It is not so easy, even in hindsight, to explain why the world moved from viewing telecommunications as a natural monopoly to the current view that the industry is at least substantially amenable to competition, especially when using mobile and wireless platforms. Facilities-based competition remains a tougher challenge in the fixed networks area, though.
In 1996, U.S. policymakers ratified a huge shift in regulation by passing the Telecommunications Act of 1996, which deregulated local telephone and communications service.
By doing so, lawmakers decided to test the theory that telecommunications really was not a natural monopoly, challenging more than a century of regulatory thinking and practice. In the subsequent years, regulators globally also moved to deregulate telecom.
New technology, a desire for higher rates of innovation and higher consumer welfare were among the drivers of the change in thinking.
It might seem obvious now, but the change from analog to digital signal processing and transmission was seen to have huge implications, such as making possible multi-purpose networks where the current state of the art was application-specific networks.
But existing telecom law effectively prevented existing firms from exploring changes in their core businesses that technology was making possible. Local telephone service once was a monopoly, as was cable TV service. Radio and TV broadcasters were limited in each market to a few providers.
Earlier, even attachment of personal equipment to the AT&T networks was forbidden. Users could not attach their own modems, for example, or their own phones. That was the case until 1968, when the Carterphone decision legalized attachment of personal customer premises equipment to the network.
That change followed on smaller steps taken since the mid-1980s, when small changes in competitive regime were introduced at the edges of the business, allowing some competition to the monopoly provider AT&T in two-way radio services to some customers in a few markets. That then began a slow process of widening the amount of competition, including long-distance signal carriage.
Electrical, gas and water systems, on the other hand, remain regulated as natural monopolies, with only a single legal supplier. As predicted, consumer benefits have been produced, in both mobile and fixed network realms.
Between 2008 and 2019, for example, communications prices dropped, while prices for the other utility services increased.
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.
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.
No comments:
Post a Comment