long-run patterns in communications service adoption

Communications services today are perceived to succeed or fail within months.  Within that time, fashion may be more important than economic fundamentals, and long-run patterns can easily be obscured.  Historical data helps to provide an alternate view.

Consider telephone service in the U.S. in 1927 and 2007.   In 1927, telephone service had been widely available for more than forty years.  Nonetheless, only about of third of U.S. households had telephone service.  By 2007, the share of households with telephone service had risen to about 95%. Telephone service was a remarkable innovation. But telephone service became nearly universal among U.S. household only after about a century of industry development.[1]

Business telephone take-up was more consistent than residential service take-up.  Residential phones per home and business phones per non-primary-sector employee are calculable statistics for considering variation in telephone take-up across states.  In 1927, residential phone take-up had 50-80% larger variation across states than did business phone take-up. By 2007, residential phone take-up varied 10% less across states than did business phone take-up.[2]

Business communications service adoption probably depends more on economic fundamentals (economic advantage) and less on fashion than does consumer communications service adoption.  That suggests slower, but more even adoption for business communications services.

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Data: business and residential phone take-up across U.S. states, 1927 and 2007 (Excel version)


[1] See estimates of the share of U.S. households with telephone service, 1920-2007.

[2] The statistics for 2007 are for telephone lines, not phones, and for households, not homes.  These differences probably do not explain the change  from 1927 to 2007 in take-up variation across states.  The 2007 data includes only ARMIS-reporting incumbent local-exchange company telephone lines. In 2007, those lines amounted to about 77% of wireline local switched-access telephone lines.  How reporting coverage correlates with the business/residential line ratio isn’t clear.

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