Trends in Global Telecommunications Essay
Trends in Global Telecommunications
Telecommunication exists everywhere, — at home, at work, at school, and even in cars – so it would be extremely difficult for anyone to be unaware of the popular trends in existing and emerging telecommunications technologies. In realizing these trends, past and present telecommunications technologies must be examined along with the measures currently being taken to improve them so that future trends can be predicted and developed.
WORLD TELECOMMUNICATION DEVELOPMENT REPORT
The International Telecommunications Union recently released a World Telecommunication Development Report (WDTR), which offers guidance on how to measure information and communication technology (ICT) access around the world. The report points out that there is a gap between digital and statistical data “within and between richer and poorer nations” (Minges et al). Michael Minges, the report’s lead author, states in it that poor economies are ignored when Internet user surveys are conducted. He goes on to say that governments must become more actively involved in measuring access to ICTs in their respective nations in order to rise above the “data divide”. The report listed twenty-three e-ITU indicators, assembled by the International Telecommunications Union, that are based on the results of existing data and new analyses and surveys. The list could be considered as a global standard for accumulating equivalent data to keep tabs on how the information society is developing globally (see Table 1 for the list of indicators).
Table 1: The e-ITU Indicators
1Percentage of households with electricity13Student to computer ratio
2Percentage of households with a radio14Percentage of schools with Internet access
3Percentage of households with a television15Percentage of government offices with Internet access
4Percentage of households with a telephone16Percentage of government offices with a website
5Percentage of households with a personal computer17Percentage of government employees with Internet access
6Percentage of households with Internet access18Main telephone lines per 100 inhabitants
7Percentage of population covered by mobile telephony19Mobile cellular subscribers per 100 inhabitants
8Percentage of population that use a computer20Internet access tariff (20 hours/month) as percentage of per capita income
9Percentage of population with access to the Internet21International Internet bandwidth per inhabitant
10Percentage of businesses with computers22Broadband subscribers per 100 inhabitants
11Percentage of businesses with Internet access23Internet users per 100 inhabitants
12Percentage of businesses with a website
Source: ITU World Telecommunication Development Report 2003
In 2000, heads of state established the United Nations Millennium Development Goals (MDGs). The ultimate end of these goals is to eliminate hunger, disease, poverty, and other serious social and socio-economic issues (Minges et al). The ICTs could provide an avenue for achieving the MDGs if the indicators are applied correctly to the appropriate goals. From the information given in the report, one of the most important of the Millennium Development Goals seemed to be education improvement – specifically, the training of teachers using information and communications technologies. Table 2 highlights a small selection of the Millennium Development Goals and the potential impact that those MDGs could receive from information and communications technologies.
Table 2: How ICTs Can Impact the MDGs
Goal 1. Eradicate extreme poverty and hungerIncrease in income from ICTsA 1999 study of Village Pay Phone (VPP) owners in Bangladesh found that profits from providing phone service constitutes 24% of these households’ total income.
Goal 2. Achieve universal primary educationPrimary school teachers trained by ICT-based educationIn Nepal, 4’430 people were trained as primary school teachers using radio-based distance education in 2001. Based on the current student-to-teacher ratio of 40, an additional 176’616 new primary school students could be enrolled once these teachers complete their training. This would raise the net primary school enrolment rate 5.7%.
Goal 3. Promote gender equality and empower women
Females enrolled in ICT-based education as percentage of total female tertiary enrolmentOpen Learning Australia (OLA) offers higher education through a combination of distance and on-line teaching. In 2002, there were 6’129 students enrolled in OLA of which 56.9% were female. This is higher share than in overall higher education (54.9%). As a result of OLA enrolment, female tertiary school enrolment is 0.8% higher.
Goal 4. Reduce child mortalityPercentage of parents of small children using ICT-based health toolsBaby CareLink is a telemedicine program for parents of infants in the United States. A 1997-99 evaluation of 56 patients found those parents who used Baby CareLink reported a 10% higher quality of care than those who did not use Baby CareLink.
Goal 5. Improve maternal healthPercentage of maternal health workers using ICTsA July 1999 evaluation of a maternal health project in the Tororo district of Uganda based on radio technology, found that maternal mortality dropped 50%.
Goal 6. Combat HIV/AIDS, malaria and other diseasesPercentage of adult population adopting health lifestyle after exposure to ICT-based health informationA September 1998 evaluation of an entertainment-education radio soap opera on HIV prevention in St. Lucia found that condom imports rose 143% after the program was aired.
Goal 7. Ensure environmental sustainabilityTeleworkers as percentage of total in employmentThere are 38’700 teleworkers in Ireland (2.3% of total in employment). As a result, CO2 emissions from car use are 2% less. If all those in Ireland who say their job lends itself to teleworking (28% of total employment) could telework, there would be a 30% reduction in CO2 emissions.
