Tuesday, October 21, 2003


The Economist of October 11, 2003 includes a “Survey of Telecoms”. Here are some snippets of information gathered from the issue.

From 1998 to 2002 the amount of fibre in the ground increased fivefold and the transmission capacity of each strand of fibre increased 100-fold, so total transmission capacity increased 500-fold. Over the same period demand for transmission capacity quadrupled.

Household spending on communications in OECD countries increased by 50% in the 1990’s, while household spending on food and clothing actually went down.

“The most visible growth area is the continuing rise of mobile phones, which have overtaken fixed-line phones to become the most widespread communications devices on earth. Their number is expected to rise from 1.3 billion today to 2 billion by 2007, and they are being increasingly used to do much more than make phone calls, providing new opportunities for wireless operators and equipment makers.”

Some 450million new handsets are bought every year.

Broadband is the second growth area, and telecom operators with fixed line networks are moving to increase broadband service (and income) to make up for losses in traditional voice service.

The best performing of the stocks of large Telecom firms is selling at less than half the price at the beginning of 2000.

“According to Telecompetition, a market-research firm, China and India will account for 60% of new mobile subscribers between now and 2010.”

"Whereas 3G has so far proved an expensive mistake, text-messaging has been a spectacular success.”

A survey of 5,600 mobile users in 15 countries “found that 43% of users now have an internet or WAP-enabled phone, and 34% have accessed internet content on their phones, up from 27% in June 2002.”

Vonage VoIP telephone service illustrates a potentially disruptive technology, allowing great convenience and low costs for the international set.

“The true significance of Wi-Fi is that it provides a glimpse of the potential of wide-area wireless-broadband technologies.”

Perhaps the best illustration of this convergence of telecoms and IT is the growing practice of carrying voice calls over corporate data networks, using voice-over-internet-protocol (VoIP) technology.”

“Customers are more likely to give a telecoms operator the lead role in a network-specific task (such as network management), but favor a systems integrator in a computing-specific task (such as setting up a customer-service website). Call centers are right on the boundary, because they involve both networking and computing components.”

Operators are now concentrating their spending mainly on three areas: equipment to provide services, such as high-speed internet connections, that can provide new sources of revenue; ways of simplifying their tangled networks and reducing running costs; and software and other operating support systems that allow them to implement new services more quickly and efficiently.”

“Operators' capital expenditure as a percentage of their revenues will stay in the low teens, he predicts, far short of the 30-50% of the boom years.”

How best to promote competition over the local loop is by far the most controversial topic in telecoms regulation. Ideally, competitors would put an end to the incumbents' local-loop monopoly by building their own networks. But building a competing network with the same reach is hugely expensive and time-consuming. Cable networks generally provide coverage only in some areas, and mobile-phone networks cannot yet offer broadband internet access. So, over the past few years, most of the developed world has been asking incumbents to share their networks with rivals—technically known as “local loop unbundling” (LLU). This means treating the incumbents as a special case and regulating them in an “asymmetric” way, at least until competing networks have been constructed. By allowing competitors to lease or resell lines, regulators have been able to foster competition in both telephony and broadband access.”

“At the heart of the telecoms industry, internet technology continues to sweep all before it.”

I recommend that you read the Survey!

No comments: