Changing the Way we Work
 40 per cent of organisations are expected to be ‘virtual' by the year 2010 (compared to only 3 per cent at present)
 Electronic commerce is expected to grow from $8 billion in 1998 to $327 billion in 2002
Explosive Growth of Internet Technology
 90 million internet hosts expected to be connected by the year 2000 (compared to 29 million in February ‘98)
 70 per cent of US corporations are on-line, compared to 10 per cent in Europe and only 1 per cent in Asia Pacific.
 Current growth rates suggest that 138 million people worldwide will be connected from their desks to an Intranet by 2001.
 Extranets are already being operated by a quarter of North American companies, more than a third of European, and almost 20 per cent of Asian businesses.
Rapid Growth of Mobile Communications
 Mobile communications subscriptions is expected to grow from 10 million in 1990 to 200 million in 1998
 The global population of mobile phones reached almost 150 million in 1997 – a tenfold increase in the last six years – and should double again by 2000
 Call centres are now worth $1 billion and are growing at 40 per cent per annum
Transformation of Telecommunications
 Global telecoms market will grow from $650 billion market to a $1 trillion by the end of 1998
 European telecoms market was worth $140 billion in 1997 - basic telephony makes up $100 billion of this
 In Latin America, the six largest markets (Mexico, Brazil, Columbia, Venezuela and Chile) have grown by more than 12 per cent a year for the past six years.
 In 1996, China added more than 14 million new telephone lines – almost 30 per cent of all the new lines installed in the world that year.
 By 2001, the Japanese market may represent 27 per cent of the total world internet market
 There are fewer than two telephone lines for every 100 people in Africa
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Technology, liberalization and new customer demands are transforming the global telecommunications industry.
A Growing Business
According to the ITU, total trade in telecommunications equipment and services in 1995 was $788 billion, and, with annual growth of around seven per cent – twice the rate of the global economy – it will be a trillion dollar business in 1998.
Telecom Revenue: Going Up
But this growth in revenue disguises an explosion in telecommunications use, driven by new applications and falling prices.
The 1990s has seen a constant rise in the number of new fixed lines installed worldwide each year. Forty eight million new fixed lines were installed in 1996, bringing the global installed base to 741 million. And the number of cellular subscribers grew by over half in 1997 to reach almost 200 million.
More significantly, networks are crammed with new traffic and applications. International traffic measured in telephone minutes more than doubled between 1990 and 1996 to reach 70 billion minutes, a combined annual growth rate of about 15%. Where competition has taken a real hold, telephone traffic is growing even faster: outgoing traffic from the UK grew by 30 per cent in the year to April 1997.
Voice telephony, and particularly international voice telephony, continues to grow almost everywhere. But in international networks, especially, data traffic growth is reaching dizzying new heights as new applications proliferate – especially applications carried on the Internet.
On the transatlantic corridor – the world's busiest international telecommunications route – Internet traffic is doubling every year, and it surpassed voice traffic by volume in September 1997. By 2000, it may account for 75% of all transatlantic traffic.
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Lower Prices for Businesses
Over the last 20 years, there have been huge reductions in the underlying cost of providing international telecommunications.
For instance, technology has transformed the cost of new fiber optic submarine and terrestrial cable transmission systems, which are now at the core
of all international telecommunications. Equipment and installation costs per voice path on the trans-Pacific route, for example, fell from $73,000 in 1975 to only $2,000 in 1996, and the next cable, due to be installed in 1999, will cut that cost to less than $200. In the early years of the next decade, cost per voice path could be as low as $5.
Telecom Prices: Going Down
After years of frustration, those changes in the cost base are feeding through to users. On the intensely competitive transatlantic route, for instance, prices are now falling by about 30 per cent per year. Over the past five years, the average price of a three minute, peak-rate US-Europe phone call has fallen from just over $4 to about $1.50. It seems likely to continue to fall rapidly, to 50 cents or less by the end of the decade.
Those falls in call prices have been driven by competition. There are now more than 50 facilities-based providers of international telecommunications operating in the UK, and there are 10 in Sweden, the two European countries which liberalized supply first. In the US, there are even more.
New providers tend to compete on price. In the market for leased capacity – the raw material of many corporate user networks – prices in competitive European markets are only one-third of those charged in monopoly markets.
Price benefits are now likely to be felt everywhere as a result of pressure from users and suppliers to end monopolies. The World Trade Organization agreement on telecommunications services, signed in February 1997 by 69 countries that collectively account for more than 90% of all telecommunications trade, calls for the liberalization of nearly all markets by 2000 or soon after.
In some regions, the effects of liberalization will be felt very soon. In Europe, most national and transborder markets opened in January 1998, and the consequence has been a huge investment bonanza by new entrants that is already having an impact.
In virtually every European market, there are at least two well-funded new entrants, typically offering to carry customer traffic for 20–30% below the national telco's price.
Meanwhile, an unprecedented fiber optic boom is underway, with at least four new pan-European infrastructures based on optical fiber now planned. Two – being built by WorldCom and Hermes Railtel BV – are coming on line this year. The consequence will be a free fall in the price of bandwidth, the raw material of all telecommunications. Bandwidth prices between major European cities are still five to ten times as high as between comparably distant US cities; by 2001, that could be a thing of the past.
At the same time, state ownership is receding. Since 1984, 44 public telephone operators have been privatized. And 1997 was a vintage year, with major offerings in China, Germany, France, India, Italy, Portugal and Spain. Fewer than ten of the top 50 international telecommunications companies are still wholly owned by the state.
Privatization: Becoming Fashionable
While privatization does not in itself lead to more efficient services, it frees the national telcos to seek new sources of investment and improve internal efficiency, and it tends to make an easier environment for competitors.
New Suppliers, New Choices
Competition and technology are not just impacting on prices – they are also greatly increasing the choice of services available to business users. And those new services are as likely to emerge from the software and computer industries as they are from the telecoms industry.
Some examples include:
mobile communications: the number of cellular mobile subscribers worldwide has grown from
10 million in 1990 to 200 million at the beginning of 1998, and most world markets are now competitive, driving down prices.
call centers: major companies, especially in the service sector, are making big productivity gains through the use of call centers which handle sales and customer service. The spread of call centers and associated freephone or 800 service closely tracks competition. In the US almost half of all long distance calls are freephone calls, and in the UK, where call centers have been aggressively promoted, the market is now worth $1 billion and is growing at 40% per annum.
the Internet: the Internet is the fastest-growing communications network of all time and is affecting almost every aspect of the communications industry. Cheap, ubiquitous and adaptable, it now links 29 million host computers worldwide – an increase from less than one million in 1993. Its growth has encouraged the emergence of hundreds of national Internet Service Providers (ISPs) and software entrepreneurs, and traffic on the Internet is doubling every six to nine months.
intranets: the emergence of the World Wide Web and associated technologies has unexpectedly transformed internal corporate networks. Companies use Web technology to link offices and provide access to internal information resources and processes. Almost unknown in 1994, by 1997 over half of all large corporations had implemented an intranet. As a result, many corporations are seeing 100% data growth per annum.
These were gathered from around the 'Net, most is from BT. |