Source: ITU World Telecommunication Development Report 2003
TELECOMMUNICATIONS IN TRANSITION
The largest movement in global telecommunications today is the beginning of the transition from wired to wireless. According to an industry report by Technology Futures Incorporated (TFI), the use of wire lines and access lines is being replaced by cable and wireless telephony technologies. The report also states that more than “ten percent of the access line market” has been captured by competitive-exchange telecommunications companies in North America (Robison). Phillip Sundquist, fund manager of Clariden Communications in Zurich, Switzerland, notes that many companies are investing in wireless, broadband, and wireless fidelity (Wi-Fi) technologies since their central business – fixed-line voice service, is shrinking. Sundquist goes on to say that most European companies are not absolute telecoms but “fully integrated operators with wireless divisions.” Therefore they still have to deal with the decline in revenues of fixed-line services (Reinhardt “Telecom Picks from a Pro”).
TELECOMMUNICATIONS AND REVENUE ISSUES
Though wireless is becoming more popular among consumers, profits for the telecommunications industry as a whole are falling even with wireless profits increasing (Rosenbush “A Wireless World” 2). The profit margins and revenues of traditional telephone companies have steadily decreased since 2001 and will continue to decline in the future (Rosenbush et al. “A Wireless World”). Because the wireless communication industry has grown at such a rapid rate since 2000, it is set to overtake traditional telephony in as little as two years if growth continues at its current rate. The Deloitte Telco Index, which is a global overview of the telecommunications sector, reported recently that worldwide telecommunications companies had suffered large losses in market capitalization although revenues were up in the industry. Every region examined showed similar losses – 69.5% in Asia Pacific, 73.1% in
the Americas, and 67.1% in Europe (“Telcos Have Lost Most of Their Market Capitalisation”). Telephone companies want their revenues to come from a variety of internal ventures, so they are incorporating more wireless technologies into their businesses. According to Steve Rosenbush, wireless activity will probably be the force behind an upsurge of telecommunications industry consolidation during the next two years, and wireless is altering the essential structure of every other communications network in the world as it gains importance (“A Wireless World”).
FIXED-LINE VOICE SERVICE AND BROADBAND
Another factor aiding the decline of traditional fixed-line voice service is Internet telephony. Though more people in developed countries use land line telephones much less than they did ten years ago, – if they still use them at all – the adoption of broadband in households will keep
fixed-line carriers afloat. Fixed-line carriers are still the owners of local networks. This is an asset although “the world is going wireless” because the advantage of wired networks over wireless networks is higher speeds of communication, or bandwidth, and faster is better in this digital age (Reinhardt et al. “The Wireless Challenge”). Since newer Internet equipment is much less costly than current and older networking equipment, phone companies across the globe will make the technological transition to Internet telephony through digital subscriber line (DSL) service. One company, Telecom Italia, has already made the transition by making Internet equipment the center of its national network (Reinhardt et al. “The Wireless Challenge”).
CHANGING THE PARADIGM IN TELECOMMUNICATIONS
While changes in telecommunications technology will eventually be beneficial to companies in the telecommunications industry, companies have to determine how to adopt changes without losing their current customers. The changes in technology will change business models for most telecommunications companies. Panelists of a Wi-Fi event, hosted by the Telecommunications Industry Association (TIA) and TelecomHub, reported that the new or altered business models should reflect the value that will potentially be provided to enterprise customers. The panelists continued that the customers should know what that value is and how it will benefit their organizations (Milligan). Deregulation has been the cause of market-share losses for established telecommunications companies, according to Pyramid Research LLC of London (a telecommunications market watcher).
Pyramid reported that although the majority of European telecommunications companies hold and run nearly all of the European home-market telephone lines, rivals of those companies obtain up to fifty percent of minutes spent during conversations on those lines. This is because customers are able to choose substitute telephone service carriers to use for telephone calls (Reinhardt et al. “The Wireless Challenge”). Some companies in transition, mainly those that offer both fixed-line services and wireless opportunities, attempt to hold on to their customers by encouraging them to change from the old wired services to the new wireless services, while other companies allow the consumers to make their own decisions about telecommunication services. The latter could end with negative results because the companies’ internal divisions are competing with each other instead of with the services of external companies (Reinhardt et al. “The Wireless Challenge”).
TELECOMMUNICATIONS PAST THE TELEPHONE
New innovations are also having their impact on the global telecommunications industry. Wireless device specialist i-mate, owned by Carrier Devices Middle East, has created a unique merger of the Windows Mobile Pocket PC and the cellular phone. It is specifically designed for global operation – mainly for users residing in English-speaking and Arabic-speaking countries. According to Christine
Haugseth, wireless handheld devices like the i-mate Pocket PC that appeal to the mobile telephone market are products of the future – available today (“i-mate Launches New Windows Mobile Pocket PC, Phone Edition”).
