Matthew J. Flanigan Issue: Latin America I 1998
Article no.: 10
Topic: Shaping a New Global Communications Landscape
Author: Matthew J. Flanigan
Title: President
Organisation: Telecommunications Industry Association, USA
PDF size: 36KB

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Article abstract

The world is witnessing a unique time in the communications industry, as more change has been seen in the past two years than in the previous one hundred. As it increasingly relies on electronic means of communicating and doing business, the impetus for closing the telecommunications gap between the industrialised and developing worlds becomes greater. TIA believes that the next millennium will bring with it the technological and regulatory changes necessary to make the promise a reality.

 

Full Article

The global telecommunications market is undergoing a paradigm shift. All around the world, telecommunications monopolies, long a bastion of government control and bureaucratic attitudes, are rapidly giving way to private sector investment, rapid technological change, competition and deregulation. It is clearly a unique time for the communications industry as more change has been witnessed in the past two years than in the previous one hundred. Importance of International Market For the Telecommunications Industry Association (TIA) members (US telecommunications equipment suppliers), it is a time of rapid market growth coupled with markedly increased competitive pressures. Suppliers have to be highly efficient in manufacturing and fleet-footed in their marketing, customer support and technology development and need to have a global perspective. Results from a recent TIA member survey indicated that the international market has become a must-do for companies wanting to expand their opportunities and tap into the enormous market growth around the world. Now, about 91 % of TIA members are doing business abroad with another 8% indicating they plan to start selling abroad during 1998. For most companies the rationale is quite obvious: the US telecommunications equipment market is smaller and growing more slowly than the market outside the US, which is estimated at US$ 150 billion and growing more than 15% per year. Four Key Trade Agreements The global regulatory changes impacting the telecommunications industry have been captured in four key trade agreements that will set the tone of the global market for years to come. First, in February 1997, under the auspices of the World Trade Organisation (WTO), 69 countries signed a historic trade agreement that will pry open their markets for basic telecommunications services-markets traditionally characterised by monopoly PTTs. What does this mean for telecommunications equipment suppliers? It means, once implemented, competition will be allowed to flourish in those countries. New operators will spring up needing to build new networks. TIA has estimated that this Agreement will increase the market for telecommunications equipment around the world by US$ 35 billion per year. Second, in March 1997, also under the auspices of the WTO, almost 40 countries accounting for more than 90% in global trade in information technology (IT) products signed the Information Technology Agreement that will eliminate import duties on IT products. In many countries around the world where import duties have been prohibitive, this will represent a huge savings to suppliers in the range of US$ 2 billion annually. The third agreement that will have far reaching implications was achieved in June 1997 when the US and the European Union (EU) announced the completion of the US-EU Mutual Recognition Agreement (MRA). For US and European telecommunications equipment suppliers, the Agreement will dramatically facilitate the process for getting products tested and certified for sale in each other’s market. This Agreement is important not only for its own sake, but as a model for other MRAs. For example, a multilateral model MRA is being developed for the 18 economies of the Asia Pacific Economic Cooperation {APEC) Forum. Finally, in July a momentous agreement was reached under the auspices of the International Telecommunication Union (ITU) to establish global regulatory frameworks for the trans-border movement of satellite user terminals. This will become particularly important as new low earth orbiting (LEO) satellite systems become operational in 1998. Companies supplying terminal equipment for use with systems such as Iridium, GlobalStar, Teledesic, etc. will not need to be concerned about regulatory or customs processes. This should dramatically facilitate the market for the satellite services and the associated equipment. Recognised Linkage between Telecoms and Economic Growth These global agreements are occurring against a backdrop in which governments around the world are clearly recognising the linkage between telecommunications and economic growth and that private investment is the key to market growth and infrastructure development. Furthermore, individuals are demanding increased access to telecommunications for business as well as personal goals. This shift in government views towards telecommunications, as well as increased demand, is intertwined with the rapid change in technology that is occurring. Wireless Communications One of the most exciting technologies that has already made a significant impact on the global society is wireless communications. Over the past five to ten years, cellular has quickly become the technology of choice for bringing telecommunications to major segments of the global society that otherwise would not have had access to a telephone. Cellular subscribership has been growing by 50% per year and reached 200 million in 1997. Latin America is a prime example of a region experiencing rapid telecommunications development and using wireless technologies to meet market demand. Cellular subscribership in Latin America reached 10 million by year-end 1997 – up almost 150% since year-end 1995. And while wireless service has exploded around the world because of its ability to quickly increase the availability of basic voice telecommunications services, the full capability of wireless communications has not yet been tested. Currently, there is a competition of very significant importance – the race to third generation wireless technology. Third-generation systems are intended to offer global high-capacity voice, data, multimedia and personal communications services to wireless appliances. The race that will begin to stretch the imagination of technology developers and users alike. Wireless technology is about to become a vital medium for broadband multimedia services – a wireless window into the World Wide Web and beyond. Examples of Application Areas While it may be intuitively obvious what the implications are for developed countries, what does third-generation mean to developing countries, many of which have poor and inadequate wireline networks? How will this new age of broadband wireless help them? Next generation wireless has the potential to make significant progress towards closing the gap between the information ‘haves’ and the information ‘have nots’, towards building the global information infrastructure (GII) to include all countries in the world, not just which already have advanced networks. The emerging GII is already enabling individuals around the world to have their lives enriched by advancements in new telecommunications technologies. Emerging and existing technologies for disaster relief, emergency reactiveness, educational, financial services, medical and entertainment applications are touching the lives of many of the world’s citizens every day. Once the GII is fully developed, a child in Mexico City, for example, will have the same access to the Library of Congress as a child in New York City. The term ‘classroom without walls’ can be globally implemented. Telemedicine, another important developing application of the GII, enables people living in rural and remote areas to gain access to timely, quality, specialised medical care. Telemedicine is saving lives even today. For instance, as reported in Interactive Week, a boy in Nepal was diagnosed by a local health care worker with vasculitis, a serious inflammation of the blood vessels, thanks to a consultation over the World Wide Web with experts at the Dartmouth Medical Centre in New Hampshire. Next-generation wireless is key to implementing these exciting applications on a global scale. It throws the market into a new paradigm where networks can be established rapidly, at lower fixed costs, providing advanced services that will bring much needed connectivity to developing countries. Next generation wireless will be used for mobile as well as fixed applications. One of the most promising applications of wireless technology is providing the connection to the end customer – the ‘last mile’ as some call it. Wireless local loop is beginning to be used as a cost effective and rapidly deployed alternative to copper and fibre. The need for advanced services is already being felt. In Africa, 23 countries out of 55 now have cellular networks. An even larger number – 33 out of 55 countries – have Internet access. The need for more advanced networks is becoming increasingly recognised. Indigenous businesses as well as foreign investors need advanced telecommunications services for a wide range of applications, including the development of natural resources, import/export businesses, commercial services, manufacturing and many others. For example, a recent case study looks at the telecommunications needs of companies trying to exploit oil and gas reserves in the Gobi Desert. A key consideration in the development of these fields was how to transmit and process the vast quantities of data required to evaluate the fields’ potential. Another case study evaluates the need for advanced networks for gold mines in remote areas of Ghana. In these cases and many others, the ability to access advanced telecommunications becomes a linchpin in the development of these national resources. Telecommunications is needed not only by industrial businesses, but also by remote farming communities that can also benefit greatly by connection to business centres. One example is the way in which telecommunications enriched the lives of rural inhabitants of Bora, a small village in Bangladesh. In mid 1997, a woman living in the community was able to take out a loan and buy a cellular phone – the first phone in the village. The woman in question now allows community members to use her cellular phone for a small fee and has since become a focal point of the community with 50 or more people lined up to use her phone at any given time. Prior to then, the only way to get a message to the outside world was to walk or hire a rickshaw to another town or city. Making a call meant travelling to another city and waiting, often days, for a pay phone. The results have been so positive that the town is eagerly awaiting access to additional advanced services. Farmers in this remote community are at the mercy of agents, middle men or intermediaries, who come and tell the farmer how much the going price is for his crops on the open market. The farmer has no way of verifying the information and frequently gets cheated in the process. The community is eager to get Internet and other broadband services to help them understand the markets for their products – locally and even abroad. Some villagers even plan to use advanced telecommunications to set up a remote data entry business. The villagers all agree that telecommunications can dramatically help their town enhance its economic future and even help stem the migration to dangerous shanty towns around major cities in search of work. Other examples abound on the benefits of broadband and other telecommunications services including increased efficiency of central and local governments, more effective disaster relief and emergency preparedness, increased effectiveness of banks and other financial institutions to facilitate commercial transactions, enhanced interaction between family members, facilitation of tourism, and greater access to entertainment programmmg. Conclusion It is clear that as the world becomes smaller and increasingly relies on electronic means of communicating and doing business, the impetus for closing the telecommunications gap between the industrialised and developing worlds become greater. TIA believes that the next millennium will bring with it the technological and regulatory changes necessary to make the promise a reality.