Communications Outlook 2005/ OECD 24/08/2005

Communications industry rebounding but Internet throws up new challenges, says OECD

24/08/2005 - The communications industry has returned to profitability but developments in Internet technology are challenging the role and business model of traditional telecoms companies, creating pressures for a new approach to industry regulation, according to the OECD’s Communications Outlook 2005.

The growing popularity of Internet telephony, or Voice over Internet Protocol (VoIP), threatens the fixed-line revenues of traditional carriers, especially for international calls, the OECD report concludes. In addition, however, VoIP presents a challenge to mobile telephones, which in many countries are now more numerous than fixed connections.

In 2003, for the first time ever, the number of fixed phone lines actually fell in OECD countries, with mobile operators gaining market share at the expense of the traditional telecoms companies, a trend which continued in 2004 and 2005. As for Internet telephony, a comparison of the cost of calls via Skype, a VoIP provider, and via traditional fixed-line carriers in OECD countries revealed an average saving of 80% using Skype, according to the OECD report. On a per capita basis, Denmark, Poland and the Netherlands are the largest users of Skype.

Looking ahead, the OECD predicts that new service offerings from traditional carriers, such as Wi-Fi hotspots in cities, will provide tougher competition for 3G mobile operators than these had been expecting when they obtained their licenses, in many cases for large sums. To maximize revenue, the report suggests, 3G operators may need to change their charging policies, for example by persuading customers to sign up for longer term contracts rather than purchasing calling time on an ad hoc basis, as is presently the case for a large percentage of customers relying on pre-paid cards.

Among other things, the report forecasts that:

* Service operators will increasingly offer integrated video, voice and data products in a single service package.

* The growing popularity of downloading video from the Internet will reduce the time people spend watching free-to-air TV, driving down audience share and advertising revenue for broadcasters and making it harder for public-service broadcasters to meet their social policy objectives.

* Increasing competition from new platforms, notably broadband Internet, with traditional broadcast or telecoms providers may require a re-examination of existing regulatory frameworks. In particular, regulators may need to review obligations regarding universal telecommunications service as more companies offer telephone services over the Internet without having a physical presence in a country.

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++ Related:

OECD Communications Outlook, 2005 edition

The OECD Communications Outlook 2005 presents the most recent comparable data on the performance of the communication sector and policy frameworks in OECD countries. The data provided in this report map the six years of competition for many OECD countries that fully opened their market to competition in 1998. The 2005 edition also analyses the communications sector over the years following the "dotcom bubble" crisis and explores future developments.

The Communications Outlook provides an extensive range of indicators for the development of different communications networks and compares performance indicators such as revenue, investment, employment and prices for service throughout the OECD area. These indicators are essential for industry and for regulators who use benchmarking to evaluate policy performance. This book is based on data from the OECD Telecommunications Database 2005 (forthcoming), which provides time series of telecommunications and economic indicators such as network dimension, revenues, investment and employment for OECD countries from 1980 to 2003.

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For more information on trends in information technology, globalisation and their impact on the way people live and work, refer to the OECD Information Technology Outlook (latest edition published in December 2004), publication of which alternates every year with the Communications Outlook.

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OECD: Broadband internet to reshape entire communication sector
euractiv.com | InfoSociety | Published: Thursday 25 August 2005

In Short:

As Google's much-awaited Google Talk application hits the market, a new OECD study predicts stiff competition for traditional fixed-line telephony from internet-based solutions.

Brief News:

The OECD's 2005 Communication Outlook comes just as traditional telephony carriers are recovering from a period of non-profitability, but, the authors say, they may soon be plunging back into the red. The main threat comes from Voice over Internet Protocol (VoIP) telephony, which poses a series of challenges - especially to the profitable market in long-distance foreign calls. Using programmes such as the popular Skype VoIP application, users can cut 80% of their phone costs.

More threats for fixed line telephony arise from the growing popularity of mobile services, which is likely to be boosted once third generation mobile telephony with its high bandwidths and abundance of new services becomes widely deployed. But 3G itself is being challenged by the spread of wireless internet hotspots, which, in combination with VoIP may also be used for telephony.

The next threat, according to the OECD, arises for free-to-air TV, which may gradually be replaced by video downloading and video-on-demand on the internet. Cross-platform competition between the different technologies involved may create a need for new regulatory approaches, the OECD concludes.

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OECD Information Technology Outlook 2004

Information technology (IT) is a major driver of economic change, restructuring businesses, affecting skills and employment, and contributing to growth. The 2004 edition of the OECD Information Technology Outlook describes recent market dynamics and gives a detailed overview of the globalisation of the information and communication technology (ICT) sector and the rise of ICT-enabled international sourcing. It analyses the development and impacts of electronic business processes and describes trends in industries supplying IT goods and services.

This volume looks at how differences in access to ICTs have been supplanted by differences in use, looking especially at digital delivery via broadband for peer-to-peer file exchange, business services and healthcare. Further, ICT skills across all sectors of the economy are analysed to provide insights into the dynamics of job creation and outsourcing.

The potential of selected technological developments is examined, covering nanotechnology, grid computing, radio frequency identification, WiFi and anti-spam technologies.

Finally, this volume provides an overview of IT policy priorities in OECD countries and how these are evolving

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