay for the connection of a line but do not pay any monthly fee. They purchase Telmex prepaid calling cards at prices that are the same as for the use of public payphones. One advantage of this option over simply choosing a prepaid wireless service is that it is less expensive for the calling party to make a call to the fixed network. A similar phenomenon to those in Mexico and the Slovak Republic may also be at work in Turkey where growth of fixed network penetration has slowed over recent years. However, the fixed network is still growing in Mexico, Poland and Turkey because of the relatively low penetration rate. By way of contrast, in countries with higher penetration rates, the number of fixed network connections has started to decline. This raises the question of whether operators of fixed networks in these countries will also offer tariffs aimed at keeping customers on the fixed network rather than opting for prepaid cards for wireless service. In Japan and Korea, connection tariffs for the fixed network have already been radically changed so as not to put the fixed network at a disadvantage relative to wireless networks for new customers. In both these countries, the previous pricing structures, based on high tariffs for an initial connection to the network, became a disadvantage in attracting new subscribers compared to the wireless sector. In the wireless sector, greater competition has generally meant that there was a minimal connection charge and this was particularly attractive for young people seeking their first independent telephone connection. While the number of fixed network connections is declining in a growing number of countries, the demand for capacity is increasing. How this trend will develop over the longer term is an interesting question. While the use of ISDN continues to expand in most countries, its future growth is uncertain. The reason for this is that if additional capacity is now the main driver for opting for ISDN (rather than additional telephony access which is being met by cellular mobile), then it will be rapidly superseded by technologies providing greater bandwidth. To some extent this depends on the strategy of the incumbent. In countries where DSL was not widely available or unavailable prior to 2002, ISDN continued to grow apace (e.g. Greece, Ireland). ISDN access also continues to grow where the incumbent favourably tariffs an upgrade to DSL for existing ISDN users (e.g. Germany). In June 2002, 85% of T-DSL users were ISDN customers. This trend is likely to change as in mid-2002 the price of the analogue plus DSL package became lower than the price for the ISDN plus DSL package. In the Netherlands, in June 2002, some 32% of DSL subscribers were also ISDN subscribers. This being said, it is significant that the two countries with the highest broadband penetration – Canada and Korea – experienced a decrease in basic rate ISDN connections in 2001. Placing ISDN to one side, it seems likely that wireless access will continue to make inroads into the number of standard telephone lines. In the United States, a number of telecommunication carriers have reported lower demand for second residential lines in the face of substitution by wireless and broadband. Worthy of note is the decrease in the number of residential lines in Canada, the Czech Republic, Finland, Hungary, Italy, Norway, Sweden and Switzerland – even if only slight in some cases (Table 4.4). This has contributed to the decrease in the number of fixed access channels per 100 inhabitants in a growing number of OECD countries for the first time. In 2001, the number of fixed channels per 100 inhabitants was reduced from 55 to 54.3 (Table 4.5). Offsetting this is the fact that the total number of telecommunication access paths (i.e. fixed plus wireless) continues to increase.

88

By 2001 all but five OECD countries had more than one telephone for every inhabitant. Luxembourg was the leader with 176.7 fixed and mobile access paths per 100 inhabitants. In 2001, Luxembourg displaced Sweden as the country with the highest penetration for fixed networks. Luxembourg also has the greatest number of cellular mobile users. Access to cellular mobile networks has transformed telecommunication access in recent years and is worthy of greater examination. © OECD 2003

Network Dimensions and Development

Mobile access Although cellular mobile communications are now pervasive, it is worth remembering that this is still a relatively recent phenomenon. Indeed, 60% of users in 2001 had only been connected since 1999. By 2001 the number of mobile subscribers in OECD countries almost reached 612 million, which was 65% of all mobile users in the world (Table 4.6). More than one in every two people in the OECD area had a mobile telephone by the end of 2001. In the case of Luxembourg, there was nearly one mobile telephone for every person (Table 4.7). This may suggest that some users have one phone for professional use and one for private use. It may also be the case that some users, residing in surrounding countries but working in Luxembourg, purchase additional phones to avoid international roaming charges. Italy is the country with the second highest penetration and this may reflect the number of users with dual prepaid cards for different operators in one handset. In Europe the rapid expansion of mobile penetration rates owes more to the popularity of prepaid cards than any other factor. Prepaid cards were introduced in the southern Mediterranean countries from 1996 onwards and immediately fostered very high growth rates. In 1996, for example, Finland’s mobile penetration rate was double Italy and Portugal’s rate and more than four times the rate in Greece. By 2001, Italy and Portugal had exceeded Finland’s penetration and Greece had almost reached parity. This was not because Finland’s mobile market ceased to grow. Rather, it reflects that growth rates were much higher in countries where prepaid cards became popular. At the close of 1996 only around 1% of mobile users were prepaid customers. By the end of 2001 nearly 40% were prepaid (Table 4.8). In countries such as Hungary, Italy and Portugal more than 70% of users have opted for prepaid service. In the European Union area the proportion of prepaid cards was 61% in 2001. By way of contrast, some countries outside Europe have relatively low proportions of prepaid cards with most users being on post-paid tariff plans. Even within Europe, prepaid is little used in Finland with just 2% of the overall market being prepaid. Outside Europe, Korea has virtually no prepaid cellular services while Japan had just 2.5% of its market being prepaid in 2001. In North America the contrast is stark between Mexico with nearly 92% of users being prepaid and just 9% for the United States and 25% for Canada.

Figure 4.2. Mobile subscribers in OECD countries Contract

Pre-paid

Mobile subscribers (millions) 700

Mobile subscribers (millions) 700

600

600

500

500

400

400

300

300

200

200

100

100

0 1996 Source: OECD.

© OECD 2003

1997

1998

1999

2000

0 2001

89

OECD Communications Outlook 2003

There are a number of possible explanations for the relative popularity of prepaid cards in different countries. In markets where operators have tried to make prepaid cards popular, they have generally found it necessary to subsidise handsets. The initial cost of buying an unsubsidised handset would otherwise be a barrier to entry for some users attracted by the low maintenance cost of prepaid cards. It may be for this reason that in countries where subsidies are discouraged or disallowed by regulation, operators have chosen not to market prepaid cards (e.g. Finland and Korea). In Canada and the United States, the relatively low use of prepaid may be due to this pricing structure being less popular in countries with receiving party pays. Certainly, the experience of Mexico would suggest that the take-up and use of prepaid cards accelerated enormously following the introduction of calling party pays. However, it also reflects the strategy of operators in different countries. Cellular operators in the United States generally bundle large amounts of minutes for a fixed monthly charge. Operators in Europe and the Asia-Pacific region generally prefer to meter usage and include lower amounts of bundled minutes in the most widely used tariff plans. The latter of these two systems lends itself more to prepaid cards. As a result, the penetration of cellular mobile phones is much higher in Europe than in Canada and the United States. Some have suggested that the existence of unmetered local calls on the fixed network in North America has contributed to lower mobile penetration rates in Canada and the United States. If this was significant, it raises the question of why the same impact has not been evident in Australia and New Zealand, where local calls on the fixed network are also unmetered. Another explanation for why some have higher penetration rates than others relates to the quality of the fixed network. In those countries with a competitive wireless sector and a poorly performing fixed network, it is not surprising that users would opt for a mobile telephone. However, using the reverse case by claiming that an efficient and inexpensive fixed network lessens the need for users to also take up mobile service is tenuous. If this were true, the Nordic countries would not have led mobile communications and would not have such high penetration rates. None of the foregoing is to wholly suggest that one pricing structure is better at developing mobile communications than another. Calling party pays does appear to be more favourable to marketing prepaid cards and hence the higher penetration rates that result. On the other hand, by bundling larger amounts of minutes with post-paid packages, operators encourage greater use of mobile phones and Figure 4.3. Cellular mobile subscribers per 100 inhabitants, 2001 100

90

90

80

80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0

Lu

xe m

bo

ur g Ita Au ly st Ic ria el a N No nd et rw he a rla y Sw nds ed Fi en nl U ni P and te or d tu Ki ga ng l d G om re Be ece lg iu m D E en U m a Sw Sp rk itz ain er la Ire nd l a C ze Ger nd ch m a N Re ny ew pu Ze blic al a Fr nd an c Ko e re Ja a Au pa st n ra l O ia E U Hu CD n n Sl ited ga ov r ak Sta y R tes ep C ubli an c a Po da la Tu nd rk M ey ex ic o

100

90

Source: OECD.

