Governments tax, users respond rationally

Posted on February 8, 2017  /  0 Comments

It has become increasingly common for developing-country governments to extract rents from what they think is an easy target, international communication. After all, the people affected don’t vote in their elections, even if they are in many cases, hardworking expat workers who keep the home economies afloat. But telecom users are not stupid. They have been switching to alternatives in a big way, says Telegeography:

First up is the curious discovery that 2015 marked a turning point in the market. It was the first time since the Great Depression that international carrier voice traffic declined.

A little context: in the 1930s, the decline in traffic was due to macroeconomic circumstances. Growth resumed as the economy recovered.

But this recent decline in traffic may reflect a permanent, structural shialft: the mass adoption of new “over-the-top” communications services that are reshaping the international communications market. While Skype dominated the OTT market on computers, it’s hardly the only game in town. Consumers now have a range of smartphone-based communications apps like WhatsApp, Facebook Messenger, WeChat (Weixin), Viber, Line, KakaoTalk, and Apple’s Facetime.

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