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Consumer Communication Services Share of Wallet Analysis 2015

Consumer Communication Services Share of Wallet Analysis 2015

Stratecast conducts annual surveys to gauge consumer preferences for communication services. One consequence of doing so is that Stratecast can assess the way in which consumers prefer to spend their communications dollars. This year’s survey, conducted in the fourth quarter of 2014, provides some profound insights into the future of consumer communication service offerings.

In particular, while spending is up over 2013 in unadjusted terms, the overall trend is flat for the last five years tracked. In fact, when spending is corrected for inflation, residential communication services spending is down over % from 2009. Why is this?

In part, consumer spending reflects the commoditization of communication services. As competitive pressure increases in the market from non-traditional sources, such as over-the-top (OTT) service offerings, traditional spending has been constrained. After all, consumers will shop for the best deal; when an OTT service is essentially priced at zero incremental cost, there is a strong temptation to utilize it, rather than a service offering from a network operator.

Additionally, consumption habits are changing. While a previous generation might spend most of its recreation time surfing broadcast television channels, current generations will surf the Internet. And the younger generations tend to look for more abbreviated entertainment, where simply viewing the most exciting parts of a film or a TV show on YouTube is preferred over watching the entire performance over a cable connection, or even an OTT streaming video feed.

The move to data, and the increasing commoditization of the consumer wallet, demand that operators deliver OTT integrated service packages that are complete and include wireless access. Certainly, players like Google are already moving to do so.

About this report

This report provides telemetry on consumer spending for communication services (the consumer wallet), and explores the dynamics that are moving to change both the nature as well as the size of that wallet. The message is clear; consumer spending is not keeping up with inflation, and, in fact, is declining on an inflation-adjusted basis. As this report discloses, this is both a function of the migration of services to a data-centric environment and the change of consumer utilization of communication services.

  • Executive Summary
  • Introduction1
  • Consumer Spending Dynamics
  • Spending Trends
  • Commoditization of the Wallet
  • The Switch to Data
  • Operator Strategy
  • The Last Word

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