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Moore’s Law, which observed that the number of transistors on an integrated circuit doubles about every two years, has largely held true since it was first published in 1965.

A corollary to Moore’s Law has been a steadily declining price for processing power.

Thus today’s high end mobile phones pack more processing power than a standard laptop in 2000.

Various other core technologies have undergone a similar price-performance progression.

The price of digital storage, both hard-disc and semi conductor-based, has plummeted in recent years.

The cost per megapixel, a unit of measure describing a digital camera’s resolution, has also fallen sharply.

A growing range of today’s camera phones offer 3MP cameras. At the start of the decade, this performance could cost over $1,000 in a standalone digital camera.

And the arrival of broadband has also seen a dramatic fall in the cost per megabit per second.

The current price for one megabit per second of broadband access is typically lower than the subscription charge for dial-up internet access in 2000, providing a measly 56 kilobits per second.

Thus one expectation is that connectivity prices should tend to zero, with transmission speeds heading to infinity.

But every technology has associated costs.

The copper based telephone network is already delivering far greater speeds than ever envisaged, and at some point, copper’s limits will be reached, and it will need to be replaced with fibre optics. Delivering speeds sufficient to offer high definition internet protocol television (IPTV) to a mass market, for example, is likely to require an upgrade.

The underlying cost for fibre optics is falling.

But in many countries, where existing ducts lack room for expansion, there is still the need to dig trenches to install the wiring.

The construction cost is typically greater than the equipment cost.

And labour costs have constantly risen both since 2000 and since 1965.

For example, the UK’s unit wage costs rose, on average, by more than 8 per cent a year between 1965 and 2006.

In that time, the number of transistors on a chip has risen by an average of 10,822 per cent a year.

● Research and analysis by Paul Lee, director of technology, media and telecommunications research at Deloitte, and David Tansley a partner at Deloitte.

Copyright The Financial Times Limited 2017. All rights reserved.
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