Telecommunications expenditure potential of Korean households and income turning point

Abstract

Purpose - The growth of telecommunications spending is the single most vital factor for continuity of the virtuous circle in the overall information communications technology (ICT) industry. This article aims to attempt to gauge the future telecommunications expenditure potential of Korean households by adopting the Kuznets curve which considers the income turning point. Design/methodology/approach - This study begins by examining the structural pattern of household telecommunications expenditures, and then analyzes them using the fully modified least squares estimation method. Household survey raw data collected on a quarterly basis between 1982 and 2005 were used. Findings - The paper finds that the Korean telecommunication market has grown at a high pace and adopted new technologies quickly. Most previous studies on the Korean telecommunication market have predicted that growth will continue on the basis of the past trend of continuous growth in consumer communications service expenditure, and the technological innovations which have rapidly taken place in the industry over recent years. However, the research paper finds various interesting points that contradict the prediction. Research limitations/implications - The main research limitation is the range of telecommunication expenditures. The main idea was to examine the relationship between household income and communications expenditure based on the concept of Kuznets hypotheses and to calculate an income turning point to measure spending potential. Practical implications - The case of Korea offers implications for other countries that are putting in special efforts to manage the telecommunications service market. Originality/value - The Kuznets hypotheses have never before been utilized in gauging consumers' expenditure potential in the ICT industry, and therefore the process and results discussed in this paper can be classed as pioneering.