Competition and Regulation in the Telecommunications Industry in ...

Competition and Regulation in Telecommunicationsfor television or education broadcast - from advertising to dramas. Finally, datacontent would be associated with those firms providing content for the Internet orprivate data networks - from online news corporations to electronic commerce. In allthese industries, expansion of the network and lowering the costs of transmissionexpand the number of people connected to the network and therefore expand themarket for content. Enhancing the speed and quality of the networks open up theopportunities for new content products to be introduced which also expands themarket for content. An important question remains - how big are the multiplier effectson content providers stemming from improvements to the network and its expansion.1.3.4 Household Expenditure ItemFinally, communications enter the household consumption function. Communicationsdoes not represent one of the main items that households spend their income on, butat 2.4% of household income, it is still a significant item. In fact, as figure 1.2 shows,households on average spend more on communications than on investments/savings, education, house operations, pensions and fuel/power. The size ofexpenditure is also sufficiently large that price movements in the sector will influenceboth the welfare of consumers and the price level – the consumer price index. In fact,the 1995 survey probably underestimates the expenditure item as it would excludethe rise in cellular telephony and the Internet (both significant expenditure items).Figure 1.2: Household expenditure patterns (1995)15