One example of the impact of competition in a capital-intensive industry can be seen by comparing retail price trends in the European, Japanese and South Korean electricity, natural gas and water industries--still regulated as natural monopolies--and the telecommunications business, which is deregulated and competitive.
Between 2008 and 2019, for example, communications prices dropped, while prices for the other utility services increased.
The other trend we can note in those same markets is relatively inelastic demand for communications. In other words, people will only spend so much for communications. As a percentage of gross domestic product, for example, communications spending by households fell between 2006 and 2019, for example.
Basically, households tend to spend between 1.5 percent to 2.25 percent of GDP on communications. Other studies of household spending in developed markets show the same pattern.
Over time, household spending on connectivity services has fallen. Nor has business spending moved much, either.
Consumer spending does not change too much from year to year. Nor does the percentage of income spent on various categories change too much.
In Myanmar, a new mobile market, spending per household might be as high as eight percent of total spending. In Australia, communications spending (devices and services) might be just 1.5 percent of household spending.
In South Africa, households spend 3.4 percent of income is spent on communications (devices, software and connectivity). In Vietnam, communications spending is about 1.5 percent of total consumer spending.
In the United States, all communications spending (fixed and mobile, devices, software and connectivity, for all household residents) is perhaps 2.7 percent of total household spending. U.S. household spending on communications might be as low as one percent of household spending, for example.
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