The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
Telecom products are becoming a necessity for most households across the globe, with uptake rates of mainstream digital goods and services largely insulated from economic recessions. This offers considerable protection and benefits to telecom operators and providers, who can be assured of continued subscriber and usage expansion as long as they maintain their competitiveness. Burgeoning online segments such as e-commerce and online adspend can even benefit from a recessionary climate by providing alternative options to cost-conscious consumers and businesses. However, traditional telecom segments can lose their positions to more dynamic disruptive technologies at a time of financial slowdowns.
Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF), World Economic Outlook (WEO)
The global economic downturn of 2008-2009 offered the biggest challenge thus far to the global telecom market, yet consumers largely continued to expand their intake of digital offerings throughout the slowdown:
The rising uptake of services/devices and a minor blip in telecom consumption during the economic slowdown suggests that the world’s consumers are unlikely to discard their Internet connections or mobile subscriptions altogether, but can downgrade price plans or opt for budget options in response to lower purchasing power.
Information and communications technologies (ICTs) have several distinct advantages over other business and consumer segments during times of economic recession:
The capability of the Internet to offer lower-cost alternative options to mainstream services is a strong component of ICT’s antirecessionary strength. Consumers flock to online bargains in greater numbers under economic pressure, as evidenced by global Internet retailing value actually picking up annual real growth pace from 2008 to 2012. Similarly, businesses looked to the online domain to gain brand visibility at a cheaper rate, driving global online adspend value in the process, which saw double-digit annual real growth throughout 2008-2010, levelling off thereafter.
However, technological and trend-based progress can also impact uncompetitive telecom segments during recessions. For example, the onset of wireless voice services have encouraged greater numbers of homes to discard their land-line connections, deemed surplus to requirements. A similar trend is occurring for mobile SMS use in debt-laden Western European markets, with cheaper IP messaging systems growing in influence. Nonetheless, as long as a telecom product remains relevant and price-sensitive within a consumer or business market, it remains more protected from economic turbulence than most other goods and services.