INTERNATIONAL TELECOMMUNICATION UNION

Geneva, 13 October 1997

“Postal Vision 2005: Global Challenges and Strategies in the Communications Market” - UPU High-level Meeting,
Geneva, 13 and 14 October 1997
International Communications Market:  Globalization of Services and International Competition
Telecommunications liberalization, international competition and universal service
Dr. Pekka Tarjanne, Secretary-General
International Telecommunication Union
Ladies and gentlemen,
It gives me great pleasure to be with you today, to share my thoughts on where the communications market is going, and on how key trends, such as liberalization, competition and globalization affect the old goal of universal service.
Consideration of these topics is especially appropriate as we stand at the edge of a new century, after a 50 year period which saw more progress in the communications sector than ever in the past. 
H. G. Wells said, “The past is but the beginning of a beginning, and all that is and has been is but the twilight of the dawn”. Those words put in a nutshell my feelings about the current stage of the revolution in communications and information. 
Unprecedented opportunities
I believe that this new age of intelligent, information-rich and multimedia communication will offer unprecedented opportunities to both the ITU and the UPU, and of course to our membership.
As you know, ITU and UPU are sister agencies which were founded at approximately the same time. Until recently our constituents – monopolistic postal and telecommunication authorities – were Siamese twins managed by national PTTs. 
Because of the dictates of the marketplace during the past decade, many countries broke away from a century-long tradition and separated the twins to set up new telecommunications corporations, some of which have also been partially or fully privatized. 
But the challenges faced by our organizations remain similar. In his message to this Conference, UPU Director General Thomas Leavey says, “It seems to me evident that clinging to the status quo is not an option in the changing environment which we currently face...cooperation may have to take new, more flexible and customer-driven forms...”
A vital sector
I agree with my friend Tom Leavey. These remarks are certainly true of the environment facing the ITU and its members. The fact is that the communications sector is vital to all economic activity and involves such enormous sums of money that it cannot stand still. 
“Money is like an arm or leg – use it or lose it,” said Henry Ford, the American industrialist. The relentless forces of competition and globalization are reinforcing this succinct advice.
To give you an idea of the scale of the telecoms industry let me offer you a few facts. As an industry, the telecommunications sector alone achieved combined sales of $788 billion in 1995, including three-quarters from services and one-quarter from equipment sales.  The public telecommunications sector alone earned more than $600 billion in 1995, including $53 billion from international telephone charges. Sales of telecommunications services grew at a rate of 7 per cent world wide in real terms, and there is little sign of a slowing down.
The boom is expected to continue into the next century, not least because telecommunications is at the heart of a much larger industry, combining information and communication, which was worth nearly $1.4 trillion in 1995. Clearly, status quo is not an option for any of us in this room.
Competition
Over the past few decades, the telecommunications industry has been reshaped almost beyond recognition by a handful of trends. It has seen a progression which has involved separation from postal services, through corporatization, privatization, liberalization and globalization to technological convergence among the telecommunications, computer, audio-visual, publishing and other information-based sectors. The re-shaping has occurred at all levels – national, regional and international.
The driving force has been competition reflecting the extraordinary technological innovations which have characterized the past 20 years. That helped to transform the industry’s structure away from national monopolies into an almost bewildering variety of deregulated and privatized operators, service providers and services. 
Privatization of public telecommunications operators in various countries has raised more than $160 billion so far. Extraordinary prospects have also been opened up for future foreign direct investment, particularly in the emerging markets and developing countries, many of which lag far behind the industrialized nations.
Although the transformations have occurred mainly in the industrialized countries, they encompass the overwhelming majority of international telecommunications trade.
Open markets
The market-place is now peopled by multi-billion dollar companies and the investments involved are far greater than in the past. The technologies and services are so varied, stretching from simple software to fiber optics and satellites, that only global markets and high volumes can amortize the massive investments required. 
The character of telecommunications has also changed. Data transmission is becoming just as important as voice and high-speed, high-capacity global networking is becoming arguably more important than local or even regional networks. The Internet has emerged as a likely backbone for the Global Information Infrastructure which in turn would be the backbone of the Global Information Society.
So, the move from closed to open markets is inevitable, although the period of transition may vary from country to country. Countries who might wish to stand still, no longer have that option.
ITU’s position
The ITU fully supports these processes of market opening because they can bring great benefits, in particular to the emerging and developing economies by building their infrastructure and information processing industries.
The latest ITU World Telecommunication Development Report 1996/97 shows that liberalization is beneficial for developing countries. It showed that international traffic per subscriber grew by 12 per cent in competitive emerging markets per year since 1990, compared with just 5 per cent in non-competitive ones.
As these processes evolve, they will foster a creative environment for investment and entrepreneurship, including the development of new forms of electronic commerce.
The value of trade in telecommunications equipment and services exceeded $100 billion in 1996. Electronic commerce over the Internet, which did not exist just a few years ago, is already measured in billions of dollars. 
A paradigm shift
To cut a long story short, a paradigm shift has taken place. Trade in telecommunications equipment and services is now a multilateral affair. Telecommunications is a strategic resource for economic growth just as important as land, labour or capital. It has a dual role as both a traded product and service, and a facilitator of trade. 
The rules of the game have changed irrevocably. Thus far they were based on bilateral correspondent agreements between operators to establish prices, known as accounting rates, for the joint provision of services. But the industry is now characterized by multiple suppliers, operators and services. 