© OECD 2003

Network Dimensions and Development

have largely negated any perceived disadvantage for users with receiving party pays. At the same time, one advantage of receiving party pays over calling party pays is that it places greater competitive pressure on the cost of terminating a call on a mobile network. One other important factor underlying the rapid spread of cellular mobile penetration has been the high level of population coverage (Table 4.9). These data do not differentiate between digital and analogue services but rather take the greatest proportion of population covered by either system. In most cases this is now digital but in a few countries analogue services still provide greater geographical coverage. In Canada, for example, Rogers Communications’ analogue network covered 93% and its digital network 92% of the population at the end of 2001. The joint coverage of population, by all networks in Canada, was estimated by the Canadian Wireless Telecommunications Association (CWTA) to be 96% at the end of 2001. In large countries such as Australia and the United States, the data indicate that nearly all the population live in regions with access to cellular service. In 2001, digital cellular service was available in counties in the United States covering 97% of the population and 70.7% of the country. This was up from 95% and 57.2% respectively for the previous year. This does not necessarily mean that all the people living in these counties will be covered. The Federal Communications Commission (FCC) notes that some operators may only cover a portion of the geographic area of some counties. However, as in other countries, the available data suggest a high degree of availability for wireless services. Turkey is the country with the lowest proportion of population covered by mobile service. By 2002, Turkcell covered 100% of the population in cities of 10 000 or more people and 99.5% in cities of 5 000 or more, as well as the 81 largest cities and the majority of the country’s tourist areas and principal intercity highways. Under its license, Turkcell must cover 90% of the population and 50% of the geographic area of Turkey within a defined period. Digitalisation The process of digitalising all telecommunication networks is nearing completion across the OECD area. Nearly all wireless networks are now digital although there are still a small but rapidly decreasing share of analogue services in countries such as Iceland, Mexico and the United States. In respect to the fixed network the proportion of all lines connected to a digital exchange is now 97% in the OECD area (Table 4.10). OECD countries whose networks were still less than 90% digital at the end of 2001 included Hungary, Korea, the Slovak Republic, Spain and Turkey. It is somewhat surprising that Spain’s rate of digitalisation has not changed in the previous three years. This is particularly so given the rapid pace at which Telefonica moved to upgrade the fixed network to provide DSL. The level of digitalisation in Korea is also relatively low. In 2002, KT planned to have all its lines connected to a digital exchange by 2005. With most OECD countries being fully digital, attention has more recently turned to the number of lines that can be enabled to provide DSL technology. In this context, Belgium and Denmark lead the way with coverage of 90% or more in 2001 (Table 4.11). Denmark aimed to have 95% coverage by the end of 2002. Germany and Spain have coverage of 80% and 81.3% respectively, and aimed to have coverage of 90% and 89.3% respectively by the end of 2002. Although telecommunication carriers report coverage using several different measures (lines, households, population), the data should be broadly comparable. There wil,l however, be slight variations between the measures. In the United Kingdom, for example, 66% of people lived in areas where the exchange has been upgraded by September 2002, but BT advises Oftel that because of the technical limitations of ADSL, approximately 5% of people in each exchange area could not get the service. This meant that ADSL was available to approximately 63% of the households at that date. In those countries where cable networks provide broadband service in areas where DSL is not yet offered, the national totals would be higher. The same caveat could apply where satellite service is available although the performance levels and cost would also need to be taken into account. Investment In the period leading to 1999 capital expenditure had grown to record levels in OECD countries. The three main drivers for this increase in investment were the construction of second generation © OECD 2003

91

OECD Communications Outlook 2003

wireless networks, the first significant entry into local access markets by new fixed network providers, and very large commitments by new entrants and incumbents in national and international backbone infrastructure. By 1999 the combined impact of these developments produced capital expenditures of USD 197 billion across the OECD. In 2000 investment increased again by USD 32 billion to USD 229 billion. Investment at this level proved to be the peak. By 2001 the total investment in telecommunication infrastructure had decreased 16% to USD 192 billion (Table 4.12). Some USD 21 billion of this reduction occurred as a result of decreasing capital expenditure in the United States. This being said, capital expenditure was reduced in nearly two-thirds of OECD countries in 2001. Although investment in infrastructure continued to be at very high levels historically by the end of 2001, the financial performance of a number of telecommunication equipment companies seriously waned during this period. One reason for this was the phenomenon known as vendor financing. This practice entailed telecommunication manufacturers financing the equipment they sold to service providers. In many cases vendor financing was made available to new entrants that subsequently exited the market. At the same time several other factors were at work. Perhaps the most important of these was that although the telecommunication sector continued to grow, the rate slowed appreciably from the late 1990s. Even in those cases where vendor financing was not involved the reduced rate of growth meant that many new entrants could not service the debt they had incurred for market entry. The business plans of both equipment and services companies were the casualties of the absence of reliable industry data. This was particularly acute in Internet backbone markets where the absence of industry-wide traffic metrics meant that business plans were predicated on what proved to be highly inaccurate existing and projected growth rates. In some cases deliberately misleading or fraudulent information, fuelled by the hype of the “dot.com bubble”, filled the void. A further factor in the severe downturn in the fortunes of equipment manufacturers at a time when the telecommunication sector continued to expand was the vastly increasing capabilities of technology. Although access continued to expand, and relatively new sectors such as wireless communications were responsible for an increasing proportion of new investment, the unit cost of serving customers continued its long-term decline. In 1991, capital expenditure of USD 245 per subscriber (fixed, wireless and Internet) was recorded. In 2001, the same measure was USD 133 per subscriber. This was the case even though total capital expenditure in the OECD nearly doubled over the same period. Access and service expansion, particularly via wireless and Internet, increased enormously at a time when the capabilities of the core fixed networks to carry the additional traffic also escalated. The advent of cellular wireless and Internet were both responsible for considerable investment in new overlay networks. In the case of wireless, new access networks were built for both first and secondgeneration systems. Moreover, digitalisation coincided with a tremendous amount of new entry as OECD governments liberalised the sector. Whereas monopolies (and duopolies) characterised the analogue era, three or more networks were typically constructed in OECD countries as digital networks were introduced. In addition, the advent of Internet and globalisation resulting from liberalisation attracted a range of new and existing players to build new backbone networks. At the same time, new players such as Cisco and Juniper Networks emerged in equipment markets to challenge the existing players in the supply of this equipment. This has resulted in an increasingly competitive equipment market at a time when demand has shifted toward technologies based on Internet protocol (IP) rather than circuit-switched networks. For the future, the two areas most likely to augment infrastructure investment are broadband access for fixed networks and universal mobile telecommunications system (UMTS or third-generation wireless).

92

The licensing process for spectrum has had an unprecedented impact on levels of telecommunication investment from 1999 to 2001. In 1999, OECD public authorities received around USD 1.5 billion in revenue from spectrum licenses (Table 4.13). In 2000, this amount soared to USD 93 billion before declining to USD 3.9 billion in 2001. The vast bulk of this revenue was derived from the auction of spectrum licences for UMTS. Licences for PCS services have also been purchased but they account for a relatively small amount of overall licence revenue received by public authorities. © OECD 2003

Network Dimensions and Development

Few developments have attracted more attention in the field of telecommunications than the prices paid for UMTS licences. The UMTS auction in the United Kingdom raised USD 33 billion. This was followed by an auction for UMTS licences in Germany, which raised nearly USD 47 billion. In Italy, UMTS licenses raised USD 11 billion in 2000. UMTS auctions also raised considerable amounts in other countries relative to their size – such as the Netherlands where the UMTS auction raised USD 2.5 billion in 2000. Generally, telecommunication carriers have included expenditure on UMTS licenses in their accounts under capital expenditure and financial investments. Historically, the OECD investment series has largely tracked investment in tangible assets (i.e. property, plant and equipment) rather than financial investments such as licences. However, it is necessary to take into account the expenditure on UMTS licenses, in relation to overall investment, as it is having significant impact on the accounts of some major telecommunication carriers. Deutsche Telekom began amortising the recorded value of its UMTS licenses in 2000 but accelerated this process in 2002 when their market value was determined to be much lower than the amount on which the amortisation was earlier predicated. BT would have normally amortised the UMTS licenses it purchased in Europe over their lifetime commencing with the start of service. Due to the demerger of mmO2 (formerly BT Cellnet), however, the company amortised a significant amount of the total cost of the UMTS licenses in 2001. In Italy, Telecom Italia plans to commence UMTS service from 2004 and write off the cost of licences over their 15-year duration. The main impact on Telecom Italia’s investment was in 2000 when the bulk of the licence fee was paid. However, UMTS license fees will have an ongoing impact on Telecom Italia’s capital expenditure that is in addition to actual construction of network infrastructure. The company is capitalizing the interest expense resulting from financing the license fee which, under United States generally accepted accounting principles (GAAP), is considered as construction in progress. KPN had also planned to begin amortisation of its UMTS licensees when service commenced in 2003. However, in announcing its second quarter 2002 results, KPN brought this forward and announced that USD 8.7 billion had been written off the value of its mobile assets. In Japan, 3G licences were provided using a comparative selection process at a relatively low fee. NTT DoCoMo, KDDI and J-Phone have commenced 3G services since October 2001, April 2002 and December 2002, respectively.