Tholos, a video conferencing innovation by Tholos Systems of Vienna, Austria, is on the cutting edge of technology. Tholos could be thought of as a giant webcam. The console consists of five cameras and a transmitter, and it allows its users to have private conversations on the streets of their separate cities – in separate countries. Each console is expected to cost 2 million ($2.4 million) to construct and install, and Tholos Systems aims to provide the services that the Tholos booths offer at no cost to the public (“Windows With a Grand Vision”). The plan is to have Tholos booths installed on the streets of sixteen cities in Europe by 2008.
Even carmakers are considering upgrading the already technologically advanced navigational systems that the vehicles contain. The OnStar network of General Motors’ vehicles is a precursor to the advanced systems that could come to pass very soon. Some carmakers are already working to build wireless fidelity (Wi-Fi) or Bluetooth specifications into future models (“A Web Address for Every Car?”). Even newspaper companies like The Washington Post are keeping the lines of communication open between themselves and automobile manufacturers. If this in-vehicle information-serving kiosk dream becomes a reality, newspapers want to be on board as well (“A Web Address for Every Car?”).
MERGERS AND ACQUISITIONS VS. PARTNERSHIPS
It is expected that telecommunications companies will grow not through mergers and acquisitions but through partnerships. Most companies can no longer afford to negotiate deals for mergers and acquisitions because stock prices are down. The blurring of the boundaries between different sectors of the telecommunications industry is another reason why mergers and acquisitions are difficult to achieve among industry companies (Rosenbush “Telecoms Will Date, Not Mate”). Partnerships are difficult as well, since differing agendas of the partnering companies make it hard to establish a strategy or work together for a common achievement.
Having managers with different work styles – and heightened egos – attempt to work together could also end in disaster, for everyone involved. It is for these reasons that the activities of mergers and acquisitions will not be dissolved, according to Steve Rosenbush. He claims that the merging of a number of companies – like some of the tens of wireless telephone companies in the United States – could decrease the capacity that the sector has in the industry and form powerhouses (Rosenbush “Telecoms Will Date, Not Mate”).
THE DOMINATION OF CHINA
Some experts in the telecommunications industry see China and Chinese industry players rising to become the force to be reckoned with in the global telecommunications game. Grant Hyde, lead partner of the Deloitte Asia Pacific Telecommunications Group says, “China is the most tantalizing market on the globe” (qtd. in “Telcos Have Lost Most of Their Market Capitalisation”). He also states that the Chinese market will overtake Japan for the dominant position in the Asian Index (“Telcos Have Lost Most of Their Market Capitalisation”). Two Chinese newcomers to the communications equipment-manufacturing sector of telecommunications, Huawei Technologies and ZTE Corporation, are two of the fastest-growing equipment makers in the world.
Their profits will rise rapidly because of lower-priced products than are available in the Western countries, and because China is such a large market. China became the largest global mobile market in 2001, and it outperformed the United States in the fixed-line sector of telecommunications for the first time ever in 2002 (Reinhardt “Telecom’s Future: Made In China?”). While Huawei and ZTE are currently producing “low-cost versions of Western gear”, they are pouring money into research and development to create their own high-tech, innovative communications equipment. They are determined to become giant forces in the telecommunications world (Reinhardt “Telecom’s Future: Made In China?”).
Technologies exist today that were not even conceivable ten years ago. Back then, Nicholas Negropointe of the Massachusetts Institute of Technology pointed out that the transmissions of telephone calls and television broadcasts seemed backwards, and he predicted that the technology would be switched in the future. He was right – the proof is in the wireless/mobile/cellular telephone and the cable television. However, developments and technological advancements for the Internet have “thrown all rules out the window” (Reinhardt et al. “The Wireless Challenge”). Broadband is emerging in the telecommunications industry’s local exchange network as the upgrade from narrowband cables and circuit switches commences (Robison).
Globally, companies are encouraging consumers to subscribe to DSL services and to take advantage of the emerging technology that goes along with it – voice calls over the Internet. Industry researcher Gartner Incorporated predicts that DSL will be a global industry worth $46.6 billion by 2007 (Reinhardt et al. “The Wireless Challenge”). Allied Business Intelligence, another industry research firm, predicts a $4.7 billion worth for “Voice-over-DSL service” by 2007 (Reinhardt et al. “The Wireless Challenge”). As technology continues to advance and the telecommunications industry continues to grow, all transitions – those currently in progress and those not yet set in motion – will be complete, according to Debra Robison in her article “Telecom Report Reviews Outlook for the North American Local Exchange Network,” between 2015 and 2020.
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