roundtable: OECD advocates more competition in communication markets

roundtable: OECD advocates more competition in communication markets

OECD advocates more competition in communication markets

Bjorn BLINDHEIM, STI/STCP (BLINDHEIM@OECD.ORG)
23 Feb 95 16:23:00 MET 

Date: 23 Feb 95 16:23:00 MET
From: "Bjorn BLINDHEIM, STI/STCP" <BLINDHEIM@OECD.ORG>
Subject: OECD advocates more competition in communication markets
To: "roundtable" <roundtable@cni.org>
Message-Id: <"11828132205991/520850@OECDHQ"@OAS4.OECD.ORG>


Date: 23 Feb 95 15:57:00 MET
Author: Bjorn BLINDHEIM, STI/STCP <blindheim@oecd.org>
Subject: Press release for Internet
X-Comment: Auto-converted from WPS-PLUS format to ASCII text

      You may like to note that the OECD "Communications Outlook 1995"
was released on 24th February 1995. Attached is the press release that
accompanied the Outlook launch.

        Please feel free to re-post this message in its entirety!

 ------ Unfortunately we could not include the graphics ------


Sam Paltridge                                   Bjorn Blindheim
paltridge@oecd.org                              blindheim@oecd.org


--------------------------------------------------------------------


Paris, 23rd February 1995




        THE OECD'S 1995 COMMUNICATIONS OUTLOOK PRESENTS FURTHER EVIDENCE 
OF THE BENEFITS OF COMPETITION IN TELECOMMUNICATION MARKETS AND CAUTIONS
AGAINST DELAYS IN REFORM TO TELECOMMUNICATION MARKETS WHICH ARE HAVING
NEGATIVE EFFECTS ON PRICE EFFICIENCY AND ON DEVELOPMENT OF NEW SERVICES.

     Public telecommunication operators (PTOs), generating total service
revenue of US$395 billion, and annual investment of US$103 billion,
constitute one of the most profitable economic sectors in OECD Member
countries.  According to the OECD's 1995 Communications Outlook, just
released, there is also further evidence that more competitive markets
would bring down prices for telecommunication services for households and
business users in countries which have not yet opened up their markets.  
The top 25 PTOs are more profitable than the world's 100 largest commercial
banks, while existing OECD-wide telecommunication networks have a current
book value of more than US$720 billion.  The financial strength of the
sector is welcome given the continuing large investment requirements for
PTOs to expand and upgrade their networks. Investments are running at about
US$124 per person per year on the PTO networks.  

     The OECD report provides additional evidence that some households
and business users are paying too much for telecommunication services.  For
the first time, an international time series compares different prices,
allowing governments to track their performance relative to other OECD
countries.  The results show an unambiguous endorsement of those countries
that have introduced competition into their telecommunication markets.   


     Between 1990 and 1994 the business price index for a basket of
services in countries with competition declined in real terms by 8.6 per
cent and by only 3.1 per cent in non-competitive markets (Figure 1).  Over
the same period the index of the average residential prices decreased by
3.1 per cent in competitive markets but increased by 8.7 per cent in
monopoly markets 

(Figure 2).  For high speed leased circuits business users in Member
countries with competitive markets pay, on average, nearly 40 per cent less
less than those in monopoly markets. 

     Indeed OECD countries with competitive markets are now seeking to
extend such benefits with further liberalisation in their telecommunication
markets.  For example Australia, Japan and the UK have recently gone beyond
limiting the mobile telecommunication market to two suppliers, a
characteristic first step in liberalisation in many countries.  Following
this change in policy the average monthly increase in the number of new
subscribers tripled in these markets.  On the other hand several other
Member countries are only now introducing second mobile operators in their
markets, penalising consumers with higher prices and limited choice.  The
cost of delay in markets for mobile telephony is relatively easy to
demonstrate yet this is still a relatively small part of the overall
market.  The cost of delaying reform to the fixed public network
infrastructure is even more pronounced and requires increasing attention.
        
     OECD governments are seeking to boost efficiency of their
telecommunication sectors in greater recognition of the importance of
information infrastructures to overall economic and social development. 
Efficient telecommunication networks are seen as being fundamental to
competing in global markets and increasing attention is being given to how
information infrastructure can be applied to improve the provision of
services such as health and education.  However, for these and other
applications to be brought to fruition, telecommunication prices must
reflect underlying costs.  PTO pricing will also need to reflect new ways
of using networks and be more responsive to customer demand. 

     The 1995 Communications Outlook examines the new policy frameworks
being put into place to achieve these goals, including the trend toward
increasing liberalisation in the telecommunication sector.  Since the
publication of the last Outlook in 1993, the number of Member countries
with competitive markets for public telecommunication services has
increased to eight -- Australia, Canada, Finland, Japan, New Zealand,
Sweden, the UK and US.  Most European Union countries will follow on the
1st January 1998, although some have the option to retain monopolies for a
further five years.  The Outlook concludes that rapid technological
development in telecommunications, linked with new service and market
developments is in many cases leaving the regulatory process behind.  
Governments need therefore to respond more quickly to change.


BACKGROUND


     This is the third in the biennial series of OECD Communications
Outlooks.  The Outlook provides a range of performance indicators for
public telecommunication services and an overview of the telecommunication
sector.  It analyses developments over the previous decade and highlights
future trends.     Comparative national data from earlier years, in a
harmonised format, is provided to show tariff, investment, network and
service development, as well as employment and productivity trends.  The
Outlook data, which includes more than 70 time series, is made available on
diskette in the *STARS* format and can be easily transferred to a
spreadsheet.  A comprehensive telecommunication policy survey contains the
response of Member country governments to a questionnaire on a wide range
of regulatory issues.

----------------
"Communications Outlook 1995"
222 pages, OECD, Paris 1995
France only:  FF340         All other countries:  FF425;  US$83;  DM129
ISBN 92-64-14330-0 (93 95 08 1)
Available from the OECD Publications Distributors.


For those of you living in the US copies can be obtained from the: 

OECD Publications and Information Centre, 
2001 L Street, N.W., Suite 700,
Washington, DC 20036-4910
Tel. (202) 785 6323
Fax. (202) 785 0350

In other countries copies can be obtained through their national OECD
publications outlets.

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