Figure 4.4. Public telecommunications investment by region, 1990-2001 (excluding spectrum fees) North-America

EU

Asia-Pacific

Rest of OECD

Billion USD 250

Billion USD 250

200

200

150

150

100

100

50

50

0 1990 Source: OECD.

© OECD 2003

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

0 2001

93

OECD Communications Outlook 2003

The impact of the UMTS auctions can be seen when the data on telecommunication investment are examined on a regional basis. In 2000, Europe invested more in telecommunications than North America for the first time, when taking into account expenditures on spectrum (Table 4.14). The same year, the total sum invested by telecommunication carriers in Europe was USD 154 billion compared to USD 125 billion in North America. By 2001 the traditional ranking re-emerged with North America once again recording the largest share of telecommunication investment in the OECD area. Remarkably, the combined investment in tangible infrastructure and spectrum licenses reached a peak of USD 324.9 billion. This was more than three times the total investment in the sector a decade earlier. The sums paid for UMTS licenses made 2000 an extraordinary year in terms of the amounts that telecommunication operators recorded as expenditure on tangible and intangible assets. This being said, it is worth noting that investment in telecommunication infrastructure has continued to show a slight longterm decline in proportion to growth in sector revenues. In 2001, capital expenditures represented the equivalent of 23.1% of industry revenue in the OECD area (Table 4.15). This compares with an average ranging between of 26.9% between 1988 and 1990 through to 25% between 1997 and 1999. In the Slovak Republic, investment in telecommunications has exceeded revenue in recent years due to the construction of new wireless infrastructure as well as expansion and upgrading of the fixed network. In 2001, investment in telecommunication infrastructure decreased as a proportion of gross fixed capital formation (GFCF). It is, nevertheless, still at a high level historically with telecommunication infrastructure investment representing 3.64% of GFCF compared to 2.51% in 1990 (Table 4.16). As GFCF only applies to expenditure on structures, machinery and equipment, the levels of investment are not impacted by investment in spectrum licences. The ratio between overall telecommunication investment and the number of fixed network access channels decreased in 2001 (Table 4.17). This followed a general increase in previous years. However, these data should be read in conjunction with the ratio between overall telecommunication investment and all telecommunication access paths (i.e. fixed network plus cellular wireless) (Table 4.18). In relation

Figure 4.5. Public telecommunication investment as a percentage of PTO revenue and GFCF, 2001 % revenue (left scale)

GFCF (right scale)

% 160

% 30

140 25 120 20 100 15

80 60

10 40 5 20 0

M

h

ze c

C

Sl

ov ak

R ep ex . R ico ep ub Au lic s G tria re D ec en e m a U ni Po rk t ed la U n ni te St d a d Ki tes ng Au dom st H rali un a g Po ary rtu g Ko al re N O a et EC he D rla nd Fr s an C ce an ad a Ita Ire ly la n Ja d pa I Sw cel n itz and er l Sw and ed Fi en nl an d N ew Sp Ze ain a G lan er d m a N ny or w a Lu Bel y xe giu m m bo u Tu rg rk ey

0

94

Source: OECD.

© OECD 2003

Sl

ov a n k U ite Re ni d te S p. d ta Ki te ng s do m Ja D pa en n m a M rk ex ic O o EC Au D Au stri Sw str a itz alia er l C an N an d et he ada rla n G ds re e Po ce rt H uga un l ga C ze r ch Irel y R and ep u Ic blic el a Fi nd nl an N d or w Sw ay ed e Fr n an c Ko e N P rea ew o Ze lan al d an d G Ital er y m an Sp y a Lu Bel in xe giu m m bo u Tu rg rk ey

U

U ni t ov ed ak Sta R tes ep u U ni De blic te n d m Ki ar ng k do Au m st ri Sw Ja a itz pan er Au land st ra l N O ia et EC he D rla n G ds re Sw ece ed N en or w Ic ay e Po lan rtu d g C al an a Fi da nl a Ire nd la C ze F nd ch ra R nce ep ub lic Ita Ko ly H rea un G gar er y m an N ew Sp y Z a Lu ea in xe lan m bo d u M rg ex Be ico lg iu Po m la n Tu d rk ey Sl

Network Dimensions and Development

Figure 4.6.

Figure 4.7.

Source: OECD.

© OECD 2003 Public telecommunication investment per capita

USD 400 1999

1999

2001 USD 400

350 350

300 300

250 250

200 200

150 150

100 100

50 50

0 0

Source: OECD.

Public telecommunications investment per access path

USD 500 2001 USD 500

450 450

400 400

350 350

300 300

250 250

200 200

150

150

100

100

50

50

0

0

95

OECD Communications Outlook 2003

to all access paths, the ratio of investment has fallen in recent years. In 2001 it was at an historic low across the OECD. The main reason for this was not the decline in capital expenditure but the very large increase in the number of cellular mobile subscribers. In other words, the telecommunications industry is only investing less relative to the large increase in the number of access paths. Countering this longterm trend, in the future new investment will be required to construct networks for UMTS services whereas the number of mobile subscribers in some countries is unlikely to grow as fast as in recent years. Upgrading the fixed network to provide services such as DSL will also entail new investment. Given that more than half the fixed network lines in the OECD area were enabled to provide DSL by the end of 2001, this investment may be more incremental in nature. Despite a decline in 2001, investment in telecommunications on a per capita basis continued at a relatively high level that year (Table 4.19). The level of investment in infrastructure per capita peaked in 2000 at USD 204 per OECD country inhabitant. This was double the per capita investment of a decade earlier. If UMTS licensing fees were included, this amount would have been just under USD 286 per capita in 2000.

96

© OECD 2003

Network Dimensions and Development

1997 (‘000)

1998 (‘000)

1999 (‘000)

2000 (‘000)

2001 (‘000)

CAGR (1991-2001)

1996 (‘000)

CAGR (1996-2001)

1991 (‘000)

CAGR (2000-2001)

Table 4.1. Telecommunication channels in the OECD area

Australia

8 259

9 620

9 900

10 248

10 772

11 109

11 245

1.2

3.2

3.1

Austria

3 344

3 779

3 726

3 726

3 865

3 938

3 946

0.2

0.9

1.7 2.3

Belgium

4 098

4 871

5 209

5 056

5 261

5 273

5 138

-2.6

1.1

Canada

15 815

18 051

18 660

20 051

20 702

21 940

21 435

-2.3

3.5

3.1

Czech Republic

1 707

2 817

3 274

3 749

3 853

3 872

4 126

6.6

7.9

9.2

Denmark

2 951

3 315

3 280

3 432

3 596

3 791

3 833

1.1

2.9

2.7

Finland

2 718

2 932

3 080

3 184

3 317

3 506

3 480

-0.7

3.5

2.5

France

29 250

32 382

32 685

34 800

37 700

39 200

40 000

2.0

4.3

3.2

Germany

33 861

44 205

45 142

46 500

47 800

50 220

52 280

4.1

3.4

4.4

Greece

4 190

5 333

5 436

5 555

5 710

5 972

6 176

3.4

3.0

4.0

Hungary

1 128

2 688

3 172

3 531

3 849

4 121

4 230

2.6

9.5

14.1

Iceland

136

157

164

176

187

194

192

-1.1

4.0

3.5

Ireland

1 048

1 390

1 500

1 634

1 585

1 798

1 862

3.5

6.0

5.9

Italy

23 071

25 324

26 088

26 465

27 070

28 235

29 134

3.2

2.8

2.4

Japan

56 481

64 343

66 189

68 037

71 130

75 239

74 285

-1.3

2.9

2.8

Korea

14 573

19 959

20 887

20 858

27 316

27 298

27 213

-0.3

6.4

6.4

Luxembourg

192

252

265

236

269

323

347

7.4

6.6

6.1

Mexico

6 025

8 826

9 254

9 927

10 927

12 393

13 833

11.6

9.4

8.7

Netherlands

7 175

8 530

9 660

7 767

9 624

10 363

10 349

-0.1

3.9

3.7

New Zealand

1 491

1 719

1 753

1 763

1 759

1 749

1 765

0.9

0.5

1.7

Norway

2 198

2 590

2 734

2 936

3 176

3 317

3 318

0.0

5.1

4.2 16.5

Poland

3 565

6 533

7 511

8 511

10 472

13 182

16 360

24.1

20.2

Portugal

2 694

3 806

3 993

4 117

4 230

4 314

4 378

1.5

2.8

5.0

..

