Could Consumer Communications Spending Quadruple?

By Gary Kim September 26, 2012

How much can consumer spending on communications, including mobility services, broadband and other services continue to grow, as a percentage of total household spending? The answer to that question could well determine the health of the global telecom business.

And there are clear indications that household spending on a range of communications services and appliances has been growing over the past couple of decades. In fact, a spending rate below three percent was the norm until the recent Internet and mobile era.

Image via Shutterstock

In part, you might argue, that it is logical. People now are buying multiple services (broadband access, video entertainment, mobile telephone service, fixed telephone service) where in the past they were only buying a single service, namely fixed network telephone service.

There also are some potential indications that overall spending on devices and services is reaching unprecedented levels.

U.K. household spending on communications, broadly defined, are as high as 12 percent of total household spending, some say. That figure seems unprecedented and out of line with historic percentages in most markets. If such levels can be reached, then there is room for overall spending on devices and services to more than double.

In fact, the U.K. government data seems to suggest that U.K. households spend between three percent and four percent of income on communications. That is entirely consistent with past spending patterns, and nowhere near the 12 percent level some believe is the case.

In the U.S. market, household communications and information technology spending has recently been in the five percent of spending range. That includes both “communications” subscriptions and devices such as computers and other “office” technology.

There are clear indications that consumers are spending a greater percentage of their disposable income on mobile services, in particular.

U.S. consumer spending on phone services rose more than four percent in 2011, the fastest rate since 2005, according to Department of Labor statistics.

Families with more than one smartphone sometimes pay more for mobile service than they pay for cable TV and home Internet access.

But it is not clear that the 12 percent figure is accurate, in the United Kingdom or anywhere else.

Edited by Brooke Neuman

Contributing Editor

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