Prices for Communications Equipment: Rewriting the Record

Abstract

Communication equipment plays as large a role in high-tech investment as computers, yet prices for communication equipment have not been studied as extensively as prices for computers and electronic components. Prices for satellites, cell phones, and the ground stations for these systems--important components of a nation's communications infrastructure--are difficult to locate in official statistics. This paper develops new price measures for 16 types of communications equipment from 1963 to 2009. Indexes for some (e.g., cellular phone systems) experience declines of 15-20 percent per year, similar to the decline in quality-adjusted prices for computers, and suggest that advances in wireless communications technology have been very rapid. All told, our price index for domestic production falls 4.8 percent per year on average over the time period we study and 9.8 percent per year on average since 1985--nearly 10 percentage points faster than the official U.S. producer price index introduced in that year.