1 246

1 392

1 542

1 669

1 737

1 663

-4.3

5.9

8.2 3.9

Slovak Republic Spain

13 264

15 632

16 372

16 790

17 748

18 776

19 521

4.0

4.5

Sweden

5 957

6 132

6 210

6 338

6 535

6 705

6 718

0.2

1.8

1.2

Switzerland

4 083

4 444

4 688

4 835

5 066

5 236

5 383

2.8

3.9

2.8 8.7

Turkey United Kingdom United States

8 200

14 286

15 744

16 964

18 068

18 415

18 959

3.0

5.8

25 677

31 560

31 538

32 550

33 790

35 079

35 326

0.7

2.3

3.2

139 741

167 955

178 028

187 961

196 617

201 024

192 494

-4.2

2.8

3.3

422 890

512 958

535 783

557 478

591 906

616 571

617 221

0.1

3.8

3.9

15 147

120 093

170 311

245 162

359 356

513 777

611 852

19.1

38.5

44.8

438 037

633 052

706 094

802 639

951 262

1 130 347

1 229 073

8.7

14.2

10.9

OECD (fixed network) (mobile subscribers)

OECD (fixed channels and mobile subscribers total)

Note: Slovak Republic CAGR is for 1992-2001. Source: OECD.

97

© OECD 2003

OECD Communications Outlook 2003

1997 (‘000)

1998 (‘000)

1999 (‘000)

2000 (‘000)

2001 (‘000)

CAGR (1991-2001)

1996 (‘000)

CAGR (1996-2001)

1991 (‘000)

CAGR (2000-2001)

Table 4.2. Standard analogue telecommunication access lines in the OECD area

Australia

8 257

9 350

9 540

9 760

10 050

10 060

10 010

-0.50

1.37

1.94

Austria

3 344

3 656

3 482

3 299

3 202

3 034

2 900

-4.42

-4.53

-1.41 -0.23

Belgium

4 097

4 725

4 939

4 549

4 394

4 256

4 003

-5.95

-3.27

Canada

15 815

18 051

18 209

19 294

19 806

20 803

20 278

-2.52

2.35

2.52

Czech Republic

1 707

2 817

3 273

3 732

3 795

3 746

3 850

2.78

6.45

8.47

Denmark

2 951

3 225

3 104

3 086

2 934

2 833

2 770

-2.23

-3.00

-0.63

Finland

2 718

2 842

2 861

2 855

2 850

2 849

2 806

-1.51

-0.25

0.32

France

29 100

31 600

31 572

31 218

30 581

31 950

31 850

-0.31

0.16

0.91

Germany

33 700

39 000

37 800

36 400

34 500

32 100

30 600

-4.67

-4.74

-0.96

Greece

4 190

5 329

5 431

5 536

5 611

5 659

5 608

-0.91

1.03

2.96

Hungary

1 128

2 675

3 133

3 457

3 726

3 798

3 742

-1.47

6.95

12.74

Iceland

136

154

152

151

148

144

140

-2.57

-1.79

0.34

Ireland

1 048

1 390

1 500

1 536

1 585

1 590

1 590

0.00

2.73

4.26

Italy

23 071

24 918

24 801

24 251

23 453

22 569

22 244

-1.44

-2.24

-0.36

Japan

56 260

61 526

60 451

58 559

55 446

52 258

50 997

-2.41

-3.68

-0.98

Korea

14 573

19 942

20 845

20 756

26 879

26 999

27 002

0.01

6.25

6.36

192

248

255

219

189

206

191

-7.22

-5.04

-0.02

Luxembourg Mexico

6 025

8 826

9 254

9 927

10 927

12 332

13 773

11.69

9.31

8.62

Netherlands

7 175

8 110

8 850

7 767

7 330

7 075

6 779

-4.18

-3.52

-0.57

New Zealand

1 491

1 719

1 753

1 763

1 759

1 749

1 765

0.91

0.53

1.70

Norway

2 198

2 441

2 324

2 167

1 914

1 698

1 552

-8.59

-8.66

-3.42

Poland

3 565

6 532

7 510

8 485

9 533

10 946

11 400

4.15

11.78

12.33

Portugal

2 694

3 724

3 819

3 803

3 752

3 653

3 560

-2.54

-0.90

2.83

..

1 246

1 392

1 539

1 655

1 698

1 556

-8.35

4.54

2.24

Slovak Republic

13 264

15 413

15 854

16 285

16 770

17 102

17 427

1.90

2.49

2.77

Sweden

5 957

6 032

6 010

5 965

5 892

5 760

5 668

-1.60

-1.24

-0.50

Switzerland

4 081

4 045

4 076

3 883

3 622

3 382

3 241

-4.16

-4.34

-2.28

Turkey

8 200

14 286

15 744

16 960

18 060

18 395

18 904

2.77

5.76

8.71

25 595

30 678

30 330

30 900

31 400

31 909

31 819

-0.28

0.73

2.20

United States

139 673

165 421

173 891

180 471

186 659

188 627

179 747

-4.71

1.67

2.55

OECD

422 204

499 921

512 154

518 573

528 422

529 178

517 772

-2.16

0.70

2.60

Spain

United Kingdom

Note: Slovak Republic CAGR is for 1992-2001. Source: OECD.

98

© OECD 2003

© OECD 2003

Table 4.3. ISDN subscribers in OECD area 1992 (‘000) Australia

Austria

Belgium

Denmark

Finland*

France

1999 (‘000)

2000 (‘000)

CAGR (20002001)

2001 (‘000)

..

270 000

360 000

488 000

722 300

1 048 800

1 235 000

3 500

193 600

269 525

360 350

..

..

..

..

ISDN Primary

..

..

..

..

..

..

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

47 766

122 564

244 166

427 400

663 200

ISDN Basic

..

16 308

40 642

83 083

152 200

247 600

ISDN Primary

..

505

1 376

2 600

4 100

1 950

78 066

145 984

270 260

825

27 288

53 342

95 935

10

783

1 310

ISDN Channels (64 Kbit/s Voice Equivalents)

CAGR (19962001)

17.8

35.5

..

..

..

903 800

1 046 400

15.8

53.6

331 900

398 700

20.1

57.9

5 600

8 000

8 300

3.8

43.2

507 468

867 650

1 017 200

1 135 100

11.6

50.7

179 769

311 230

420 094

438 191

4.3

52.4

2 613

4 931

8 173

9 668

9 530

-1.4

48.7 20.7

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

451 024

756 840

895 588

1 137 524

1 156 182

1.6

ISDN Basic

..

..

..

50 162

69 975

80 999

82 342

76 851

-6.7

8.9

ISDN Primary

..

..

..

11 690

20 563

24 453

32 428

33 416

3.0

23.4

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

1 260

17 210

58 040

126 084

276 010

118.9

193.8

ISDN Basic

..

..

..

165

2 335

10 135

23 562

80 555

241.9

244.9 162.0

..

..

..

31

418

1 259

2 632

3 830

45.5

ISDN Channels (64 Kbit/s Voice Equivalents)

..

41 688

89 574

176 000

346 000

661 912

958 084

1 063 322

11.0

64.0

ISDN Basic

..

