In-depth review of the telecommunications sector

OECD Observer
Page 92 

Who would have thought, even a few short years ago, that mobile phone operators would be making staggering profits? Yet the UK company, Vodafone, which announced an almost 50% increase in its annual profits in a recent interview with the BBC, has done just that. According to a Vodafone executive, the company expects to increase its customer-base from its current 15 million to 30 million by the end of 2002. Fact or fantasy? One thing is certain, the revenues that the telecommunications sector is generating today are perfectly real: over $1 000 billion, according to the latest edition of the OECD's Communications Outlook. This sort of performance warrants an in-depth look at this most lucrative of industries. In addition to a wide range of performance indicators for the various communications networks and companies, the above report gives data on service charges, investment and employment. It reviews the major changes and future trends in the industry in detail. It tells us, for instance, that the share of mobile phones accounts for 20% of all telecommunications expenditure. With the expansion of networks and the liberalisation of the market in the majority of OECD countries, mobile communications have cornered the mass market. In early 1992 there were fewer than 15 million mobile cellphone users. By 1997 there were over 173 million: a real boon for telecommunications operators, which are relentless in their efforts to find attractive new charging formulae. Competition is also beginning to transform the fixed telecommunications market, although change is slower and often confined in some countries to just one or two market sectors, such as long-distance or international services.

Besides mobile communications, the Internet is indisputably the main potential source of revenue to appear on the scene over the period 1992-1997. The structure of this industry has been rapidly transformed: for example, Internet access was initially offered by service providers, which have now practically all been taken over by major telecoms operators offering access as one of a range of services. A case in point is AT&T Worldnet, launched in February 1996, which signed up its millionth Internet customer in the fourth quarter of 1997. Although lower than mobile phone and Internet revenues, earnings from broadcasting in Member countries are still substantial: $145.3 billion in 1997, of which 84.4% is from television. Five countries -- the United States, Japan, Germany, the United Kingdom and France -- still account for almost 80% of the total market, with the United States alone accounting for 40.2%. Of the 50 largest companies in the world, 49 belong to OECD countries. The main players are still terrestrial broadcasting companies, although cable television companies, like Viacom and TCI, and pay television companies like Canal Plus and BSkyB are also on the list. With the entry on the market and rapid development of cable and pay television companies, revenues from subscription charges for these services have generated a substantial flow of income that is vital for the television sector. These charges now account for 32.1% of the television market's revenues in the OECD area, or more than double what it receives in government funding and advertising revenues. The advent of digital transmission should speed up this trend. The upheaval that this new information technology has caused throughout the communications industry is far from over. It enables digital television to provide better picture and sound quality and to vastly increase the number of channels that can be transmitted on the same bandwidth. Among other services, digital television could provide improved data facility and a host of interactive services, ranging from electronic commerce to video-on-demand and high-speed access to the Internet. For telecommunications companies, the opportunities are vast. Could it be that all current forecasts are still on the conservative side?

• OECD Communications Outlook, 1999

©OECD Observer No 217/218, Summer 1999 

ISBN: 92-64-17013-8, US$71, FF400, pp.256

Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.6% May 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Mar 2018
Last update: 06 Jul 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • International co-operation, inclusive growth and digitalisation lead the themes of the 2018 OECD Forum in Paris on 29-30 May, under the banner of What brings us together It is held alongside the annual OECD Ministerial Council Meeting on 30-31 May, chaired this year by France with a focus on multilateralism
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018