Monitoring Retail Prices · 2013. 4. 1. · Cell2Cell own Network Peak Cell2Cell own Network Off...
Transcript of Monitoring Retail Prices · 2013. 4. 1. · Cell2Cell own Network Peak Cell2Cell own Network Off...
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Monitoring Retail Prices
Dr Christoph Stork
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Need to RegulateFull competition in the telecom sector cannot be expected anywhere anytime soonUntil then, fair competition needs to be established or maintained through sector specific regulation
Price is the ultimate indicator for competitionLower prices expand markets to rural areas and lower income groups...not universal service obligationsMonitoring prices and hence cost to end-user remains a key regulatory function
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Regulatory Applications1. Consumer protection, price transparency and effective cost to
consumers. Example Namibia: 29 products, constantly changing promotions, insufficient information on webpage and form retail outletsExample Vodacom South Africa: 37 products varying on every single aspect (peak/off peak, on/of-net, fixed, bundled airtime, handset...)
2. Defining universal service obligations in terms of affordability, alternative approach to the usual geographic access obligations
3. Monitoring impact of regulatory interventions such as licensing, retail and wholesale tariff regulation, number portability...
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OECD Mobile Basket Methodology
Pricing products for basket of minutes and SMSOnly Dominant operators
Together 50% market share: 2006 DefinitionLargest 2 operators: 2010 Definition
Cheapest product from dominant operators for country comparison
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OECD 2006 Definition
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Exercise: Translate annual basket into monthly baskets
Low Medium High Cell2Cell own Network Peak Cell2Cell own Network Off Peak Cell2Cell own Network Off Off Peak Cell2Cell other Network Peak Cell2Cell other Network Off Peak Cell2Cell other Network Off Off Peak Cell2Fixed Peak Cell2Fixed Off Peak Cell2Fixed Off Off Peak SMS Peak ON-NET SMS Peak OFF-NET
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Translation into minutesLow Medium High
Cell2Cell own Network Peak Cell2Cell own Network Off Peak Cell2Cell own Network Off Off Peak Cell2Cell other Network Peak Cell2Cell other Network Off Peak Cell2Cell other Network Off Off Peak Cell2Fixed Peak Cell2Fixed Off Peak Cell2Fixed Off Off Peak SMS Peak ON-NET SMS Peak OFF-NET
6.912 15.6 39.483.6 7.488 12.5
3.888 8.112 13.821.782 4.056 7.641.65 3.744 6.923.168 7.8 21.843.168 6.825 16.81.65 3.276 5.321.782 3.549 5.8821.45 32.5 35.7511.55 17.5 19.25
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LimitationsMethodology does not take into account the size of a network. If, for example, someone changes from Network A to Network B but most of the contacts that this person usually calls are on Network A, then this person will now make more off-net calls than on-net ones, which are typically more expensive. Free handsets bundled with post-paid contracts can-not be taken into account by this methodology. This needs to be considered when comparing the cost of two usage bundles. The cost difference between two bundles, one with and one without a free handset can be interpreted as the price the con- sumer pays monthly for the handset.A price comparison does not take into account the quality of service, coverage and roaming agreements.This price comparison is aimed to assist consumers in picking the right packages but it cannot be the only source for a decision.
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OECD 2010 Definition
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General Basket RulesAt least two largest network operators are covered for each country, based on subscriber numbers. The operators covered should between them have at least 50% of the market share.Discount brands offered by the network operators will only be included when clearly linked with the network operator’s website and brand.Offers shall be typical 2G and 3G services with the main focus on voice.A range of relevant price packages shall be covered, allowing the lowest cost package to be selected for each operator. Only price presented clearly as current on the operator web pages will be considered.The basket methodologies can be used to compare different types of offers such as pre-paid, post-paid or SIM-only plans.Nonrecurring charges are distributed over 3 years.Selective discounts are calculated with the algorithm described in the section on selective discounts above.The value of call and message allowances included in the package will be deducted from the usage element of the basket, up to the value of actual usage.Allowances are deducted in the following order: Selective discounts, most restricted minute allowance, least restricted minute allowance, message allowance, value allowance. Specific volume discounts will be deducted from the total cost at the end.Off-net mobile-to-mobile charges are weighted according to subscriber numbers for each country, where relevant for the pricing of calls.Call costs are calculated using the duration of D + (Unit(seconds)-1)/2, based on basket call duration D given below concerted to seconds and average per second charges. The Unit is the billing unit in seconds.