13 599

28 797

58 000

113 000

240 731

368 762

397 906

7.9

69.1

ISDN Primary

..

483

1 066

2 000

4 000

6 015

7 352

8 917

21.3

52.9

ISDN Channels (64 Kbit/s Voice Equivalents)

..

25 544

90 184

218 946

329 028

467 346

656 930

674 286

2.6

49.5

ISDN Basic

..

5 962

25 922

54 168

95 064

151 413

199 015

272 013

36.7

60.0

ISDN Primary

..

454

1 278

3 687

4 630

5 484

8 630

4 342

-49.7

27.7

350 000

1 417 600

782 400

1 112 800

2 800 000

3 600 000

4 300 000

4 700 000

9.3

43.1

55 000

258 800

391 200

556 400

..

..

..

..

..

..

8 000

30 000

..

..

..

..

..

..

..

..

403 800

2 778 800

5 204 600

7 342 400

10 100 000

13 300 000

17 300 000

20 400 000

17.9

31.4

98 400

864 400

1 918 300

2 831 200

4 030 900

5 548 650

7 358 000

9 000 000

22.3

36.2

6 900

35 000

45 600

56 000

72 300

88 300

107 700

121 000

12.3

21.6

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

4 566

5 604

19 956

99 424

312 324

567 940

81.8

162.4

ISDN Basic

..

..

888

792

3 258

27 542

96 972

199 205

105.4

202.1

ISDN Primary

..

..

93

134

448

1 478

3 946

5 651

43.2

127.4

ISDN Channels (64 Kbit/s Voice Equivalents)

ISDN Channels (64 Kbit/s Voice Equivalents) ISDN Basic ISDN Primary

*In 2000, a change was made in the way Finnish data are compiled.

99

Network Dimensions and Development

ISDN Primary

ISDN Primary

Greece

1998 (‘000)

7 000

ISDN Basic

Germany

1997 (‘000)

ISDN Basic

ISDN Primary

Czech Republic

1996 (‘000)

ISDN Channels (64 Kbit/s voice equivalents)

ISDN Basic

Canada

1995 (‘000)

1992 (‘000) Hungary

Iceland

Ireland

Italy

Japan

Luxembourg

Mexico

1996 (‘000)

1999 (‘000)

2000 (‘000)

CAGR (20002001)

2001 (‘000)

CAGR (19962001)

..

5 000

12 900

38 600

74 100

123 500

322 900

487 116

50.9

106.7

..

2 500

6 450

19 300

37 050

61 750

161 450

243 558

50.9

106.7

ISDN Primary

..

..

..

..

..

..

..

..

..

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

3 916

12 700

24 856

39 204

49 670

51 228

3.1

67.2

ISDN Basic

..

..

698

3 425

7 388

12 192

16 300

17 379

6.6

90.2

ISDN Primary

..

..

84

195

336

494

569

549

-3.5

45.6

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

..

97 700

..

208 340

271 848

30.5

..

ISDN Basic

..

..

..

..

48 850

76 223

43 360

65 484

51.0

..

ISDN Primary

..

..

..

..

..

..

4 054

4 696

15.8

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

195 842

406 136

1 287 000

2 213 950

3 616 900

5 666 100

6 889 774

21.6

76.2

ISDN Basic

..

45 571

97 543

448 500

867 500

1 524 500

2 163 300

2 334 602

7.9

88.7

ISDN Primary

..

3 490

7 035

13 000

15 965

18 930

44 650

74 019

65.8

60.1

ISDN Channels (64 Kbit/s Voice Equivalents)

406 892

1 345 902

2 817 196

5 737 970

9 478 094

15 683 500

22 981 664

23 288 218

1.3

52.6

ISDN Basic

156 811

519 846

1 084 928

2 364 520

4 019 707

6 600 080

9 571 522

10 233 239

6.9

56.6

3 109

10 207

21 578

33 631

47 956

82 778

127 954

94 058

-26.5

34.2

ISDN Channels (64 Kbit/s Voice Equivalents)

..

8 618

16 810

42 220

102 372

436 588

299 608

211 892

-29.3

66.0

ISDN Basic

..

4 309

8 405

21 110

37 686

171 314

96 629

54 316

-43.8

45.2

ISDN Primary

..

..

..

..

900

3 132

3 545

3 442

-2.9

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

1 556

3 688

9 840

17 220

80 018

116 440

155 356

33.4

111.3

ISDN Basic

..

778

1 844

4 920

8 610

27 544

40 640

57 968

42.6

99.3

ISDN Primary

..

..

..

..

..

831

1 172

1 314

12.1

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

..

61 678

59 638

-3.3

..

ISDN Basic

..

..

..

..

13 739

26 669

94.1

..

..

..

..

..

1 140

210

-81.6

..

1 130

95 000

420 000

810 000

..

2 294 000

3 288 778

3 570 000

8.6

53.4

385

22 000

30 000

270 000

..

862 000

1 239 389

1 395 000

12.6

115.5

12

1 700

12 000

9 000

..

19 000

27 000

26 000

-3.7

16.7

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

..

..

..

..

..

..

..

ISDN Basic

..

..

..

..

..

..

..

..

..

..

ISDN Primary

..

..

..

..

..

..

..

..

..

..

ISDN Channels (64 Kbit/s Voice Equivalents) ISDN Basic ISDN Primary

New Zealand

1998 (‘000)

ISDN Channels (64 Kbit/s Voice Equivalents)

ISDN Primary Netherlands

1997 (‘000)

ISDN Basic

ISDN Primary Korea

1995 (‘000)

OECD Communications Outlook 2003

100

Table 4.3. ISDN subscribers in OECD area (continued)

© OECD 2003

© OECD 2003

Table 4.3. ISDN subscribers in OECD area (continued) 1992 (‘000) Norway

Poland

Portugal

Slovak Republic

Spain

Sweden

1999 (‘000)

2000 (‘000)

CAGR (20002001)

2001 (‘000)

CAGR (19962001)

45 180

148 708

410 480

768 992

1 262 338

1 619 198

1 765 876

9.1

64.0

..

11 580

41 819

146 005

304 636

524 999

696 289

760 463

9.2

78.6

ISDN Primary

..

734

2 169

3 949

5 324

7 078

7 554

8 165

8.1

30.4

ISDN Channels (64 Kbit/s Voice Equivalents)

..

164

476

800

26 402

939 420

2 235 780

4 959 500

121.8

536.2

ISDN Basic

..

82

238

400

5 956

99 000

260 520

340 000

30.5

327.5

ISDN Primary

..

..

..

..

483

24 714

57 158

142 650

149.6

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

37 902

81 934

173 670

313 654

477 352

660 998

817 926

23.7

58.4

ISDN Basic

..

7 101

18 212

45 060

85 907

132 926

187 774

243 018

29.4

67.9

ISDN Primary

..

790

1 517

2 785

4 728

7 050

9 515

11 063

16.3

48.8

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

..

2 858

13 466

39 110

106 502

172.3

..

ISDN Basic

..

..

..

..

724

4 183

11 365

29 461

159.2

..

ISDN Primary

..

..

..

..

47

170

546

1 586

190.5

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

28 012

219 110

518 176

504 640

978 826

1 674 100

2 094 000

25.1

57.1

ISDN Basic

..

10 601

96 040

228 458

177 215

355 493

632 470

..

..

..

ISDN Primary

..

227

901

2 042

5 007

8 928

13 640

..

..

..

ISDN Channels (64 Kbit/s Voice Equivalents)

..

39 900

99 900

200 100

372 900

643 000

944 700

1 049 900

11.1

60.1

ISDN Basic

..

12 000

30 000

60 000

114 000

194 000

259 050

270 100

4.3

55.2

..

530

1 330

2 670

4 830

8 500

14 220

16 990

19.5

66.4

ISDN Channels (64 Kbit/s Voice Equivalents)

4 712

236 946

399 180

612 000

952 202

1 443 810

1 854 130

2 142 000

15.5

39.9

ISDN Basic

1 951

65 958

120 540

201 000

331 516

517 245

712 295

846 000

18.8

47.7

27

3 501

5 270

7 000

9 639

13 644

14 318

15 000

4.8

23.3

ISDN Channels (64 Kbit/s Voice Equivalents)

..

..

..

..

3 940

8 190

19 730

54 400

175.7

..

ISDN Basic

..

..

..

..

..

..

7 000

7 370

5.3

..

