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VIEWS: 6 PAGES: 21

  • pg 1
									                                          Communications Sector of the U.S. Economy

                              $600.0




                              $500.0
                                                                                                                                                           $120.4
Total Revenues in Billions




                                                                                                                                 $106.4
                              $400.0
                                                                                                        $94.2

                                                                              $75.7
                                                   $60.8
                              $300.0



                                                                                                                                                           $395.0
                              $200.0                                                                                             $356.6
                                                                                                       $322.2
                                                                             $291.2
                                                   $267.2

                              $100.0




                                $0.0
                                                 1994                      1995                       1996                      1997                      1998*

                                                                     Communications Services              Communications Equipment

                                                                                                                                                                            1
                             * 1998 figures are estimates from the the 1998 Multimedia Telecom Market Review and from IAD.
                             Sources: Census Bureau, Statistical Abstract of the U.S. and Annual Survey of Communications Services; 1998 Multimedia Telecom Market Review
                                                       Communications Services Revenues

                              $400.0


                              $350.0


                                                                                                                                              $43.7
                              $300.0
Total Revenues in Billions




                                                                                                                       $38.5

                                                                                                $33.9                                         $42.8
                              $250.0                                                                                   $39.2
                                                                         $30.3
                                                 $29.6                                          $35.9                                         $33.0
                                                                                                                       $25.9
                                                                         $32.9                                                                                       $395.0
                              $200.0             $30.3                                          $18.6
                                                                         $14.2
                                                 $10.2
                              $150.0


                                                                                                                      $196.2                 $198.1
                              $100.0                                    $169.5                 $180.2
                                                 $160.0


                               $50.0


                                 $0.0
                                                1993                   1994                   1995                   1996                   1997                   1998*

                                                                              Wireline        Wireless        Radio & TV          Cable
                                                                                                                                                                              2
                             * 1998 aggregate figure is an IAD estimate. Specific 1998 estimates for the different communications services segments were not available.
                             Sources: IAD, Telecommunications Industry Revenue Report; Census Bureau, Annual Survey of Communications Services.
                                               LD Consumer Prices and Access Costs are Falling*

                                          14   13.5
                                                            13.2
                                                                               12.4
                                                                                              12
                                          12                                                                       11.5
Average Price/Cost per Minute, in Cents




                                                                                                                                         10.2
                                          10



                                          8


                                                      5.8
                                          6                        5.5                5.4
                                                                                                     5.1
                                                                                                                          4.6
                                                                                                                                                4.2
                                          4



                                          2



                                          0
                                               1992         1993               1994           1995                 1996                  1997

                                                                         LD Consumer Prices            Access Costs
             * As measured in average cents per conversation minute. LD consumer prices are based on all interstate and international calls. Access   3
             costs include all interstate and international access costs paid by IXCs to the LECs.
             Source: IAD, Telecommunications Industry Revenue Report. Prices shown are per conversation minute. Year-end 1998 data is not avail.
                   Interstate & International Calling Continues to
                         Grow and Access Costs Decrease*

          160


                                                                                                                                142.7
          140
                                                                                                           134.1

                                                                                      123.5
          120                                                    114.8
Indices




                                           106.1
                       100 100
          100                                       94.8                 93.1
                                                                                              87.9
                                                                                                                    79.3
            80
                                                                                                                                         72.4


            60
                        1992                 1993                 1994                 1995                  1996                 1997

                                           Interstate & International Switched Access Minutes                    Access Costs
          * Interstate & international calling as measured by all associated originating/terminating switched access minutes.                   4
          Access costs as measured by the average cost per minute paid by IXCs to LECs for only the associated conversation minutes.
          Sources: Trends in Telephone Service and Telecommunications Industry Revenue Report. Full-year 1998 data is not yet avail.
                            Number of Long Distance Carriers*

600




500




400




300                                                                                                  562     569


                                                                          453

200                                             366
                     321



100




 0
                  1993                      1994                       1995                       1996     1997

