Broadband remains one of the main growth areas for telecoms firms and one of their key challenges, looking ahead, will be to decide how much and how soon they should invest in next-generation networks, such as fibre-optics, rather than continue their investments in traditional copper networks.
Much more data can be delivered more quickly over fibre than over other broadband networks such as cable or DSL. This is important because emerging applications and services such as high definition television on demand require more bandwidth than current networks can provide. Looking ahead, the OECD expects consumer and business demand for fibre to rise.
Several operators have already made the decision to move quickly to fibre and customers in these countries have access to the best services at the lowest prices. Japanese fibre subscribers, for example, can download at 100 Mbits per second - ten times faster than the OECD average. Additionally, Japan’s price per Mbit/s is the lowest in the OECD at USD 0.22 per month. Japanese fibre subscribers can also upload at the same speed they can download which is not possible with ADSL and most cable subscriptions.
Questions remain about who should pay for installing new fibre networks and who should own them. For example, there is a growing trend for local municipalities themselves to build the network and then require their local network operator to offer competitors access to the network under equal terms.
There is no one size-fits-all solution to the challenge, according to the OECD. Those countries that have started stimulating fibre development have each taken a different approach. But governments, industry and local authorities need to work together to agree how best to upgrade their telecommunications networks.
Among other issues analysed in the OECD Communications Outlook 2007 is a distinct shift in the telecoms industry away from paying for voice to paying for data.
This is already affecting the core businesses of telecommunications operators. Voice continues to be the key driver in OECD telecommunications markets, worth over USD 1 trillion in 2005, but new technologies such as Voice over Internet Protocol (VoIP) are exerting strong downward pressures on prices for voice services and are expected to continue to do so.
Mobile services are also increasingly important in OECD markets, with mobile’s percentage of total revenue tripling to 39% between 1995 and 2005.
The report analyses telecommunications developments in Brazil, Russia, India, China and South Africa, the so-called BRICS. They are among the world’s fast-growing Information Communications Technology (ICT) markets and their impact is increasingly spilling over into OECD markets. Between 2000 and 2005, ICT spending in the BRICS economies increased by more than 19% a year from USD 114 billion to USD 277 billion, while worldwide ICT spending by just 5.6% a year and OECD country spending by only 4.2% a year.
