U.K. Telecom Illustrates Wider Global Challenges

Competition seems to have brought undeniable benefits for U.K. consumers, but also illustrates the strategic challenges global service providers face.

Despite huge growth in adoption of mobile phones, smart phones, broadband access and multi-channel TV service, average monthly U.K. household spending has increased by just 12.8 percent in real terms, to £93.10 in 2010, up from £83.01 , when household spending reached a recent peak of £106.50.

Keep in mind that service penetration has doubled or tripled over the last decade, for many services. Despite that massive adoption of new services, industry revenues have remained flat, in inflation-adjusted terms.

Total annual communications industry revenue in 2010 was £53.4 billion. On an inflation-adjusted basis, industry revenues were £54.3 billion in 2000.

To be sure, industry revenues have grown in nominal terms. But adjusting for inflation reveals flat 'real' revenues over the last decade. That is despite the fact that consumers over that same period have dramatically increased their buying of several services.

Razorsight | Corporate Blog