TRADE IN TELECOMMUNICATIONS Michael Minges Telecommunication Development Bureau Telecommunications and Economic Growth Webster University Geneva 20 September 1996 1
Topics Trade in telecommunication equipment Trade in telecommunication services Rules and regulations Global electronic commerce
2
TELECOMMUNICATION EQUIPMENT TRADE Telecommunication equipment exports US$ billions
96
76 68 61 56
1990
1991
1992
1993
1994 3
Top telecom equipment vendors TELECOM EQUIPMENT REVENUE, 1995 Foreign Company (US$ b) sales % 1 2 3 4 5 6 7 8 9 10
Alcatel (Fra.) Motorola (USA) AT&T (USA) Siemens (Ger.) Ericsson (Swe.) NEC (Jap.) Nortel (Can.) Nokia (Fin.) Fujitsu (Jap.) Bosch (Ger.) Top 10
20'054 16'660 15'564 13'669 13'423 13'045 10'143 8'525 4'899 3'777
77% 63% 26% 57% 91% 28% 89% 91% 30% 56%
119'759
49% 4
Trade-dependent Telecom equipment exports, 1994 Developing 3% Asian 27%
How can developing countries pay? Generate enough service revenues Have strong currency
Multi-lateral loans (World Bank, EIB) Declining
Developed 70%
Bi-lateral loans Tied
Make own equipment China, Korea
Foreign Investment 5
TRADE IN TELECOM SERVICES Cross-border supply Consumption abroad Commercial presence Presence of natural persons
6
Cross-border supply Twenty years of talking International telephone traffic Billions of minutes 25% Developing countries
60
20%
50 40
15%
Traffic growth
30 20
10% GDP growth
5%
10 0
0% 75
77
79
81
83
85
87
89
91
93
95 7
Annual growth rate
Traffic (billions of minutes)
70
Imbalance Growing imbalances creating pressure for reform of “Accounting rate� system Growing callback exacerbates problem
Net telephone traffic Minutes, 1994 Mexico
1'134 700
Canada Philippines
369
Turkey
326
Colombia
230
-240
Singapore
-279
Switzerland
-400
Japan
-1'044 Germany -7'800 USA 8
Consumption abroad Cellular subscribers Western Europe, millions
Home billing Global System for Mobile Communications (GSM) Global Mobile Personal Satellite Systems
23
GSM Analog 15 9 6
1992
1993
1994
1995 9
Presence of “natural� persons CAN WE HELP?: SCANDINAVIAN TELECOM CONSULTANTS 1995 Company
Revenue (US$ m)
TeleDenmark Consult
11 44 Management training in Bulgaria. Network planning in Ukraine. Payphone network in Mozambique. 3 11 Corporate Plan for Mongolia. Feasibility study for cellular in Bangladesh. Subscriber network plan for Eritrea. Training for Lesotho and Poland. Billing system for Tanzania. Network planning in Russia. 33 225 More than 50 countries including development of services in Philippines, cooperation with new network operators in Poland, building transmission systems in 10 Bosnia and Hungary.
Telnor Consult
Swedtel
Staff
Projects
Commercial presence
Liaison office “Watching� function Foreign Direct Investment Privatization Joint ventures International partnerships
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Foreign Direct Investment “Only foreign investors can save Mongolia. We must do everything to attract them.” “Little countries like ours [Zaire] are in desperate need of help in developing infrastructure in things like telecoms, and we’re grateful for whatever can be done. But we mustn’t lose sight of what the world ‘help’ means. We’re not negotiating the carve-up of the world for the benefit of only half-a-dozen countries.” 12
Privatization “La Reconquista” Spain’s Telefónica in South America CANTV (6%) (Venezuela) 1991: US$ 300 million Telefónica del Perú (35%) 1994: US$ 2 billion CTC (44%) (Chile) 1990: US$ 400 million
Telefónica de Argentina (21%) 1990: US$ 160 million
13
Joint ventures ONE 2 ONE: US West
50%
ORANGE: Hutchison (HK)
65%
ESAT: TelNor(way)
38%
LIBERTEL: Vodafone (UK)
35%
BELGACOM MOBILE: AirTouch (USA) 25% Ameritech (USA) 13% TeleDanmark 12% Singapore Telecom10% SFR: BellSouth (USA) 4% Vodafone (UK) 10% TELECEL: AirTouch (USA) 23% AIRTEL: AirTouch (USA) 16% OMNITEL: AirTouch (USA) 12% BellAtlantic (USA)12% Telia (Sweden) 10%
Foreign investment in Western Europe Cellular Operators
NETCOM: Singapore Telecom17% EUROPOLITAN: Vodafone (UK) 19% NORDICTEL: AirTouch (USA)
51%
SONOFON: BellSouth (USA) 29% Vodafone (UK) 25% MANNESMAN: AirTouch (USA) C&W (UK) E-PLUS: BellSouth (USA) Vodafone (UK)
35% 5% 21% 17%
Ö CALL: Deutsche Telekom 25% STET HELLAS: STET (Italy) PANAFON: Vodafone (UK) France Telecom
75% 45% 35%
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INTERNATIONAL REGULATIONS ITU
GATT / WTO Equipment standards Numbering Traffic settlement principles Frequency conflicts Policy discussions
Equipment trade barriers General Agreement on Trade in Services (GATS) Annex on Telecoms Negotiating Group on telecoms 15
General Agreement on Trade in Services (GATS) Most-Favored Nation Transparency Domestic regulation Monopolies and exclusive service supply Business practices Market access National treatment Annex on Telecommunications 16
WTO timetable 1986-1993: Uruguay Round 15 April 1994: Marrakech Treaty 1994 - 1996: Negotiating Group on Basic Telecommunications (NGBT) April 30 1996: “Standstill� on NGBT December 9-13, 1996: WTO Ministerial Conference, Singapore Jan 15 - Feb 15 1997: Reopening of Group on Basic Telecommunications Implementation of agreement on basic telecommunications on January 1 1998? 17
APPLICATIONS: Global electronic commerce Telecommunications for other services Banking, travel, etc. Off shore software development
Telecommunications as commerce Voice services Information services
Telecommunications as trade facilitator Trade points EDI 18
Communications for other services Internal networks Banking, airline industry
Customer interaction Call centres International freephone
Delocalization Off-shore software development
SWIFT Messages Millions 600 500
5'000 4'500 4'000 3'500 3'000 2'500 2'000 1'500 1'000 500 0
Banks connected (right scale)
400 300 200 100 0 1990
1992
1994
19
Communications as commerce Internet host computers World, 000s
Audiotex Videotex On-line services Internet Interactive TVbased services
14'000
40'000
Hosts (left scale) Users
12'000 10'000
35'000 30'000 25'000
8'000
20'000
6'000
15'000
4'000
10'000
2'000
5'000
0
0 1.91
1.93
1.95
7.96
20
Communications as trade facilitator EDI users Estimated distribution
Trade points EDI
1995 total: 130'000 Americas 38% Pacific 8%
Europe 23%
Asia 30% Other 1%
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