Historic changes
In recent years, a number of historic changes have taken place in the telecommunications industry.  The United States, for example,  passed a new Telecommunications Act in 1996 which will open markets further for local telecommunications services and video entertainment. It also allows firms active in one market to cross over into others.  Many countries in the Asia-Pacific, Latin American and African regions have also taken measures since 1996 to liberalize their telecommunications markets.
Further important changes are slated to occur on 1 January 1998 and later. Let me mention just a few. 
1.	The new multilateral agreement to liberalize trade in telecommunications services, concluded at the World Trade Organization in February this year, will come into effect on 1 January 1998. Its 69 signatories, including many developing and emerging economies, account for more than 90 per cent of international telephone traffic.  This agreement is of the greatest significance for the ITU and its members.  We will be holding a World Telecommunication Policy Forum in this building from 16 - 18 March, 1998 to assess the implications of the WTO agreement and to examine how our members can cooperate in smoothing the transition to the new era of global telecoms competition.
2.	On this same date, the 15 Member countries of the European Union and several others such as Switzerland will open their internal telecommunications markets to competitors. Almost all have either corporatized their public telecommunications corporations and are moving towards privatization.
3.	Looking a little further ahead, in the coming years, several systems providing Global Mobile Personal Communications by Satellite (GMPCS) will be operational. That will make telephony distance-independent because calling Australia from Geneva will be not much more expensive than calling the building next door.
4.	At the same time, down here on earth Internet telephony will also become commercially important, making voice, fax and data transmission not only distance-independent but also almost duration-independent. 
As a result of these developments, I believe we are standing at the dawn of a new expansion in communications markets -- after several decades of breakneck growth which has left all of us breathless. But this time, the turbulence gives us reason to hope that we, at the ITU, will come closer to fulfilling our chief duty of promoting “the extension of new telecommunications technologies to all the world’s inhabitants”.
We can achieve that through the Global Information Society, a concept which seems to have found the widest favour among world leaders. In the context of such a society, I would like to see enshrined as a new fundamental human right, the imperative of universal access to basic communication and information services – what I like to call “the right to communicate”. 
Without such a strong commitment and priority to communications on the part of the international community, I fear that the world might become divided into the “information rich” and the “information poor”. It is this right which, through a global sharing of information at very low cost, will help the peoples of the world to receive education, develop their skills, find work, participate in social and political life and live healthy lives in a healthy environment.
Over the past couple of years, I have had the honour to lead a United Nations system-wide project whose objective is to see how the UN system can contribute to the achievement of these goals.  The UN Secretary -General, Mr. Kofi Annan, will submit the results of this work to the General Assembly next week with a proposal to endorse what I like to call the “Right to Communicate” as a fundamental human right in the global information society.
This concept has already received the collective support of  the Executive heads of all UN agencies.  In this connection, I would particularly like to thank my good friend Tom Leavey for the strong support he has given throughout this project.  Tom never failed to remind us that universal access to postal service remains a central objective for the international community, especially in a global information society.
Lessons
Let me now attempt to draw some lessons from ITU’s experience which might be relevant for the UPU as you prepare for your next Universal Postal Congress: 
1.	The first lesson is to be bold.  International organizations like the UPU and the ITU, which depend for success on consensus among diverse membership, cannot adapt to change as quickly as private companies or other public institutions.  A change that might take only a few months in the private sector and a few years in a national government might take a decade or more in an international organization.  Paradoxically, therefore, international organizations must be more far-sighted than other bodies, with a better ability to identify long-run trends and the tenacity required to pursue change.
2.	The second lesson is not to underestimate the impact of technology.  When I became Secretary-General of the ITU in 1989, hardly anyone had heard of the Internet.  Even two or three years ago, very few of our members took it seriously; it was seen as a toy for professors and computer hobbyists.  Today, people are saying that the Internet may turn the telecommunications industry upside down – that it will be the basic service of the future, and that voice will be just an add-on!  Five years from now, we will probably not even talk about the Internet; something newer and more revolutionary will have taken its place.
3.	The third lesson is to learn to communicate better.  It has always struck me as ironic that an institution like the ITU, which deals with communications, is a very poor communicator – even with its own staff.  In the past, it was not important to tell the ITU story; everyone who would have been interested was already part of the club.  And our members certainly had very little interest in hearing what their customers wanted; they did not even think of them as customers in those days.  As for the staff, they were there to do as the members decided, without thinking too much.  Today, we know that we need to tell our story to the world; that we must listen to customers, since the applications are more important than the technology; and that we will never be able to change if our staff do not understand the need to change, and to be part of the process.
4.	The fourth, and perhaps most important lesson, is to enhance the role of the private sector.  In telecommunications, it is now the private sector – not government -- that develops the global telecommunications network.  Their role in ITU decision-making must be enlarged to reflect this reality.  Without them, we will become nothing more than a bunch of bureaucrats.
Stuff of dreams
Mr. Chairman,
I could go on with other lessons, but this is probably enough for now.  Hopefully they will strike a responsive chord, and help you in your strategic thinking over the next few days.
In conclusion, let me say that mankind now has the technology and expertise to build a new Global Information Society to reach everybody on our planet and guarantee their fundamental human right to communication. If we so wish, we can build a sustainable planetary civilization where information – the most powerful component of peace, security, prosperity and health – is shared by everybody at minimal cost.
Shakespeare wrote, “We are such stuff as dreams are made on”. We might say something like that about our world of the 21st century. 
We have all dreamed of a better world. Now, after millennia of wandering and experimentation, mankind has arrived on the threshold of what could be a “golden age”. But whether that age dawns depends upon the wisdom and foresight of our decisions.
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