After emerging from the crisis of 2000, the telecommunication industry is being transformed. Technological changes and the development of new services are affecting the core businesses of telecommunication operators. Voice continues to be the key driver in OECD telecommunication markets which have now attained revenues of USD 1 trillion. However, voice services, and the structure of telecommunication revenues, are evolving. Mobile services now make up 40% of all OECDarea telecommunication revenues, and mobile subscribers outnumber fixed subscribers by a ratio of 3 to 1. At the same time, technologies such as Voice over Internet Protocol (VoIP) are exerting strong downward pressure on prices for voice services. The impact of VoIP is apparent in prices for international fixed-line calls, which many VoIP operators now bundle into flat-rate subscription plans. As a result, the future of voice revenue streams is unclear.
Policy Issues and Market Structure
The telecommunication industry is being transformed. This chapter shows that voice has been, and continues to be, the key driver in OECD telecommunication markets. However, voice services are evolving. Voice over Internet Protocol (VoIP) and the growth of mobile telephony are changing voice markets significantly, causing shifts in the structure of telecommunication revenues. Broadband is quickly becoming a dominant technology and multiple-play offers of video, voice and data are now available over a variety of platforms. The chapter also highlights several emerging policy issues including the future of unbundling, investment in new networks, traffic prioritisation, universal service, and the need to reconcile broadcast and telecommunication regulation.
Recent Communication Policy Developments
New technological developments have continued to generate growth opportunities in the communication service sector. They are creating new markets and services but also new challenges to policy and regulation. The chapter examines key developments in competition and regulation in OECD markets during this period of change. It explains how local loop unbundling and broadband competition in general have changed the competitive landscape in many OECD countries. It also covers issues of state ownership of telecommunication firms and restrictions on foreign investment, the regulatory treatment of VoIP and fixed-to-mobile interconnection. Finally, it examines the increasing importance of communication in overall household expenditures in the OECD area.
Telecommunication Market Size
The telecommunication sector continued to grow, with revenues reaching USD 1 trillion for the first time in 2005. Users typically paid less for individual services but bought more of them. The introduction of these new telecommunication services has helped increase the percentage of telecommunication revenue in overall GDP to 3%. The chapter examines the size of the telecommunications market and highlights the sectors with the most impressive growth. Mobile revenues are increasingly important and now account for roughly 40% of total telecommunication revenues. Broadband revenues are also beginning to compensate some of the loss of voice revenues. The chapter also explores trends in research and development.
Network Dimensions and Development
In the past ten years there has been a significant shift in the way users access telecommunication networks. Mobile subscribers now outnumber fixed-line subscribers by a ratio of more than three to one. Several new access platforms have emerged during the past decade. In particular, users continue to move from dial-up Internet connections to broadband. This chapter examines network changes in the industry as fixed-line connections decline but DSL, cable Internet connections and mobile subscriptions increase. In addition, the chapter examines how the lines between fixed and mobile telephony are blurring. There is also discussion of prepaid mobile, the growth of 3G and the shift towards fibre networks. Finally, the chapter tracks investment trends that show a return to growth.
Broadband and Internet Infrastructure
The number of Internet users and subscribers in OECD countries continues to grow rapidly. At the end of 2005, there were 265 million active subscribers to fixed Internet connections and, of these, 60% were using broadband access. Broadband subscriptions have increased by more than 60% a year over the last five years. This chapter studies the growth of the Internet with particular attention to broadband. Other key topics include the number of Internet hosts and the rise in "bot infections". The chapter also includes data and analysis of domain name registrations, the growth in autonomous systems, the move from IPv4 to IPv6 and peering arrangements.
Markets for broadcasting are changing constantly. In many countries, the switchover from analogue to digital broadcasting is now taking off. People are able to receive audio-visual content through a number of different networks on a variety of devices. This chapter examines some of the main developments that are currently shaping broadcasting markets and will continue to do so in the next few years. It discusses technological developments, the availability and uses of content and channels, market structure and regulation. The chapter concludes by identifying some of the main challenges in this fast-changing landscape, for both regulators and market players.
Main Trends in Pricing
Prices for communications across the OECD area have continued to fall and users commonly receive better services for prices lower than they paid just two years earlier. The chapter looks at telecommunication pricing trends in the OECD area. It highlights the growth of flat-rate communication plans for both voice and data services. It also uses the OECD telecommunication price comparison methodology to provides comparative data on the different baskets of communication services across the OECD area for fixed and mobile telephony for both residences and business subscribers. A section devoted to broadband pricing examines total subscription costs as well as prices per Mbit/s for all 30 OECD member countries. Finally, the chapter looks at the development of bundled services and pricing for leased lines.
Trade in Telecommunication Equipment
Telecommunication trade continues its expansion in the OECD area and among OECD and non-member countries. Telecommunication trade, particularly with non- OECD member countries, is having a substantial impact on trade balances because of increasing imports from those countries. The chapter examines telecommunication trade in the OECD area and its place within the larger category of total information and communication technology equipment. It presents trade balance data from countries in the OECD area as well as key trends and growth patterns. Finally it examines revealed comparative advantages and the breakdown of intra-industry trade.
Communications in the Emerging BRICS Economies
The emerging economies often referred to as BRICS (Brazil, Russia, India, China and South Africa) have a number of important common features in terms of telecommunications development, although policy responses have sometimes been different. They are among the fastest-growing ICT markets in the world and are developing as large consumers and producers of ICT goods. This chapter examines and compares development and communication policies in each of the five countries.
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