Statistic Austria Alexandra Beisteiner Ottawa Group October 2007
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Transcript of Statistic Austria Alexandra Beisteiner Ottawa Group October 2007
Evaluation of the behavior of different methods for price measurement in the
telecommunication market
Statistic AustriaAlexandra BeisteinerOttawa Group October 2007
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Overview
Aim of the study Fixed network Mobile network Preliminary conclusions
30 slides
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Aim of the study
Evaluation of different methods for telecommunication services
Identification of advantages and disadvantages of methods
Evaluation of results – Do the different methods yield to the same result?
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CENEX HICP
Center of Excellence for HICP Sampling and Quality Adjustment
Germany is leading, six countries are contributing
Output: HICP Handbook; Reports for some areas
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independent of location
competition intensive
Contract and prepaid cards
Mobile and fixed network
Upcoming of high speed internet
Market diversity
Former monopolist has big shares
Call by call providers and pre-selection
fixedfixednetwork network
mobilemobilenetworknetwork
cablecableTVTV
Bundled services
In urban areas
Primary use is television
The telecommunication market
internetinternet
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The fixed network
Former monopolist provides wires to households – only small competition in this field
Call by call/ pre-selection providers for connection fees
ISDN rates are low and decrease -> mobile internet increases as alternative
Allover decrease of turnover of ~1% per quarter
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Methods used
Traditional Approach Unit Values Representativity Approach User Profiles with rational choice
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Traditional Approach
Data are from the monthly CPI survey Shops and packages are selected in the
base period Tariff prices are weighted with base period
turnover weights Packages are equal weighted
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Results 1 – Traditional approach
Different Methods for Telecommunication price measurementFixed market
93,0
94,0
95,0
96,0
97,0
98,0
99,0
100,0
101,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
Index traditional approach baseweighted
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Traditional ApproachAdvantages Disadvantages
Easy to apply once established
Only price data are needed in monthly survey
In a strict traditional approach packages are equal weighted – no further data are needed
Difficult when accounting rules are changing (may lead to zero cells)
No weights for providers No weights for packages Impact of small packages
and providers is overestimated
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Unit Values
Data stem from a quarterly survey which is done by the regulatory body
Providers are obliged to report data Starting with Q4/2004, but some problems
occure regarding the understanding of definitions
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Results 2 – Unit Values
Different Methods for Telecommunication price measurementFixed market
93,0
94,0
95,0
96,0
97,0
98,0
99,0
100,0
101,0
102,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
UV index base weighted
UV index weighted index bycurrent turnover
UV index weighted average pricesby current turnover
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Unit Values - Drawbacks
Definition of elements differs between providers and within time – explains part of volatility
Differences in consumption patterns for unit values which comprise a diverse segment –> e.g. mobile unit value and foreign country unit value
Can lead to wrong results when consumption pattern changes over time
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Comparison of unit value with price data
Mobile Network
90,0
92,0
94,0
96,0
98,0
100,0
102,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
Foreign Countries
88,0
90,0
92,0
94,0
96,0
98,0
100,0
102,0
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
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Unit ValuesAdvantages Disadvantages
Easy to apply Less data have to be
collected UVs incorporate
discounts
UVs may be volatile when definition of element is too broad
Providers must report detailed data - reluctance
Difficulties when definition changes
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Comparison – UVs and traditional approach
Different Methods for Telecommunication price measurementFixed market
93,0
94,0
95,0
96,0
97,0
98,0
99,0
100,0
101,0
102,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
UV index weighted average pricesby current turnover
Index traditional approach baseweighted
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Price data with representativity selection and weighting
Packages and Providers are selected by turnover – old and new packages
Prices for Packages are collected monthly Weights of Packages and Providers may
vary quarterly Consumption pattern is fixed to base period
(one consumer profile)
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Comparison – UVs and traditional
Different Methods for Telecommunication price measurementFixed market
93,0
94,0
95,0
96,0
97,0
98,0
99,0
100,0
101,0
102,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
representativity approach
UV index weighted average pricesby current turnover
Index traditional approach baseweighted
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Representativity approachAdvantages Disadvantages
Follows the packages that are currently in use
Much data is needed at deep detail
Providers have to cooperate
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Consumer Profiles
Assumption of rational choice – cheapest package within provider is taken
For the time being one consumer profile is taken equivalent to the one of the representativity approach
Done with CPI data, will be repeated with data from the chamber of employees (only tariff prices of new packages)
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Comparison – all four methods
Different Methods for Telecommunication price measurementFixed market
93,0
94,0
95,0
96,0
97,0
98,0
99,0
100,0
101,0
102,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
representativity approach
UV index weighted average pricesby current turnoverIndex traditional approach baseweightedCPs rational choice
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Consumer ProfileAdvantages Disadvantages
Only price data are needed in monthly collection
easy to apply once established
Is like a copy of a monthly bill – similar to re-pricing of bills
Detailed data is needed to establish different consumer profiles
Weighting of profiles Assumption of rational
choice Weighting of packages
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The mobile network
Highly competitive market More packages than on the fixed network
market Providers are sensitive when additional data
is asked
study repeated for the mobile market
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Consumer Profiles
Data are from a monthly survey of the chamber of employees which summarize all available packages for the mobile, the fixed and the internet market
Here free minutes and special discounts have to be taken into account (less importance on the fixed market)
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Representativity approach
Current CPI data are used Not only new packages are taken into account Packages are weighted by their share – data are
delivered by the providers Old packages stay as long in the sample as they
have a significant share New packages are taken into account not when they
appear on the market but when they gain share
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Unit value
Data from regulatory body are used No distinction between business and private
market available Definitions of unit values are very broad
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Results – Comparison mobile market
Differnet Methods for Telecommunication price measurementMobile Market
50,00
60,00
70,00
80,00
90,00
100,00
110,00
120,00
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
consumer profile (rational choice withouttaking into account free minutes)
consumer profile (rational choice taking intoaccount free minutes)
UV whole market
Representativity approach contract market
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Results – Comparison fixed market
Different Methods for Telecommunication price measurementFixed market
50,0
60,0
70,0
80,0
90,0
100,0
110,0
120,0
2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4
representativity approach
UV index weighted average pricesby current turnoverIndex traditional approach baseweightedCPs rational choice
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Preliminary Conclusions
Price development of different methods with different data show the same direction but to a different degree
Unit values, as used here, are not recommended as they show volatile behavior that can be explained by differences in consumption pattern
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Outlook
CPs for fixed market will be elaborated (ongoing study of individual data – results will hopefully be available before the end of the CENEX)
Traditional approach for mobile market Internet data are in preparation Data for mobile phones were collected – Quality
adjustment in the presence of discount shemes
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Thank you for listening!