..

..

..

..

..

..

191

1 322

592.1

..

108 000

661 000

882 000

1 208 000

1 650 000

2 390 000

3 170 000

3 507 000

10.6

31.8

ISDN Basic

9 000

102 500

141 000

214 000

330 000

550 000

765 000

846 000

10.6

43.1

ISDN Primary

3 000

15 200

20 000

26 000

33 000

43 000

54 667

60 500

10.7

24.8

ISDN Channels (64 Kbit/s Voice Equivalents)

246 590

1 320 500

2 534 340

4 137 174

7 489 906

9 958 070

12 397 366

12 747 958

2.8

38.1

ISDN Basic

118 630

502 375

836 895

1 102 062

1 402 208

1 509 385

1 550 558

1 694 474

9.3

15.2

311

10 525

28 685

64 435

156 183

231 310

309 875

311 967

0.7

61.2

ISDN Channels (64 Kbit/s Voice Equivalents)

ISDN Primary

Source: OECD.

101

Network Dimensions and Development

United States

1998 (‘000)

..

ISDN Primary United Kingdom

1997 (‘000)

ISDN Basic

ISDN Primary Turkey

1996 (‘000)

ISDN Channels (64 Kbit/s Voice Equivalents)

ISDN Primary Switzerland

1995 (‘000)

© OECD 2003

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD (Total of above) Source: OECD.

1990 .. .. .. .. .. .. 2 035 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 92 200

1991 .. .. .. .. .. .. 1 995 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 95 900

1992 .. .. .. .. .. .. 2 057 .. .. .. 952 .. .. .. .. .. .. 4 818 .. .. .. .. .. 611 .. .. .. 5 714 .. 99 300

1993 .. .. .. .. .. .. 2 119 .. .. .. 1 135 .. .. .. .. .. .. 5 524 .. .. .. .. .. 662 .. .. .. 6 754 .. 101 800

1994 6 420 .. .. .. .. .. 2 112 .. .. .. 1 399 .. .. .. .. .. .. 6 207 .. .. .. .. .. 748 .. .. .. 8 004 .. 105 100

1995 6 560 .. .. .. .. .. 2 018 .. .. .. 1 785 .. .. .. .. .. .. 6 481 .. .. .. .. .. 830 .. .. .. 9 821 .. 108 100

1996 6 640 .. .. .. .. .. 2 041 .. .. .. 2 213 .. .. .. .. .. .. 6 589 .. .. .. .. .. 920 .. .. .. 10 631 22 777 111 100

1997 6 770 .. .. .. .. .. 2 031 .. .. .. 2 627 .. .. .. .. .. .. 6 902 .. .. .. .. .. 1 003 .. .. .. 11 658 23 412 114 700

1998 7 100 .. .. 12 602 .. .. 2 007 .. .. .. 2 888 .. .. 18 890 .. .. .. 7 428 .. 1 339 .. .. .. 1 126 .. .. .. 12 612 23 700 117 300

1999 6 810 .. .. 12 744 .. .. 1 961 .. .. .. 3 091 .. .. 18 700 .. .. 192 8 079 .. 1 349 1 810 .. .. 1 229 .. 3 921 3 235 13 511 24 694 122 800

2000 6 715 .. .. 13 199 2 663 .. 1 923 .. .. .. 3 063 .. .. 18 460 .. .. 188 9 042 .. 1 357 1 777 .. .. 1 255 .. 3 848 3 040 13 967 24 625 126 700

2001 6 930 .. .. 12 844 2 632 .. 1 877 .. .. .. 2 926 .. .. 18 220 .. 15 782 199 10 063 .. 1 385 1 746 .. .. 1 157 .. 3 843 2 942 14 200 24 995 ..

94 235

97 895

113 452

117 994

129 990

135 595

162 910

169 103

206 991

224 125

231 821

121 742

OECD Communications Outlook 2003

102

Table 4.4. Residential lines Thousands

Network Dimensions and Development

Table 4.5. Telecommunication channels per 100 inhabitants in the OECD area

1990

1992

1995

1996

1997

1998

1999

2000

2001

Telecommunication access paths (fixed and wireless) per 100 inhabitants1, 2001

Australia

47.1

48.9

50.7

52.5

53.4

54.6

56.7

57.8

57.7

114.8

Austria

41.8

44.0

46.6

46.9

46.2

46.1

47.8

48.6

48.6

131.7

Belgium

39.3

42.5

46.4

48.0

51.2

49.6

51.5

51.4

50.1

125.0

Canada

55.2

57.3

59.8

60.8

62.2

66.3

67.9

71.3

69.0

103.9

Czech Republic

15.7

17.6

23.2

27.3

31.8

36.4

37.5

37.7

40.1

107.6

Denmark

56.6

58.1

62.0

63.0

62.1

64.7

67.6

71.0

71.5

145.4

Finland

53.5

54.4

55.5

57.2

59.9

61.8

64.2

67.7

67.0

147.4

France

49.6

53.2

58.8

55.8

56.2

59.6

64.3

66.6

67.6

130.1

Germany

50.7

44.7

51.4

54.0

55.0

56.7

58.2

61.1

63.5

131.8

Greece

39.1

43.6

49.4

51.0

51.8

52.8

54.2

56.3

58.1

133.1

Hungary

9.6

12.5

21.7

26.4

31.2

34.9

38.2

41.1

41.5

90.3

Iceland

51.4

53.6

55.6

58.6

60.7

64.3

67.6

68.9

67.2

149.7

Ireland

28.1

31.4

36.5

38.3

41.0

44.1

42.3

47.5

48.5

120.7

Italy

39.4

41.7

44.1

44.6

45.8

46.4

47.4

49.4

50.8

137.9

Japan

44.2

46.7

49.8

51.1

52.5

53.8

56.1

59.3

58.4

117.2

Korea

35.7

35.6

42.0

43.8

45.5

45.1

58.6

58.1

57.5

118.8

Luxembourg

47.8

52.2

55.9

60.5

63.0

55.4

62.2

73.6

78.6

176.7

6.6

8.0

9.8

9.6

9.9

10.4

11.2

12.7

14.0

35.9

Mexico Netherlands

46.4

48.7

52.5

55.0

61.9

49.4

60.9

65.1

64.7

146.0

New Zealand

43.8

43.2

45.4

46.3

46.6

46.5

46.2

45.7

45.8

108.8

Norway

50.3

52.9

56.5

59.1

62.1

66.3

71.2

73.9

73.5

155.2

Poland

8.6

10.3

14.8

16.9

19.4

22.0

27.1

34.1

42.3

70.2

24.1

30.7

36.8

38.6

40.4

41.3

42.3

43.1

43.5

122.8

Portugal Slovak Republic

..

15.5

20.9

23.2

25.9

28.6

30.9

32.2

30.9

70.8

Spain

32.4

35.4

38.6

39.8

41.6

42.6

44.8

47.0

48.5

121.7

Sweden

68.3

68.4

68.6

69.4

70.2

71.6

73.8

75.6

75.5

156.0

Switzerland

58.7

60.9

66.0

62.8

66.1

68.0

70.9

72.9

74.4

147.4

Turkey

12.3

16.2

23.0

22.8

24.7

26.2

27.5

27.3

27.6

54.5

United Kingdom

44.2

45.3

51.3

53.7

53.4

54.9

56.8

58.7

58.9

136.0

United States

53.9

55.9

60.6

63.3

66.4

69.5

72.0

73.0

67.5

OECD 39.7 41.4 45.6 47.0 48.7 50.4 53.1 55.0 54.3 1. Telecommunication access paths include the total of fixed access lines and cellular mobile subscribers. Source: OECD.

