|
Program :: Ljuben Talev /Thematic
Session II Accelerated Telecommunication Infrastructure ACCLERATED TELECOMMUNICATIONS INFRASTRUCTURE DEVELOPMENT
Telecommunications for Development Conference Your Excellencies, The world economy is being overtaken by the info-communication technologies, and by now it is universally accepted that they are key factors for growth and sustainable development. These new technologies are establishing the foundation of the infrastructure for a knowledge based economy. This economy is based on the exchange of intangibles - information, ideas, software, intelligence - all that can travel down the communication highways at speeds incomparable to moving goods and services. Even when a material product is still involved in a trade, the amount of knowledge and various forms of software built into it is fairly large already, and still growing. We should not be blinded by the so called "bubble - burst" of the high-tech companies valuations, which occurred in 2000. There were two very distinct phenomena which, by some people, were treated as if they were one. The first which had been building over several years previous to 2000, was the extraordinary selectivity in investment: the high tech bubble in the shares of companies, often with no profits to show for their inflated prices. The second phenomenon is e-business itself (and the whole information society concept) a very real and unprecedented opportunity to transform and improve many companies' competitiveness, to change the industries in which they operate, to fuel innovation, to create new high-value adding jobs, to open up alternative distribution channels and to create new cost structures. These changes are so fundamental they will transform the basic building blocks of economics, markets and work itself. The Internet and e-commerce are more about long-term business performance than about short term share performance. Many terms have been used to describe this new "economy", Some call it simply new economy, knowledge - based economy, digital economy. It seems that the most acceptable term would be networked economy. Sometimes taking into account that economy is just a part of the overall activity in a society, the term "information society" is used, reflecting the fact that info-communication technologies have greater and greater role in sectors such as 'education", "government" "health" which usually are not included in the narrow definition of "economy" Previous transition was the passing from an agricultural economy to an industrial one. If we accept the theory that all countries must follow the same stages of development, I'm afraid the developing world and underdeveloped regions will never close the gap. However, many recognize that info-communication technologies may help countries to leapfrog this development process by moving directly to an information-driven society, if they take the proper steps. To build the information-oriented society we do not necessarily require those pre-conditions such as the accumulation of wealth to be able to invest in the facilities for mass production which was the case when industrial revolution took place. What we need are creative individuals and a comparatively smaller amount of investment in info telecommunications infrastructure. Anyone can work and provide a product to the global market, even from a remote corner of the world if abundant communications are readily and cheaply available. Some success stories are known: the software industry in India's Bangalore, the case of a remote agricultural village in Peru which sells their products to New York via e-commerce are just two examples. South East Europe must not be left behind in these new developments. We are facing a unique chance to leap-frog and join the European mainstream much quicker than what would have been possible with the "industrial age" model. It is imperative that SE Europe seizes this opportunity of the new digital age. We must not be discouraged by the disadvantages and the obstacles on the way, nor by the region's violent experiences of the past, which have, quite understandably, discouraged investors. Investments should preferably come from the private sector which wants to see its capital increase. The donor community should consult closely with the private sector in developing its economic strategy for the region. The concept of public-private partnership must be given serious consideration. Given that telecommunications is central to the information society concept, one trend which has been spotted recently in Europe is very interesting and must also be closely watched: the resurgence of one-time telecom monopolies. Given that competition - conducted for its own sake - has not lived up to expectations- the incumbents might assume a new role: instead of natural monopoly which they were considered before - they might grow into benevolent monopoly. Some years ago EURESCOM (European Institute for Research and Strategic Studies in Telecommunications) has defined four scenarios for the European Information Society in the period until 2010 and the role of the Telcos in it: Converged market, Fully liberalised market, Business as usual and The Responsible Society. Lately in the aftermath of the Enron and WorldCom scandals, rising social and environmental concerns, it seems that The Responsible society is gaining an importance. Market should be seen just as a mechanism for sorting out the efficient from the inefficient, not as a substitute for responsibility. What ever the path and the legal and regulatory environment the big telcos must be leaders in the effort to define and establish an economically viable model for the information society in the South East Europe. In this region, the dominant telcos have a very special role in their respective countries. In the new information society, they can use their position very creatively and maintain leadership, even if they lose some market share - but the overall market can and should be much larger. In addition to this session today and tomorrow there are several others, one targeted mainly towards the NGOs, another towards regulators, other towards the e-envoys from the region, and also other stakeholders. This session is targeted towards the CEO's and Presidents of the region's telecom operators, privatised or at least partly privatised. This reflects the view that it is impossible to realise the goals of eSEEurope initiative without active participation and partnership with the regional telcos, and the private sector in general. The regional telcos must be aware of their responsibility in this crucial moment when SEEurope has a unique chance to catch up with the European mainstream. After all it is their own interest. If the market is larger, and the customers are educated, companies will be valued more as well. The main goal of this session is to invite you the CEOs of the regions leading telecom operators to come up front and clearly state: what do you need in your environment, so you can go to your Boards and ask for more investments in the regions telecom infrastructure. Do you see the need for special forms of cooperation, or special regulatory environment, insurance for non-commercial or commercial risks or something else? Usually two factors are quoted for lack of investment. First is the relative instability of the region, and the second the relatively low level of demand for advanced services, compared to the rest of Europe. The Stability Pact, as its name suggests has