                                                              Long Distance Carriers
                                                                                                                   5
      * Refers to the carriers self-identified on their TRS filings as long distance service providers.
      Source: IAD, Trends in Telephone Service.
Average Rate per Minute* for an International Call
                  1994-1997


       $1.00                         $0.91
                                                          $0.84
       $0.80                                                                   $0.70
                                                                                               $0.64
       $0.60

       $0.40

       $0.20

       $0.00
                                   1994                 1995                  1996                 1997

* Consumers can obtain even lower per minute rates under some rate plans


Source: FCC Section 43.61 data (excluding reorigination and country direct and beyond). Full-year 1998 data is not yet available.
                                                                                                                                    6
                              Revenues of New Local Service Competitors

                       $6.0



                       $5.0
Revenues in Billions




                       $4.0



                       $3.0                                                                                          $5.7



                       $2.0
                                                                                                 $3.1


                       $1.0
                                                                             $1.2
                                                          $0.9
                                 $0.4    $0.5
                       $0.0
                                1993    1994            1995               1996               1997               1998*
                                                Local Service Competitor Revenues

* 1998 figure is an ALTS estimate.
Source: IAD, Local Competition Report. Local service competitors refer those identifying themselves as CAPs and/or
CLECs on their TRS Worksheets submitted to the FCC.                                                                         7
                                                  Complaint Workload Continues to Grow*

                                         60,000

                                                                                                                                      53,168
Number of Telephone-Related Complaints




                                         50,000                                                                      47,135
                                                                                                                                              45,461

                                                                                                                             41,184
                                         40,000


                                                                                     30,614
                                                                                                      28,55628,381
                                         30,000




                                         20,000                  17,953                      17,431

                                                        13,421
                                                  11,633
                                                                         9,677
                                         10,000




                                             0
                                                   1993           1994                1995             1996           1997             1998

                                                                          Complaints Received         Complaints Processed
 * Refers to telephone-related complaints made by consumers. These complaints are typically related to carrier                                    8
 spamming/cramming practices, to faulty payphones and to problems with operator services.
 Source: CCB Enforcement Division
                               Total MVPD Subscribers vs. Cable
                                         Subscribers
                       80

                       70
                                                                                        Total MVPD

                       60
                                                                         Cable
                       50
       (In Millions)




                       40

                       30

                       20

                       10

                        0
                        1992     1993   1994        1995          1996           1997            1998*




Note: 1992-1993 and 1997-1998 (1998 is an estimate) are end of year; 1994-1996 end in December.
Sources: 1996 Competition Report, 1998 Competition Report, Paul Kagan Associates.
                                                                                                         9
                       DTH/DBS/C-Band GROWTH


            From June, 1995 to December, 1998 satellite home
           subscribers grew 206% and now exceed 10.5 million .
                                       (# of S ubscribers)
                                                                         10.62 Million
                                                         9.28 Million
                                        7.25 Million

                        5.09 Million
     3.47 Million




      June              June             June                June       December
      1995              1996             1997                1998         1998


Source: DBS Investor




                                                                                         10
        Charting the Growth in the Mobile Telephone Industry
                            1993 - 1998
   60.8 Million     113,111 Jobs in                       $50.2 Billion
Subscribers in 1998      1998                          Invested as of 1998




      UP                         UP                          UP
     380%                       284%                        359%             Average
         From
                                From 39,775
                                                             From $14                          Wait for
      16 Million
                                Jobs in 1993
                                                            Billion as of   Subscriber
     Subscribers                                                 1993                          Licenses
        in 1993                                                                Bill

                                                            Capital          DOWN               DOWN
  Subscribers                     Jobs
                                                          Investment
                                                                              35%                68%
                                                                              From $61.48         From 24
                                                                             per Month in       Months for
                                                                                 1993           Comparative
                                                                                                 Hearings

                                                                            $39.88 Dollars   7.8 Months From
                                                                                                          11
  Source: CTIA June 1998 Survey; FCC Report to Congress on Spectrum          Per Month        Application
  Auctions, September 30, 1997.
                                                                               in 1998         to Grant
                                                 Residential Broadband Access Projections

