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World Telecommunication Development Report 2002
‘Reinventing Telecoms’
&
Trends in Telecommunication Reform 2002
‘Effective Regulation’

Overview

The World Telecommunication Development Report ‘Reinventing Telecoms’ and the Trends in Telecommunication Reform Report 2002 Report ‘Effective Regulation’ show that while the gap in telephone access between the developed* and developing world is narrowing, the ‘digital divide’ in the quality of Internet access is increasing.

In 1991, total telephone penetration (fixed line and mobile telephones) stood at 49 telephones per 100 inhabitants in developed nations, 3.3 in emerging nations and just 0.3 in the least developed nations. Today the levels are 121.1 telephones per 100 inhabitants in developed nations, 18.7 in emerging nations and 1.1 in the least developed nations.

Figure 1
The Telephone Gap shrinks …
But the Internet gap grows …
Note: Developed refers to the European Union, Switzerland, Norway, Canada, United States, Japan, Australia, New Zealand, the Republic of Korea, Singapore and Hong Kong SAR, China. LDC refers to the 49 Least Developed Countries. Emerging refers to all other countries.
Source: ITU World Telecommunication Indicator Database.

Ten years ago, those countries that had mobile cellular networks or were connected to the Internet were in the minority. Now, most nations have both. Africa has more than 20 million mobile phone users and by the end of 2001 and twenty-eight African nations — over half the countries of the region — had more mobile phones than fixed line subscribers; a higher percentage than any other continent.

Most encouraging is the fact that the nations with the fastest recent growth rates have been the least developed countries. They have surpassed the psychological threshold of one telephone user per 100 inhabitants during 2001. This is an unmistakable sign that the digital divide is being reduced, albeit at too slow a pace.

A less encouraging milestone was also set in 2001. For the first time in almost two decades telecom growth rates declined globally in 2001. Share prices dropped and profits turned to losses for many.

The New Digital Divide

While there is evidence that the digital divide in access between developed and developing nations is shrinking, the nature of the divide is shifting from basic to advanced communications, and from quantity to quality. Unfortunately, this is more difficult to measure because, unlike access, quality implies the nature of the users online experience.

For example, international Internet bandwidth (or IP connectivity) is a good measure of a users experience with the Internet. The greater the bandwidth, the quicker the response times and the more likely it was a richer multimedia or interactive experience. Yet the 400’000 citizens of Luxembourg share more international Internet bandwidth than Africa’s 760 million citizens. The reality is that high speed Internet access, which has become the norm in countries such as the Republic of Korea and Singapore, is still a long way off in most developing countries.

The digital divide not only exists between countries but within a country between urban and rural areas, between men and women, between the educated and the unschooled and between the young and the elderly. This divide is mainly the result of socioeconomic disparities, the root cause of which is poverty. The less money a country’s citizens have, the less likely they are to use information and communication technologies (ICTs).

Figure 2: The Digital Divide is an Economic Divide
Distribution of population, main telephone lines, mobile cellular subscribers and Internet users by country economic classification, 2001

Relationship between Internet (users per 100 inhabitants) and wealth (GDP per capita)
Note: Bottom chart: Logarithmic scales. Each dot represents one economy. GDP is in terms of purchasing power parity.
Source: ITU World Telecommunication Indicators Database

If access to information is a measure of power in society, the digital divide reflects how power is distributed. There is a shortage of conclusive research and examples of how ICTs can transform the development process. Effective solutions will require a triumvirate pact between governments, development agencies and the private sector.

The developed world can do much to help. For example, funding innovative grass–roots projects that harness ICTs to improve the livelihoods of local communities, incubating developing nation dot.coms and facilitating international connectivity to the Internet, especially among the least developed countries.

Developing country governments must also play their part. This includes adopting appropriate national ICT strategies based upon private sector participation, market liberalization and independent regulation, as well as developing ambitious universal access policies.

Mobile — the Missing Link

The mobile phone is poised to take over from fixed lines in the early part of 2002 as the network with the most subscribers. By the end of 2001, over 90 per cent of countries had a mobile phone network and almost 100 countries had more mobile than fixed telephone subscribers. In contrast, less than 1 per cent of the world’s population had access to a mobile phone a decade ago, and only one third of countries had a mobile network.