been established to stabilise the region. The second factor is of course GDP related and also heavily influenced to the structure of the economy. Any request for more investment may be viewed as a rather pre-mature with investors confidence as far as telecoms is concerned at least in Western Europe at all time low, but we need to look further down the road. Also we must take into account that SE Europe is generally still far away from the situation that created this disappointment with the telecom sector. One event that really should trigger increased activity is the Olympic Games in Athens in 2004. Many people will travel to Greece to see the Games themselves, but also a lot of others will watch TV, as they always do every four years. However the state of development of mobile communications now is much more advanced than four years ago. Now people can have almost instant access to the latest results and scores - mobile data is untapped market! Olympic games should be a challenge for all players to define their role and take part. One recent example testifies that this is feasible idea. Korean operators used the World Cup to set the ball rolling for some next-generation mobile voice and data services. Revenue windfall running into many millions of dollars has been reported. With view to the Multigigabit backbone transmission projects being implemented all over Europe, perhaps it is not too early to start considering extending them to South East Europe. Currently on record there are a number of fiber network projects being constructed or already completed all over Western Europe: Some of those have already folded in the marketplace. The capacity of some of them are enormous. There is talk in the industry that there is glut of capacity and that the planners have overestimated demand. However at least one of those companies describes their network as "oil in the ground" which will keep producing for the next 25 years. However all that rush to build long-haul data highways was not matched with equal investment in local and regional infrastucture, leaving Europe's network rife with bottlenecks. South East Europe as a region is clearly lagging behind in this kind of investment. A recent article in a well respected European telecommunications magazine lists the eight largest networks in Europe, with tens of cities on their route. Only one of them touches Hungary. Nothing is mentioned south or east from there! The fact remains that only a fraction of the money invested in the densely covered Western Europe, (and some of it already lost ) would have made a lot of difference in South East Europe. That is not to suggest that there is absolutely nothing in Eastern and Southern Part of Europe. There are some fiber projects there (TEL/TET, Adria, ITUR, KAFOS, TBL) which have been conceived and mostly completed in the first half of the nineties. There serve the region well for the current demand which is mostly voice (narrowband, with some data and Internet rising rapidly) However there is nothing of the enormous Gigabit capacity that would enable the price of unit bandwidth to sharply fall, thereby stimulating broadband economy. Many people share the view that for the new economy we should read broadband economy. Situation in countries in South East Europe varies. There has been some attempts to survey the situation and estimate the readiness of the various countries for information society. Some data has been collected and is available on the web site of eSEEurope initiative, UN Economic Commission for Europe has published a very valuable report on the Internet Infrastructure development in transition economies. There are other sources as well. Europe as a whole is behind the US with the broadband Net Connections. Only about 7% of homes across Europe have broadband Net connections - half the rate in the U.S. There are indications that European Commission is so worried about this shortage of broadband connections, especially in the Continents poorer southern countries that is considering diverting billions from the $92 billion annual infrastructure budget to subsidize service. However even if that happens the beneficiaries will be the EU members. What about the others? Should they be let to fall even further behind? This region is notorious for its brain-drain. In the last couple of years both Germany and the US have taken measures to encourage IT specialists from various parts of the world to emigrate to those countries to make up for the serious shortage of IT specialists. So the exodus is continuing. The fundamental question is: should the people from SE Europe and countries like Turkey continue to move into Western Europe, where the capital is located, or is it maybe easier and far more better for overall stability and for everybody concerned that capital starts flowing into the other direction. With a well developed telecommunication infrastructure it will be far easier for talent from this region to meaningfully participate in the economy. This is a strategic question of the highest order. Hugely accelerated investment in telecom infrastructure could reverse that trend. Stability Pact has engaged itself in supporting building bridges, roads, railroads etc, which is all very good but all that is part of the industrial age, based on physical transport of goods and people. What we need now is abundant bandwidth, affordable, available everywhere in the region. A huge broadband network that would include all the countries of the region, could go a long way towards providing the region with a powerful foundation for the new economy. It could be an area for participation of all the interested regional players. Bandwidth bottlenecks would not exist any more; bandwidth would be cheap and abundant. The market opportunities will be opening up. Telecom operators are already generating some revenue from Internet access, but they will need to move forward and offer hosting, ASP and e-commerce solutions, streaming audio and video, IP VPNs for corporate customers, and in due time "voice over IP" products. In short everything that is available in EU should be available in many points in SEEurope just the same, sooner rather than later, if we are to bridge the digital divide. This network would be a great e-commerce enabler. The fast-growing economies of SE Europe will need to communicate more and more, and it will require a lot of bandwidth and a whole plethora of new services, which must be provided efficiently and profitably. This is an opportunity, which must not be overlooked when strategies for business growth are being developed. The network would be privately funded and operated, and very likely can be constructed by extending and upgrading and building on some of the existing networks. A feasibility study, conducted along the usual rules would probably show that the optimum time to start is about two to three years from now. However we must take a bolder approach and convince all the potential players, with full participation of the Working Table II of the Stability Pact (considering all the other large projects in the region) that they can expect a fair return on their investment. I hope that you will come up with some suggestions as to how to create win-win-win strategies. If everybody understands the importance of this issue, I deeply believe it is possible to define and establish an economically viable, sustainable model for Information Society in South East Europe which will provide for accelerated overall growth. Thank-you. |