Telecom Prices Are Up...and That's a Good Thing

Michael Mandel

Buried deep in this morning's CPI report from the BLS was the encouraging news that phone prices have been rising at a 2.1% rate over the past 3 months. That's the biggest 3-month rise since early 2003.

This is good news for telecom companies, enabling them to boost revenues and profits (investors don't believe this yet, though. Both Verizon and SBC are not much above their recent lows).

It also could be a sign that the communications sector is finally starting to capture a bigger share of the pie. As I wrote in a BW article (dated May 16, 2005), consumer spending on information-related products and services is a smaller share of consumer budgets than in 1997. An increase in spending would benefit the entire information sector--including hard hit telecom companies and content providers.

Related posts on the same subject come from James DeLong (yes, Brad's father) and John Rutledge.

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