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Basket Methodology Weaknesses
No one is averageBaskets do not reflect the most popular package but the cheapest productThe same basket is used for all operators: off-net/on-net ratio depends on market shareOnly dominant operators - new entrants and small operators are likely to be price challengers
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Expanding OECD Methodology to all operators and all products in a country
OECD Basket Methodology
Comparing Countries
Comparing Operators
Comparing Products
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Comparing CountriesComparing cheapest product available from
dominant operators cheapest operatormost expensive operator
Comparing the difference between cheapest in country - cheapest from dominant operatorscheapest in country - cheapest from most expensive operator
Benchmarking
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GhanaTanzania
KenyaNigeria
Ethiopia*Rwanda
BeninBotswana
TunisiaNamibiaSenegalUgandaZambia
Côte d’IvoireMozambiqueSouth Africa
CameroonBurkina Faso 11.04
8.59
7.64
7.45
7
6.57
6.33
6.12
5.06
5.06
5.04
4.92
3.74
3.74
3.63
3.35
2.93
2.29 GhanaEthiopia*Botswana
TunisiaKenya
SenegalZambiaRwandaUganda
TanzaniaMozambique
BeninSouth Africa
NigeriaCôte d’Ivoire
NamibiaCameroon
Burkina Faso 12.549.3
8.96
8.15
7.76
7.64
7.5
7.45
7.26
6.95
6.87
6.6
6.12
5.93
5.06
5.04
3.74
3.04
Cheapest operator Dominant operatorGhana
Ethiopia*TunisiaKenya
BotswanaRwandaUganda
TanzaniaSenegalNigeriaZambia
MozambiqueBenin
NamibiaCameroon
Côte d’IvoireSouth AfricaBurkina Faso 12.54
10.36
9.54
9.3
8.96
8.81
8.32
8.18
7.76
7.52
7.26
7.04
6.87
6.66
5.93
5.36
3.74
3.15
Most expensive operator
Prepaid OECD Low User basket in US$www.researchICTafrica-data.net
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http://www.reehttp://www.ree
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Feb 2010 Low OECD user basket for
prepaid
DifferenceDominant vs cheapest in a
country Operators
Years since last
entry
Cheapest Operator for
low user basket
Dominant Operator
Botswana 0% 3 2 Mascom MascomEthiopia* 0% 1 11 ETC ETCMozambique 0% 2 7 mCel mCelSenegal 0% 3 1 Orange OrangeSouth Africa 0% 4 4 MTN MTN & VodacomTunisia 0% 2 8 Tunisiana TunisianaZambia 0% 3 7 MTN ZainCameroon 8% 2 10 Orange MTNUganda 9% 4 2 Uganda Telecom MTNBurkina Faso 12% 3 9 Telcel ZainCôte d’Ivoire 14% 4 3 Moov Orange & MTNGhana 25% 5 3 Tigo MTNBenin 34% 5 3 Libercom MTN & MoovKenya 44% 3 2 Orange Safaricom
Namibia 44% 3 1 Telecom Namibia MTC
Rwanda 46% 3 1 Rwandatel MTNNigeria 53% 7 4 Starcomms GloMobile & MTNTanzania 60% 9 5 Benson VodacomTuesday, 21 August 12
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Each country has a different storyNumber of operatorsSequence of market entryMarket sizeMarket sharesMarket segmentationsUser profilesPrice and income elasticity of demandLock-inClub effectsBrand loyalty
Strength of regulatorsPast regulatory interventionsLaws / licencesDisposable incomeGDP growthSubstitutes (public phones, fixed)(Country dummy may be the main explanatory power of panel studies)
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Month 66 minutesMonth 66 minutes DoC/ICASA
On-net
Peak
On-net Off-PeakOn-net
Off-off Peak
Off-Net
Peak
Off-Net Off-PeakOff-Net
Off-off Peak
Fixed-line
Peak
Fixed-line Off-PeakFixed-line
Off-off Peak
SMSOn-net
SMSOff-Net
10
10
10
10
10
10
2
2
2
5
5
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ExerciseFind out the prices for low medium and high user baskets for the DoC Basket for CellC, MTN, Vodacom and 8taWhich product is the cheapest and how much does it cost?
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