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Increased spending on internet services

Disruption and innovation in communication

The FRED Blog has looked into internet use rates around the world. Today, we bring the topic of internet services back to the United States by visualizing the fraction of personal consumption expenditures on communication services taken up by the internet between 1987 and 2021.

The FRED graph above shows the three categories of personal consumption expenditures on communication services currently reported by the U.S. Bureau of Economic Analysis:

  • Telecommunication services (in blue): spending on landline and cellular telephone services.
  • Postal and delivery services (in red): spending on first class U.S. postal service and other delivery services (not from the USPS)
  • Internet access services (in green): spending on internet services and electronic information providers.

The areas in the graph show the fraction of overall expenditures for each type of service. In 1929, telecommunication services represented 84% of all communication expenditures. By 2021, that share had shrunk to 64%, partly the result of the growing use of internet services. First accounted for in 1987, expenditures on internet services amounted to 30% of overall communication expenditures in 2021.

As a fraction of total personal expenditures, spending on communication services grew at a fairly steady pace between 1929 and 2000 (see graph here). Because consumer prices on communication services have declined since 1997 (see graph here), the reduced spending might not imply lesser use of communication services. Moreover, as high-speed internet services are increasingly delivered through wireless networks, cellular phone use and internet access are gradually blending.

Did you know that FRED launched a cellphone app 10 years ago? If you’re reading this FRED Blog post on your cellphone, you’re likely part of that trend blurring the line between telecommunications and internet services.

How this graph was created: Search for “Personal consumption expenditures: Telecommunication services.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Personal consumption expenditures: Postal and delivery services” and “Personal consumption expenditures: Services: Internet access.” Next, from the “Format” panel, select “Graph type: Area” and “Stacking: Percent.”

Suggested by Diego Mendez-Carbajo.

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