27 th Voorburg Group Meeting on Services Statistics

27 th Voorburg Group Meeting on Services Statistics Updated Sector Paper on Industry ISIC 61 Telecommunications Liam Murray Warsaw, Poland October 1 st - 5 th, 2012

History of Telecommunication SPPI – Voorburg groups meetings Ø First discussed on the 4 th Voorburg Group meeting in 1989 Ø Audiovisual services were revisited in 1990 and 1992 - Canada, France, Finland Sweden discussed model survey for audiovisual services Ø Telecommunication services were discussed several times since 1993 Ø Both prices (Austria, Germany and France) and turnover (Canada, Norway and The Netherlands) were discussed on the 23 rd Group in 2008 Ø A sector paper presented by INSEE on the 24 th Voorburg Group meeting Ø Updated Telecommunication Chapter for the purposes of the Methodological Guide to be published later this year

Background Ø Traditionally a monopoly or oligopoly market Ø Deregulation and lower entry markets increased competition in recent years Ø Large growth experienced in recent years: • Revenue stood at £ 864 bn in 2010 - 13. 5% higher than the £ 762 bn in 2006 (Of. Com, 2011) • Approximately 30% of the world’s population were internet users by 2010 (ITU, 2011) • Around 1. 2 billion of users accessed the internet via mobile networks (Of. Com, 2011)

Background (cont. ) Ø Industry trends: • Regulation, such as the EU Electronic Communication Framework • Technology, including fibre optic cables, next-generation core networks • Consumer’s movement to new services, such as the substitute of fixed broadband by mobile broadband Ø Other market changes: • Convergence, i. e. Horizontal integration which brings together information technology, telecommunication and media • Bundling, i. e. sale of a number of services combined in a single price package

Classification - Industry ISIC NACE NAICS ANZSIC (Rev. 4) (Rev. 2) (v. 2007) (v. 2006/Rev. 1) 6110 5171 5801 Wired telecommunication activities 6120 5172 5802 Wireless telecommunication activities 6130 5174 Class (Group) Satellite telecommunication activities 5809 6190 5179 Other telecommunication activities

Classifications - Product Ø Product classifications not harmonized to the same degree Ø CPC rev 2: • 15 subclasses but only 3 within scope o 841 Telephony and other telecommunications services o 842 Internet communication services o 8463 Broadcasting, programming and programme distribution services Ø CPA 2008: • 24 items in total - slightly different from CPC • Directly linked with NACE industry classification Ø NAPCS (2007): • More than 50 sub-items • Complimentary to NAICS • Some item not within scope (e. g. repair services for telecommunication equipments)

SPPI development Ø Direct use of repeated services most common method • It can easily identify any potential changes in quality. • Low response burden/less expensive • Product specification at base period needs to be quite detailed Ø Summary of the Pricing Method for Telecommunications SPPI

SPPI Development – Main issues Ø Scope • Business to Business vs Business to All • Depends on the service activities, the pricing methods and data availability Ø Bundling • Break down the bundle into separate services and price separately • Price bundled services together as a group Ø Quality issues • Ensure constant quality and adjust for quality changes • Introduction and omission of new services might prove difficult if using a Laspeyres index

Turnover statistics Ø Turnover statistics can be collected through surveys • Precise turnover detail can be defined • Data can be collected with the desired periodicity • Allows the construction of I-O tables • High respondent burden • High cost • Low response rate Ø Alternatively turnover can be collected through administrative sources • Little or no respondent burden • Large coverage • Less expensive • Data coverage and definition can be ambiguous • Least timely

Turnover statistics – Main issues Ø Clear and precise definition needed • Tax declaration for tax purposes should be excluded • Revenues generated from non-turnover producing activities should be omitted e. g. sales of fixed assets Ø Turnover should be broken down by primary and other activities to avoid over/under coverage in frame and estimates

Further suggestions Ø The developed telecommunications SPPI is required to undergo frequent quality assurance by: • Re-weighting service products more frequently to capture rapid changes in service consumption • Researching methods of capturing the price of bundled service products and addressing convergence of the telecommunications with media and IT • Using a standard method of quality adjustment of business telecommunications in order to capture technology developments

Thank you for your attention Questions and Answers Liam Murray Warsaw, Poland October 1 st - 5 th, 2012