                                     7000



                                     6000
Thousands of Subscriber Households




                                                                                                                 2700


                                     5000



                                     4000                                                                1500



                                     3000

                                                                                                  700
                                                                                                                 4300
                                     2000
                                                                                                         3000
                                                                                 250
                                                                                                 2000
                                     1000
                                                                         25     1000
                                                                         425
                                                      0
                                                     100
                                       0
                                                  1997                 1998    1999             2000    2001    2002


                                            Source: The Yankee Group             Cable   xDSL
                                                                                                                        12
                                                    DTV Build-Out Schedule
                                     120                                                                                                   1800


                                                                                                                                           1600
                                     100
  % of Population with DTV Service




                                                                                                                                           1400


                                     80                                                                                                    1200


                                                                                                                                           1000
                                     60
                                                                                                                                           800


                                     40                                                                                                    600


                                                                                                                                           400
                                     20
                                                                                                                                           200


                                      0                                                                                                    0
                                           Dec-98    May-99                  Nov-99               May-02                     May-03
NOTE: 38 of the first 40 stations scheduled for
                                                              Percent of Population with DTV Service       Stations on Air
 DTV have been granted construction permits
                                                                                                                                      13
FCC’s Contract with Consumers
• The Communications sector of our
  economy is rapidly growing and becoming
  more competitive every day. (ch. 1&2)
• Our mission is to bring better services at
  better prices to every American.
• For this mission to be successful,
  competition in all facets of the telecom
  industry must take root.
 The Evidence: Long Distance
 Competition Goes the Distance
• Long distance competition is robust:
  – Access costs/consumer prices are falling (ch. 3)
  – Spurring growth in long distance calling (ch. 4)
  – While the number of competitors grew by 77%
    between 1993 and 1997 (ch. 5)
  – Impact of competition is also being felt in
    International markets
     • per minute costs to consumers have declined each
       year since 1994 (ch. 6)
The Evidence: Local Competition
      is Hitting its Stride
• Today, there are 10 times the number of
  competing local carriers (nearly 150) as
  there were pre-Telecom Act (source: ALTS)
• Today, there are over 20 publicly-traded
  CLECs with a combined market value of
  $33 billion versus just 6 with a combined
  value of $1.3 billion pre-Act (source: ALTS)
• Today, CLECs have 5.1 million access lines
  versus 800,000 pre-Act (source: ALTS)
The Evidence: Local Competition
          Continued
• Revenues from competing carriers doubled
  to $3 billion in 1997 alone, and were
  estimated to have nearly doubled again to
  $5.7 billion in 1998 (ch. 7)
• Since the Act, CLECs have raised almost
  $20 Billion from Wall Street versus just $3
  billion pre-Act (source: ALTS)
    Competition Reality Check
• The emergence of competitive markets,
  however, does spur:
  – Consumer confusion over new choices
  – Consumer anxiety over fraudulent practices by
    new and existing carriers
• …Leading to a rise in consumer complaints,
  which the FCC is tackling one by one.
  (see ch. 8)
 The Evidence: Competition has
 Revolutionized Video,Wireless
• Total MVPD subscribers have grown, with
  DBS and other alternatives capturing
  greater share of growth than cable
  (ch.9&10)
• Wireless growth in past 5 years is dramatic
  as prices fall, subscribership is up and
  capital investment soars (ch. 11)
Looking to the Future: the Future
             is Now
• Internet usage soared in 1998, driven by
  more consumers doing more shopping
  online.
  – The number of Internet shoppers during the
    holiday season grew 330% from the prior
    year’s holiday season.
  – Online spending during the holiday season
    almost tripled to $3 billion from the prior year’s
    holiday season.
    Looking to the Future: The
         Future is Now
• The transition to high speed Internet access
  is now a reality at affordable prices.
  Subscribership is expected to soar. (ch. 12)

• Digital TV has begun rolling out, and prices
  already are falling for DTV sets. (ch. 13)

								
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