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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

11


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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Trade in Telecommunications  

Webster University, Geneva 20 September 1996

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