MOBILE PHONE

COMPUTING METHODOLOGY

NATIONAL INSTITUTE OF STATISTICS AND GEOGRAPHY

MEXICO

May, 2014

The generic mobile telephony service is a new product from the basket that was used from January 2011, on the previous basket was a specific product within the generic of fixed telephony.

2

Premise

The evolution of the model was motivated by the way in which it behaves the Mexican market of mobile telephony to represent reality as faithfully as possible. This methodology is based on the recommended approaches, in the manual of the ILO, according to the available information so far, to Mexico.

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Motivation

4

Motivation

There are differentiated rates for calls to phones from the same company and higher rates to mobile phones from other companies, in the same way the rates and promotions do not apply equally to all plans within each company.

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Model’s objective

The index of the generic of mobile telephony must be calculated saving the representativeness and reliability, to reflect the behavior of market prices of mobile phone service, taking into account the different rates, plans and acquired services: voice, SMS and data.

Telecommunications Price Indices Theory

We can use different approaches to the index of prices of mobile telephony and in general for the generic of telecommunications. In this regard we use a model combined between unit values and user profile.

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Unit values.

• The price of each representative item is calculated from information on income and amounts provided by the service provider.

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Telecommunications Price Indices Theory

Unit values.

• Approach assigns the price all the differences among plans, time and duration of calls, for this reason should build for homogeneous items.

8

Telecommunications Price Indices Theory

Unit values.

• It is considered that this approach provides a method to explain the change in prices when items are subject to a proliferation of discounts or promotions.

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Telecommunications Price Indices Theory

User profile.

• Usually classify consumers

according to the volume of

use of the services.

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Telecommunications Price Indices Theory

User profile.

• To estimate the costs faced by average consumers in each period you can resort to the rates stipulated in the existing plan that is more applicable to each category.

11

Telecommunications Price Indices Theory

User profile.

• The activity of consumers

(in terms of quantity and

type of calls) is kept

constant between the

periods of comparison.

12

Telecommunications Price Indices Theory

13

Telecommunications Price Indices Theory

User profile.

• The calculations are made

from a representative sample

of suppliers, using the

information on their global

participation in the market.

User profile.

•This approach assumes that changes in plans, as such, represent the variation of prices instead of the quality change.

14

Telecommunications Price Indices Theory

User profile.

15

Implemented model uses elements of different approaches

recommended in the manual of the ILO, according to the

available information so far.

Telecommunications Price Indices Theory

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Users Profile for mobile telephony service indice

The model consists of:

• Four M.T. companies

• Prepaid and Postpaid services

• 8 prepaid plans and 7 postpaid plans

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Will differentiate the plans

according to the type of user:

new; transition and fidelity

• Prepaid is weighted by

expenditure in four groups:

up to $100; $101 to $200;

$201 to $500; $501 and

more. (1 peso = 0.06

Euros)

Users Profile for mobile telephony service indice

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Model´s Characteristics

It takes into account the market share of the four companies that offer the service, both prepaid and postpaid.

Weighting for the 46 cities of the CPI.

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Model´s Characteristics

Ponders the consumption in the three mobile services: voice, messaging and internet.

For each plan and company, in sample, register promotions and rates affecting the price of services both inside and outside the network.

Plans

Variety

•Postpaid

•Prepaid

Suppliers

Cities

• City 1

• City 46

Mobil Telephone Indice

Agregation Structure

.

.

.

.

.

.

.

Implicit price

Voice Messages Internet

Promotions

Rates Recharges

20

21

Factors to calculate implicit price

Amount of service by plan and company.

Output numbers to use toll-free numbers (call / message).

Numbers with preferential rate.

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Factors to calculate implicit price

Rates: on net, off net and preferential.

Proportion of airtime which is for each service.

Proportion of air time which is spent inside and outside the network.

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Factors to calculate implicit price

With implicit prices each promotion

generates an average price for

service and for recharging according

to the plan, in sample weighted by

the entry into force of each

promotion, calculated for each

company and each city, generating

1,288 average prices per service

quoted: voice, messaging and data,

giving us a total of: 3,964.

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ANNEXES

Calculus of generic indice.

j ji

Iciajii

Icd *

Where: wi = Weight of generic to the i city. ji = Weight for the j company in the i city. Iciaji = Indice for the j company in the i city; j={Telcel, Movistar, Iusacell, Unefon}. Ipreji = Prepaid indice for the j company in the i city. Ipostji = Postpaid indice for the j company in the i city. pji = Weight for prepaid in the j company in the i city.

