Some will lament the fact that even when gigabit (or any other very-fast) internet access service is available, most consumers do not seem to buy them, when there also are choices of other services that cost less, but are not as fast. In other words, there typically is some gap between the availability of a service and consumer willingness to buy.
In the United Kingdom, for example, 94 percent of U.K. homes and businesses are in areas where fixed network broadband operating at 30 Mbps or faster is available, according to Ofcom. In such areas, just 45 percent of homes buy a service operating at 30 Mbps or faster.
According to Ofcom, perhaps six percent of U.K., homes can buy a service operating at speeds in three or four digits (300 Mbps to 1,000 Mbps, for example). If take rates resemble those of the United States, single digits are the take rates where gigabit services are available.
And such data underscores an “iron law” of the consumer connectivity business. People are only going to spend so much for connectivity services.
Average monthly U.K. household spend on telecom services fell in 2017, down by one percent in real terms to £87, equivalent to 3.5 percent of total household spend, even as households were upgrading to faster fixed network services with higher recurring prices.
That is a typical spending pattern for consumers in developed markets. Australian consumers spend about 3.5 percent of disposable income on connectivity services, for example. That same pattern can be seen in entertainment spending as well: households will only spend so much on communications or entertainment.
Wallets are only so big, and get bigger only about as fast as overall income increases.
Average monthly spend on communications services fell by 1.2 percent from £126.18 in 2016 to £124.62 in 2017, an annual decrease of £18.72 in real terms, Ofcom notes.
Average U.K. monthly household spend on mobile voice and data services has decreased by eight percent (£4.02) since 2012, to £45.99 per month in 2017, Ofcom says.
In contrast, average monthly spend on fixed voice and internet services increased by 14.3 percent over the same period to £41.13. This is largely because consumers have migrated to faster broadband services, which tend to be more expensive than standard broadband services.
Mobile voice and data spending fell by 98p (2.1 percent), Ofcom says.
The number of landlines fell by one percent to 33.1 million as a result of businesses switching to mobile and VoIP-based voice services. The fall in business lines was partly offset by a one-percent increase in the number of residential landlines, attributed to growing fixed broadband take-up, as most households in the United KIngdom need to buy a landline service to use fixed broadband services.
The main casualty of growing smartphone take-up has been traditional messaging (i.e. SMS and MMS), as users switch to more feature-rich internet-based messaging services, such as WhatsApp and Facebook Messenger, and the messaging services offered on other social networking sites.
By 2017, average outgoing messages (including SMS and MMS) per mobile phone subscription had fallen to 82 per month, having peaked in 2012 at 162 per month. And while average outgoing mobile call volumes per subscription have risen since 2007, reaching 157 minutes per month in 2017, this was two minutes per month less than in 2016, Ofcom says.
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