CowheyTelecommunications&Trade

CowheyTelecommunications&Trade - Telecommunications...

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Telecommunications and Trade in Services Peter Cowhey Dean Graduate School of International Relations and Pacific Studies University of California, San Diego pcowhey@ucsd.edu And Jonathan Aronson Professor Annenberg School and School of International Relations U.S.C. aronson@usc.edu May 2004
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Changing mix in the market: 1994 vs. 2001 Total size grew from $517 billion to $968 billion In 1994 data and mobile were 16% and 10% of revenues. In 2003 they were 18.5% and 33%. Measured by traffic volume data about equals voice but it is priced much more cheaply even after major declines in price of long distance voice! International telecom stays around 8%
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Trade Policy should be the Tip of the Iceberg Telecom/IT are vital drivers of economic growth Competition and market reform are best option Trade policy can leverage benefits of market reform Capital markets Credibility vs. flexibility Trade Policy Market restructuring and Policy Role of Telecom & IT in Economy
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$847,917 $300,625 $232,604 $134,583 $40,625 $29,250 $22,750 $11,083 $4,433 $USD per Mile Roadway Waterway Electricity Gas Optical Fiber Coaxial Cable Copper Cable Wireless Towers Aerial Wireless* Cost per Mile of Connectivity Infrastructure
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Some economic principles Large economies of scale and scope do not justify monopoly Privatization is less effective without competition Phasing in competition slowly has very mixed record It is possible to share network capabilities efficiently among several operators but this requires regulatory intervention Significant network externalities justify efficient policies to promote universal service
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When do economies of scale arise? (Finley) Fixed costs – costs that are independent of usage Costs of maintaining local telecom loop Costs of running airline reservation system
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CowheyTelecommunications&Trade - Telecommunications...

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