46

1

*i i

Icdi

ITM wMobil telephony service indice

Mobil telephony indice by city

jijijiji IpostIpreji

Icia *)1(* pp Indice by company

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Indices calculation by variety

k

jkkji RppostIpost *

Where: Rppostjk = Relative price of postpaid k plan for the j company. k = Weight for postpaid k plan for the j company. Iserjl = Indice of service l for prepaid to the j company. l={voice, SMS, data}. fl = Weight for the use of l service for prepaid. Rpserjlr = Relative price of l service for prepaid r plan to the j company. ljr = Weight for prepaid r plan to the j company. Prppserjlr = Average price of l service in prepaid r plan to the j company.

l

jllji IserIpre *f

Postpaid indice

Prepaid Indice

Indice for service in prepaid

Relative price for prepaid service

r

jlrjrjl RpserIser *l

1,Pr

,Pr

,

tjlrppser

tjlrppser

tjlrRpser

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Indices calculation by variety

Where:

Prppserjlr = Average price of l service in prepaid r plan to the j company. Prserjlrn = Price of l service in the prepaid r plan to the j company with n recharge. mn = Weight for the n recharge. n={100, 200, 300, 500}

n

jlrnnjlr serppser Pr*Pr m

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Where:

j = Companies on sample

l = {Data, SMS, Voice}.

n = Recharges: {$100, $200, $300, $500}.

Piserjlrn = Price of service l in the prepaid r plan of the j company with the n recharge.

Rejrn = Quantity effectively paid for the n recharge in the prepaid r to the j company (current pesos).

fl = Weight of expenditure destined to use service l in prepaid.

Prepaid services price calculation.

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Where:

Sjrnh = Remainder received for h promotion with the n recharge in the r prepaid plan to the j company. h={paid, free}.

βj = Market Sharing, in lines, of the j company

Tonjlrnh = On net rate for h promotion with the n recharge in the prepaid r plan of service l to the j company.

Toffjlrnh = Off net rate for h promotion with the n recharge in the prepaid r plan of service l to the j company.

Pmserjlrn = Promotion quantity included of service l in the prepaid r plan of the j company with the n recharge.

Prepaid services price calculation.

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1

1516.4

)27.0)(260(51.0

19.1

)73.0)(260(51.0)200(51.0

Voice minute price for Plan 2 in $200 recharge (free $260):

Percentage

A 73%

B 23%

C 3%

D 1%

Distribution of mobil

telephony lines per company

Source: Cofetel dec 2011.

SMS 28%

Voice 51%

Data 21%

Average

income per

user

Use

distribution

$165

Source: The Competi tive

Intel l igence Unit 2011

97.0$1566.888.79)101(1

Minutes for

company A Minutes

other

companies

Minutes free

numbers

Example: prepaid voice service price calculus.

Plan Participation On net Out net FreeNumber SMS KB

1* 20% 1.19$ 3.98$ 3 0.88$ 0.02$

2 40% 1.19$ 4.16$ 3 0.88$ 0.02$

3 40% $ 6.00~ 4.16$ 2 0.88$ 0.02$

PREPAID: Plans and Rates

* It only includes 9 on net frequent numbers . ~Price per package of 15 minutes

09.1$)93.0($10.0)90.0($09.0)97.0($32.0)23.1($49.0

Average minute voice price for plan 2:

Service Price Price Price

2 1 3

SMS 0.69$ 0.68$ 0.69$

Voice 1.09$ 1.38$ 0.41$

Data(KB) 0.02$ 0.02$ 0.02$

PREPAID: Average prices.

Recharge 100$ 200$ 300$ 500$

Weight 49% 32% 9% 10%

2

SMS 0.73$ 0.68$ 0.59$ 0.59$

Voice 1.23$ 0.97$ 0.90$ 0.93$

Data(KB) 0.02$ 0.02$ 0.01$ 0.01$

1

SMS 0.73$ 0.68$ 0.59$ 0.49$

Voice 1.61$ 1.22$ 1.14$ 1.01$

Data(KB) 0.02$ 0.02$ 0.01$ 0.01$

3

SMS 0.73$ 0.68$ 0.59$ 0.59$

Voice 0.44$ 0.39$ 0.35$ 0.35$

Data(KB) 0.02$ 0.02$ 0.01$ 0.01$

Services prices for company A in prepaid

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