Benchmarking telecom prices
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1 Benchmarking telecom prices The South Asian case Tahani Iqbal, Researcher, LIRNEasia Expert Forum on ICT Sector Indicators and Benchmark Regulation for SAARC Regulatory Authorities June 15, 2008, Singapore
2 Nokia TCO (Total Cost of ownership) study Only 4 countries with TCO < USD 5
3 Nokia methodology TCO = Handset cost + taxes + monthly cost of using a mobile phone Handset cost: lowest Nokia handset sold in country Taxes: direct handset and service value added, sales tax and/or specific telecommunications tax + customs or similar fee on handset Usage: looks like a black box, but its not..
4 Usage component Simplified OECD low-user basket Connection charges Monthly subscription (rental) Calls (mobile on-net and off-net, local and national) Weighted by distributions based on destination and time of day SMS Taxes Free minutes/sms
5 But OECD data not quite accurate for Asia Example: We talk longer OECD average talk time = 114 minutes South Asia average talk time Prepaid: 175 minutes (BD = 161, IN = 179, LK = 134) Postpaid: 535 minutes (BD = 693, IN = 508, LK = 641) SMS use is lower in South Asia (OECD = 50, South Asia = 39) These modifications make a difference
6 OECD vs South Asian postpaid baskets Monthly postpaid mobile cost for a medium user (OECD and South Asian baskets) USD Nepal Bangladesh Pakistan India Bhutan Sri Lanka OECD (114 MoUs, 50 SMSs & 1 MMS) Maldives Nepal Bangladesh Pakistan India Bhutan Sri Lanka South Asia (535 MoUs & 39 SMSs) Maldives
7 LIRNEasia Mobile Benchmarks: 4 countries <USD 5 still the same, but different order Average monthly prepaid mobile cost for a Low User SMS Usage Rental Connection 8.33 US dollars Bangladesh Pakistan India Sri Lanka Nepal Bhutan Maldives Afghanistan
8 Customized South Asian price basket Significant differences in basket composition OECD uses call data, SAARC data available in minutes SMS use lower, and MMS and voice mail use almost negligible in SAARC Separate baskets for prepaid and postpaid RPP and CPP Presentation in US$ and US$ PPP
9 If you can calculate the baskets you can: Answer accusations that your countries prices are too high/too low Compare plans offered within the country so that you can see which operator offers the best deals to consumers Enable consumers to make choices based on their usage patterns (e.g. put the basket calculator application on your web site. Consumer just enter usage (minutes, SMSs etc) information, and calculate monthly expenses for different packages) Etc
10 Formula for calculating basket Connection (i) + Monthly rental + Monthly call usage (ii) + Monthly SMS usage (iii) + Taxes (iv) i. = Connection charge/36 ii. = No. of minutes (weighted by destination and time of day) x tariff iii. = No. of SMS x tariff iv. = Total tax on rental and usage (minutes and SMS)
11 Data requirement I Distributions by destination and time of day
12 Data requirement II Tariffs
13 Working out the numbers is easy once your have the pre-formatted spread sheet
14 Considerations for the future International calls and roaming? Currently not included in basket composition Mobile internet? Validity period? With rapidly changing prices and use
15 Considerations (contd) Who should calculate the price baskets? OECD: Teligen, commercial operation Obtains from own master tariff database SAARC? Should SATRC etc get involved?
16 Thank you
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