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January 24, 1989

WORLD INVESTMENT IN PUBLIC TELECOMMUNICATIONS FALLS FAR SHORT OF DEMAND – REPORT

By CBR Staff Writer

The world’s PTT and telecommunications operating companies are under-spending by as much as $45,000m a year, according to a recent report. The study, by the Telecommunications Research Centre, makes the claim in the report Telecommunications World Outlook and Forecast – A Major Assessment of the World’s Telecommunications. The research group forecasts that demand for telephones and associated services will require annual expenditure of around $158,000m in 1990, whereas actual spending will stand at around $112,800m; expenditure growth of 38.6% is forecast between 1995 and 2000, when total spending on telecoms equipment is expected to reach $185,000m. The world’s installed base of telephone lines is forecast to grow to 728m by the end of the century, against the current figure of around 450m; yet the demand for lines should far exceed those actually provided, the report claiming that the annual growth demand of around 10% compares to the rise of 4.6% expected to be installed. The report notes that in 1986, the world’s leading 50 telecommunications companies had 97.9% of the world’s installed telephone lines, with the leading 10 holding 74.2%. By 1990, the research group forecasts that of the world’s 501m phone lines, 44.7% will be in Europe, 33.3% in the Americas with a mere 1.1% in Africa – half of which will be in the Republic of South Africa. The study divides expenditure patterns into nine product categories, and concludes that data switching and mobile communcations will be the two largest growth areas, though public switching will continue to be the largest single sector. By the year 2000, annual expenditure on public switching will have risen to $43,000m, up 95.4% from its 1986 level. Corresponding figures are for transmission up 86.2% to $35,000m: cable up 100% to $35,200m: satellites up 97.7% to $5,240m: data switching up 312% to $24,600m: PABX and small business systems up 117% to $13,570m: customer premises equipment up 104% to $15,320m:mobile communications up 247% to $17,530m: other telecommunications equipment up 111% to $11,790m. The Centre also examined export patterns, and confirms that Japan leads the telecommunications export arena, with more than 25% of the export market. Exports from Japanese companies were valued at $2,700m in 1985, $2,400m in 1986 and $2,900m in 1987 – the forecast for 1990 is $4,100m. Newly industrialised countries The other leading nations, in order of export value, were Sweden, West Germany, the US, France and Canada. An unsurprising development in telecommunications was the significantly increased importance of the newly industrialised countries; the combined telecommunications exports of Taiwan, Hong Kong, South Korea and Singapore grew from $747m in 1985, to $1,022m in 1986 and $1,250m in 1987; the forecast for 1990 is $1,656m. But one sector in which Europe and North America can be more confident is public network equipment, where Europe enjoys a 49.0% share, compared to North America’s 38.1% and Japan’s 12.9%. Exports from the leading 20 telecommunications equipment exporting countries fell from $9,100m in 1985, to $8,800m in 1986, but picked up to $9,900m in 1987 – the forecast for 1990 stands at $13,300m. Further research found that the world’s 10 leading telecommunications companies – AT&T Co, Alcatel NV, Siemens, Northern Telecom, Ericcson, NEC, GEC/Plessey/Stromberg Carlson, Fujitsu, Telettra/Italtel and GTE Corp – accounted for sales of $28,200m in 1987, almost one third of the world’s total telecommunications equipment market. The final part of the report draws comparisons between developed and undeveloped nations, and concludes that the imbalance makes the notion of world telecommunications is a mockery; by 1990, lesser developed nations will spend less than a third of the UKP35,000m required to provide a minimal telecommunications infrastructure while expenditure in the developed world will be 84% of the $131,000m needed. For further details of the report contact the Telecommunications Research Centre in Barnham, Bogner Regis, West Sussex.

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