Internet..marginal propensity to consume what?


Merry Christmas everybody!! No political correctness here!

I was just sitting here watching the news and heard how, at Christmas, tech is the huge driver of internet usage.

Fair call! It actually is very important.

I then heard a classic techno-person (you know the type…jeans, t-shirt, unkempt hair… fan boy for free internet for everybody, anything but fibre to you ear is unacceptable blah blah blah) tell us that we therefore need super fast internet now.

Ok, fair enough.

We do all want super fast internet. Of course we do.

Business is a no-brainer. But so do consumers.

And more and more it is really important to us. For everyday things. The things that weren’t everyday that long ago. and more for interaction beyond social texting, for video, and entertainment and health.

Now, I can’t admit I’m a great fan-boy admirer. I’m not someone who respects people for getting on a band wagon for the sake of, well, the band-wagon. Political correctness free zone here.

So here’s my comment.

Yes people want super fast internet.

BUT….are they prepared to PAY for it?

Yes, I mean pull out cold hard cash and put it on the table like they do for their weekly groceries and extravagant power bills. And yes for their home mortgages.

Are they?

I reckon not.

I reckon people are prepared to continue to pay what they pay for communications but expect more for the same price.

That’s an interesting economic issue as super-fast stuff requires massive capital investment (yes, A$76m for the NBN if I remember the non-political real cost from the strategic review of the NBN I undertook). And someone needs to pay for that.

I did an economics major many years ago…I reckon marginal propensity to consume is something that the fan-boys need to consider.

The fastest network in the world with inter-galactic speeds to play games with scratchy beards and sodas is great.

But if the majority aren’t prepared to pay more – they want more for the same price.

A politically incorrect perspective is needed.

Now, I’ve got to go back to big bash cricket and that wonderful Christian tradition of Christmas.

Merry Christmas peeps!


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