Figure 3: Mobile as the new global network

Note: In the upper chart, 1982-2001 is based on real data; 2002-05 on projections. In the lower chart, countries that are shaded had more mobile users than fixed lines, as at year-end 2001
Source: ITU World Telecommunication Indicators Database and ITU projections.

Mobile has raised access to communications to new levels. In developing nations, particularly the least developed, mobile is increasing telephone access in a surprisingly quick time. Even in developed countries mobiles are becoming substitutes for fixed-line telephones among the leading mobile economies (See Figure 4 below). There are many households which now have a mobile telephone but no fixed-line telephone.

The combination of mobile communications, competition and prepaid cards has been a blessing for the world’s least developed nations, many of which are experiencing unprecedented growth in telephone access. The main reasons are:

  • The mobile sector has higher levels of competition and private sector participation.
  • Mobile penetration doesn’t appear to be heavily dependent upon income in the early stages of development.
  • Mobile is helping to eliminate waiting lists by shifting the investment burden from the operator to the consumer.

 

Figure 4: Top Mobile Markets

Note: Subscription and prepaid shares based on 2000 percentages.
Source: ITU World Telecommunication Indicator Database.

Telecoms Reinvented

Today’s telecommunication world can be summarized in four words: private, competitive, mobile and global.

Private — more than half of ITU Member States by the beginning of 2002 , either fully or partially privatized their incumbent telecommunication operator. Even in countries that have not yet done so, the private sector accounts for an ever-greater share of the market thanks to new market entry through joint venture and licensing.

Competitive — while a majority of countries still retain monopolies in fixed-line services, such as local and long distance calls, competition is wide spread. An overwhelming majority of countries now allow competition in the mobile and Internet market segments.

Mobile — telecommunication services are increasingly mobile, that is, delivered by the medium of radio waves rather than over a fixed-line network.

Global — many major telecommunication operators have holdings in operators in other nations. Countries are also choosing to enshrine their market liberalizing moves in treaty-level commitments, notably the World Trade Organization’s basic telecommunication agreement. In addition, operators are offering new services such as global roaming, satellite systems and calling cards. Future third-generation (3G) mobile services have been designed from the start to be global rather than national in scope.

Trends In Telecommunication Reform 2002 – Effective Regulation

Convergence has pushed traditional telecommunication operators into new areas such as Internet and broadcasting. New technologies and service innovations have changed the economics of network rollout, especially in developing countries. The new telecom players are global in nature, with interests that cut across different sectors.

In the past decade, the reform of the ICT sector resulted in major changes at the regulatory and institutional levels. At least 115 governments have created regulatory entities. This trend is being fueled by the fact that countries have recognized that the most fundamental task of ICT sector reform is to establish an effective and transparent regulatory authority to ensure that markets operate efficiently and more importantly, for the benefit of consumers, business and economies overall.

Regulation can be seen as a tool to achieve the ultimate objectives of providing optimal ICT services to end-users. The need for regulators has grown more acute as countries open their markets to competition.

Increasingly, governments are realizing the value of their national ICT assets is linked to the strength of their sector reform programmes. The growth in the number of ICT service subscribers worldwide continues to swell, and for the most part these services are provided in a competitive framework that requires effective regulators to ensure fair and transparent market rules.

In order to ensure that regulatory authorities are effective, governments can:

  • Spell out the authority’s mandate clearly
  • Provide sufficient human and financial resources
  • Give the authority sufficient enforcement powers and organizational flexibility
  • Set timelines and goals for efficient and effective rendering of decision.

The concept of regulatory independence is one of the most difficult. What one government may consider vital in terms of independence, another may consider impractical, unwise or even impossible. Regulatory independence can be viewed in at least three different ways:

  • Independence from market players
  • Independence from narrow, partisan political influence or control
  • Independence of abilities and capabilities.

Note: Developed refers to the European Union, Switzerland, Norway, Canada, United States, Japan, Australia, New Zealand, the Republic of Korea, Singapore and Hong Kong SAR, China. LDC refers to the 49 Least Developed Countries. Emerging refers to all other countries.

 

 

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Updated : 2002-06-13