112.6 108.2

103

© OECD 2003

© OECD 2003

CAGR

CAGR

CAGR

(2000-2001)

(1996-2001)

(1991-2001)

11 132 000 6 758 000 7 690 000 10 858 323 6 947 151 3 960 165 4 175 587 37 028 266 56 245 000 7 963 742 4 967 430 235 400 2 770 000 49 950 000 74 819 186 29 045 596 432 400 21 757 089 13 000 000 2 422 000 3 689 246 10 750 000 7 977 500 2 147 331 29 495 278 7 158 000 5 275 000 18 420 000 46 282 000 128 500 000 611 851 690 280 885 938 939 901 393

30.0 10.5 36.6 24.1 59.9 17.7 12.0 25.0 16.7 34.2 61.5 9.5 37.1 18.4 12.0 8.3 42.6 54.5 18.2 10.7 9.5 59.3 19.7 93.5 23.2 12.4 13.7 22.3 6.5 17.4 19.1 17.8 27.0

22.8 62.4 74.3 26.0 103.2 24.6 23.1 72.3 57.6 71.8 60.0 38.4 57.0 50.8 22.7 55.6 57.2 84.3 66.5 38.4 23.9 118.3 64.4 137.1 58.0 23.5 51.4 87.0 46.7 23.9 38.5 53.1 45.3

43.9 50.2 65.0 30.0 137.0 36.5 29.3 58.3 59.4 102.6 89.1 33.7 56.2 56.5 49.1 67.6 81.3 63.3 60.4 37.5 32.1 157.0 90.6 126.3 75.2 28.8 40.6 81.4 43.4 32.8 44.8 52.1 50.0

65

-6.2

-4.7

-3.5

1991

1996

1997

1998

1999

2000

2001

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand1 Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD EU World

291 459 115 402 51 420 786 000 1 242 175 943 319 137 375 000 532 251 .. 8 477 12 889 32 000 568 000 1 378 108 166 198 1 130 160 900 115 000 100 200 227 733 .. 12 600 .. 108 451 568 200 174 557 47 828 1 260 000 7 557 148 15 147 273 4 234 534 16 279 106

3 990 000 598 804 478 172 3 420 318 200 315 1 316 592 1 476 976 2 440 139 5 782 200 531 488 473 000 46 302 290 000 6 413 412 26 906 511 3 180 989 45 000 1 021 900 1 016 000 476 200 1 261 445 216 900 663 651 28 658 2 997 212 2 492 000 662 700 806 339 6 817 000 44 042 992 120 093 215 33 358 646 144 965 802

4 578 000 1 164 270 974 494 4 265 778 521 469 1 444 000 2 091 791 5 754 539 8 175 500 938 038 706 000 65 746 510 747 11 760 000 38 253 000 6 895 477 67 208 1 740 814 1 688 550 710 000 1 676 763 812 000 1 506 958 200 141 4 330 282 3 169 000 1 044 400 1 609 808 8 344 000 55 312 293 170 311 066 51 919 377 214 483 373

4 918 000 2 300 000 1 756 287 5 358 015 965 476 1 931 000 2 845 985 11 210 100 13 913 000 2 056 084 1 036 000 106 000 946 000 20 300 000 47 307 592 13 982 919 130 000 3 349 500 3 347 000 1 254 900 2 106 414 1 928 000 3 074 633 465 364 7 051 441 4 108 000 1 698 565 3 506 100 13 000 000 69 209 321 245 161 696 87 969 530 318 316 658

6 315 000 4 300 000 3 186 602 6 911 038 1 944 553 2 628 585 3 273 433 20 619 000 23 446 000 3 894 312 1 601 000 172 600 1 600 000 30 068 000 56 845 594 23 442 724 208 364 7 731 635 6 790 000 1 542 000 2 744 793 3 904 000 4 671 458 664 072 14 884 207 5 125 000 3 057 509 7 796 000 23 942 000 86 047 003 359 356 482 148 636 961 489 998 313

8 562 000 6 117 243 5 629 000 8 751 338 4 346 009 3 363 552 3 728 625 29 613 764 48 202 000 5 932 403 3 076 000 215 000 2 020 000 42 200 000 66 784 374 26 816 398 303 274 14 077 880 11 000 000 2 187 000 3 367 763 6 747 000 6 664 951 1 109 888 23 938 970 6 369 000 4 638 519 15 062 744 43 452 000 109 500 000 513 776 695 238 534 782 740 189 267

OECD % share of world total

93

83

79

77

73

69

1. New Zealand in 1996 and 1997 is for Telecom NZ only. Source: OECD.

OECD Communications Outlook 2003

104

Table 4.6. Cellular mobile subscribers in the OECD area

© OECD 2003

Table 4.7. Cellular mobile penetration, 2001

1997 24.7 14.4 9.6 14.2 5.1 27.3 40.7 9.9 10.0 8.9 7.0 24.3 14.0 20.7 30.3 15.0 16.0 1.9 10.8 18.9 38.1 2.1 15.3 3.7 11.0 35.8 14.7 2.5 14.1 20.6 15.5 13.9

Subscribers per 100 inhabitants 1998 1999 26.2 33.3 28.5 53.1 17.2 31.2 17.7 22.7 9.4 18.9 36.4 49.4 55.2 63.3 19.2 35.2 17.0 28.6 19.6 37.0 10.2 15.9 38.7 62.3 25.5 42.7 35.6 52.7 37.4 44.9 30.2 50.3 30.5 48.2 3.5 7.9 21.3 42.9 33.1 40.5 47.5 61.5 5.0 10.1 30.8 46.8 8.6 12.3 17.9 37.6 46.4 57.9 23.9 42.8 5.4 11.8 21.9 40.2 25.6 31.5 22.1 32.3 23.5 39.6

2000 44.5 75.4 54.9 28.4 42.3 63.0 72.0 50.3 58.6 56.0 30.7 76.5 53.3 73.8 52.6 57.0 69.2 14.5 69.1 57.1 75.0 17.5 66.6 20.5 60.0 71.8 64.6 22.3 72.7 39.8 45.8 63.4

2001 57.1 83.1 74.9 34.9 67.5 73.9 80.4 62.6 68.3 75.0 48.8 82.6 72.2 87.1 58.8 61.4 98.0 22.0 81.3 62.9 81.7 27.8 79.3 39.9 73.3 80.5 72.9 26.8 77.1 45.1 53.9 74.3

CAGR

CAGR

(2000-2001)

(1996-2001)

28.3 10.2 36.5 22.8 59.6 17.3 11.7 24.4 16.5 34.0 58.9 8.0 35.3 18.0 11.8 7.5 41.8 51.9 17.7 10.2 9.0 59.4 19.1 94.3 22.2 12.1 13.0 20.2 6.1 13.4 17.5 17.3

21.3 62.1 73.9 24.8 103.4 24.2 22.8 71.6 57.5 71.3 60.1 36.8 55.3 50.5 22.4 54.4 55.4 81.7 65.5 37.5 23.2 118.3 63.8 137.1 57.2 23.3 50.7 83.6 46.1 22.1 37.4 52.7

105

Network Dimensions and Development

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD EU Source: OECD.

1996 21.8 7.4 4.7 11.5 1.9 25.0 28.8 4.2 7.1 5.1 4.6 17.2 8.0 11.3 21.4 7.0 10.8 1.1 6.5 12.8 28.8 0.6 6.7 0.5 7.6 28.2 9.4 1.3 11.6 16.6 11.0 9.0

1995

% of total

1996

% of total

1997

% of total

1998

% of total

1999

% of total

2000

Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States OECD

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

.. .. .. .. .. .. .. .. .. .. .. .. .. 577 207 .. .. .. 414 493 .. .. .. .. .. .. .. .. 36 000 .. .. .. 1 027 700

.. .. .. .. .. .. .. .. .. .. .. .. .. 9.0 .. .. .. 40.6 .. .. .. .. .. .. .. .. 5.4 .. .. .. 0.9

.. .. .. .. .. .. .. .. .. .. .. .. .. 5 527 200 .. .. .. 999 711 .. .. .. .. .. .. .. 235 000 209 000 .. .. .. 6 970 911

.. .. .. .. .. .. .. .. .. .. .. .. .. 47.0 .. .. .. 57.4 .. .. .. .. .. .. .. 7.4 20.0 .. .. .. 4.1

.. .. .. 182 341 .. .. .. .. 2 086 950 716 314 0 5 500 .. 15 022 000 .. .. .. 2 314 982 1 573 090 577 254 474 152 462 720 2 428 960 .. 2 609 033 1 016 000 590 000 .. 4 901 000 .. 34 960 296

.. .. .. 3.4 .. .. .. .. 15.0 34.8 .. 5.2 .. 74.0 .. .. .. 69.1 47.0 46.0 22.5 24.0 79.0 .. 37.0 24.7 34.7 .. 37.7 .. 14.3

757 800 2 044 168 1 275 000 528 239 .. 979 811 29 907 7 279 489 5 533 256 2 052 085 473 630 40 000 640 000 25 257 120 1 907 000 .. 46 631 6 369 630 3 938 200 878 940 1 194 034 942 285 3 705 968 127 007 8 930 524 1 983 000 1 053 425 779 600 13 527 230 4 302 350 96 576 329

12.0 47.5 40.0 7.6 .. 37.3 0.9 35.3 23.6 52.7 29.6 23.2 40.0 84.0 3.4 .. 22.4 82.4 58.0 57.0 43.5 24.1 79.3 19.1 60.0 38.7 34.5 10.0 56.5 5.0 26.9

1 798 020 3 184 653 3 377 400 1 034 822 .. 1 244 886 74 573 13 041 600 26 318 292 3 468 960 1 748 981 63 000 1 266 338 32 020 000 1 414 000 .. 119 560 12 449 635 7 370 000 1 487 160 1 344 000 2 605 691 5 305 301 479 740 15 320 941 2 773 000 1 707 078 6 627 607 30 702 000 6 570 000 184 917 238

EU

..

