Digital products tend, over time, to be priced at retail on the basis of the incremental cost to produce the next unit.
For a cloud-based digital app or service, that cost is very close to zero. And though the cost of access infrastructure is quite physical, and quite costly, the product purchased by the customer is, in fact, a digital product.
And it has been true for quite some time that the incremental cost of an additional unit of any app is very close to zero.That explains the prevalence of “freemium” business models, where the base product is literally “free to use.”
That poses a serious problem for any provider who makes the bulk of revenue from selling a digital service--be that voice, messaging or Internet access.
In the United Kingdom, for example, average monthly household spend on communication services has decreased in real terms over the past five years.
That despite prodigious consumption of mobility services and faster Internet access by nearly everyone.
Although stable compared to 2013, average monthly household spend on communication services has decreased in real terms over the past five years (adjusted for inflation) from £122.07 in 2009 to £117.71 in 2014, representing a monthly decrease of £4.36, or £52.32 per year.
Where it comes to core telecom services, average monthly household spending remained relatively stable at £81.30 per month in 2014, as people are buying more units and more products.
But there is a clear trend: spending on fixed and mobile voice and data fell, while spending on fixed Internet access actually grew.
Average spend on fixed voice and mobile voice and data services both fell during the year, while average fixed internet spend continued to increase, up by £1.84 per month (14.3 percent) to £14.74 as a result of increasing fixed broadband take-up and consumers switching to superfast broadband services.
The M Hotel Singapore | 10-11 September 2015
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Business models also are the biggest challenge for Internet access across South Asia. Hear regulators and service providers explain how new business models and platforms will drive Internet adoption across South and Southeast Asia, and how mobility plays the biggest role. |
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