..

577 207

1.7

5 762 200

11.1

30 353 347

34.5

77 222 389

52.0

145 587 503

Source: OECD.

% of total

2001

% of total

37.0 2.0 44.0 54.6 58.5 56.9 29.3 62.7 75.9 2.1 .. 39.4 88.4 67.0 68.0 39.9 38.6 79.6 43.2 64.0 43.5 36.8 44.0 70.7 6.0 36.0

3 339 600 3 372 242 4 614 000 2 733 386 3 016 209 1 473 921 83 512 18 060 800 28 122 500 5 029 014 3 584 581 88 000 1 966 700 38 640 000 1 847 000 .. 179 416 19 973 638 8 580 000 1 661 492 1 528 000 5 120 000 6 366 045 1 535 671 19 171 931 3 536 000 2 155 000 11 500 000 31 991 000 11 565 000 240 834 657

30.0 49.9 60.0 25.2 43.4 37.2 2.0 48.8 50.0 63.1 72.2 37.4 71.0 77.4 2.5 .. 41.5 91.8 66.0 68.6 41.4 47.6 79.8 71.5 65.0 49.4 40.9 62.4 69.1 9.0 39.4

61.0

171 187 080

60.9

21.0 52.1 60.0 11.8 ..

OECD Communications Outlook 2003

106

Table 4.8. Mobile prepaid subscriptions

© OECD 2003

Network Dimensions and Development

Table 4.9. Percentage of population coverage of mobile networks 1995

1996

1997

1998

1999

2000

2001

Australia

85

91

91

94

94

95

97

Austria

87

90

93

97

97

99

99

Belgium

..

..

95

96

98

99

99

Canada1

..

..

93

93

93

94

96

Czech Republic

88

92

95

96

97

98

98

Denmark

100

100

100

100

100

100

100

Finland

100

100

100

100

100

100

100

France

98

98

98

98

98

98

98

Germany

99

99

99

99

99

99

99

Greece

95

95

95

95

96

98

99

Hungary

89

97

97

98

98

98

98 99

Iceland

..

..

99

99

99

99

Ireland

95

95

96

96

96

98

99

Italy

95

95

97

98

100

100

100

Japan

..

..

98

98

98

98

99

Korea

95

95

97

98

99

99

99

Luxembourg

..

..

99

98

98

98

99

Mexico

..

..

80

81

82

86

90

Netherlands

97

80

98

98

98

100

100

New Zealand

95

95

95

95

95

95

97

Norway

98

98

98

98

98

98

98

Poland

..

..

75

91

93

95

98

Portugal

..

..

98

98

99

99

99

Slovak Republic

..

..

95

96

98

98

98

98

98

99

99

99

99

99

..

..

96

96

96

96

96

95

98

98

98

98

98

99

..

46

61

61

61

64

88

..

..

98

98

98

98

98

95

95

95

95

95

95

97

Spain Sweden Switzerland Turkey United Kingdom United States2

OECD average 94.7 92.4 91.1 95.2 95.7 96.4 97.8 1. Rogers Communications Canadian coverage for 1997-1999 and Bell Canada for 2000. This would tend to slightly understate the combined coverage of all systems in these years. Canadian data for 2001 is a CWTA estimate for the entire industry. 2. Data for the United States show the proportion of population living in counties with mobile network coverage. Source: OECD.

107

© OECD 2003

OECD Communications Outlook 2003

Table 4.10. Digitalisation in the OECD area Fixed network (percentage of digital access lines) 1993

1995

1997

1998

1999

2000

Australia

40

62

84

95

100

100

2001 100

Austria

54

72

82

92

100

100

100

Belgium

54

66

83

83

91

100

100

Canada

85

94

99

100

100

100

100

Czech Republic

10

17

55

64

74

86

95 100

Denmark

46

61

86

100

100

100

Finland

62

90

100

100

100

100

100

France

86

100

100

100

100

100

100

Germany

41

56

100

100

100

100

100

Greece

22

37

47

75

91

93

96

Hungary

27

53

73

79

81

86

88

Iceland

66

100

100

100

100

100

100

Ireland

71

79

92

100

100

100

100

Italy

57

76

94

98

100

100

100

Japan

72

90

100

100

100

100

100

Korea

59

63

67

69

74

80

88

Luxembourg

82

100

100

100

100

100

100

Mexico

65

88

90

98

100

100

100

Netherlands

93

100

100

100

100

100

100

New Zealand

95

97

100

100

100

100

100

Norway

60

82

100

100

100

100

100

Poland

10

48

58

62

68

77

90

Portugal

59

70

88

98

100

100

100

Slovak Republic

5

26

51

62

67

70

74

Spain

41

56

81

86

87

87

87

Sweden

67

91

99

100

100

100

100

Switzerland

48

66

99

99

99

100

100

Turkey

74

77

82

83

84

87

89

United Kingdom

75

88

100

100

100

100

100

United States

78

82

86

90

93

95

97

OECD Source: OECD.

69

82

88

92

95

95

97

108

© OECD 2003

Network Dimensions and Development

Table 4.11. Availability of digital subscriber lines (DSL) in the OECD area

Commercial service launch

Actual coverage by year end (%)

Projected coverage

2000

2001

2002

2003

85

87

Indicator used to express coverage

2004

Australia

August 2000

50

72

Austria

November 1999

72

77

Lines

Belgium

October 1999

75

93

95

96

Canada

1996

69

Czech Republic

Yet to launch - trial

0

0

0

44

Denmark

July 1999

65

90

95

95

95

Lines

Finland

May 2000

50

60

75

85

95

Lines

France

November 1999

32

76

86

91

95

Lines

Germany

August 1999

60

80

90

Greece

Yet to launch - trial

0

0

Hungary

December 2000

Iceland

Beginning 2000

Ireland

May 2002

Italy

December 1999

Japan

September 2000

Korea

April 1999

Luxembourg

2001

Mexico

September 2001

Netherlands

June 2000

New Zealand

Lines

97

Lines Households

20 33

51

0

0

45

67.5 73.5

Households

38

45

25

50

80

90

50 Population Lines

90

70

Households Lines

65

89

Lines

40

64

85

Lines

June 1999

60

69

83

Lines

Norway

December 2000

20

50

52

Poland

2001

0

3.5

10

Lines

Portugal

December 2000

61

Population

Slovak Republic

Yet to launch

Spain

1999

Sweden

October 2000

Switzerland

2nd quarter 2001

Turkey

February 2001

United Kingdom

July 2000

United States

1997

OECD (weighted average) Source: OECD.

0 0

50

54

Lines

0

0

62.2

81.3

89.3

Lines

70

75

Lines

0

85

90

Lines

0

0.01

2.5

50

60

66

36

50

31.91

58.02

5

10

62

65

67

65.85

68.79

69.56

Lines Lines Lines

109

© OECD 2003

OECD Communications Outlook 2003

Table 4.12. Public telecommunication investment in the OECD area (excluding spectrum fees) USD millions Average 1988-90

Average 1991-93

Average 1994-96

2 285

2 130

Austria

965

Belgium

614

Canada

3 479

Australia

Czech Republic

1997

1998

1999

2000

2001

3 050

4 009

3 463

4 145

3 842

3 333

1 308

1 283

1 000

1 663

1 890

1 907

1 611

780

928

722

670

746

952

591

3 353

2 811

3 991

4 116

3 665

4 028

3 99