IDI: Why does the ITU believe that SIM profligacy serves public-policy objectives?

Posted on November 12, 2011  /  0 Comments

Because of excellent performance on many indexes such as the AT Kearney Service Location Index, I have made a habit of checking on Vietnam’s performance on comparative rankings. True enough, the ITU’s ICT Development Index showed Vietnam advancing from 91st place to 81st place, a dramatic 10 place advance from 2008 to 2010. This prompted me to probe deeper to find out what good things were happening in Vietnam that others could emulate. Instead of finding lessons to emulate, I ended up with deep disquiet about the IDI methodology.

Vietnam’s score and ranking on the Skills subindex remained unchanged (value of 5.72 and rank of 108), behind Sri Lanka, which was not exactly in line with its superior ranking in the Service Location Index. But leave that aside. The score in the Use subindex improved from 0.93 to 1.57, but the rank advanced by only one (77th to 76th). The 10-place jump was caused solely by the improvement of the Access subindex score from 3.11 to 4.39, resulting in the Access rank rising from 88th to 72nd.

The report explains Vietnam’s rise as being caused by “an increase in the IDI use sub-index, with 13 mobile-broadband subscriptions per 100 inhabitants, up from no subscriptions in 2008.” This is not, however supported by the evidence: the Use sub-index rank increases by only one. The Spider chart on p. 23 provides a contrary explanation: the increase was driven by the Access subindex, and within that by a doubling in the value from mobile-cellular subscriptions. Elsewhere in the text it is stated that Vietnam’s “already high mobile-phone penetration in 2008 (87 per cent) climbed to 175 per cent by the end of 2010.”

What is actually meant by 175 mobile-cellular subscriptions per 100 people? Why is it better than, say, 75 per 100 people? The only possible explanations for mobile SIMs over, say 70 per 100 people in any country are:
• There is significant multiple SIM use;
• There is no control of the reporting of SIMs, with inactive SIMs being reported along with active SIMs;
• Large numbers of foreigners are holding SIMs; or
• Machines are being assigned SIMs.

In any country, a certain number of citizens/residents do not own mobile phones, because they do not want to, or because they are too young or too old or sick. That is the reason why any number above around 70 implies one or another of the above explanations.

LIRNEasia has surveyed multiple SIM use among those at the Bottom of the Pyramid and conducted qualitative research to find out why people hold multiple SIMs. Our research shows that multiple SIM use is decreasing in South Asia, principally because of the greater controls of SIM registration and reporting by regulators. Qualitative research conducted in 2009 showed that the poor carried multiple SIMs because they were
• Elements of strategic behavior intended to keep costs down by using affinity calling plans offered by different operators;
• Responses to significant differentials in on-net and off-net call prices;
• Needed to address differences in signal coverage in different localities frequented by users; or
• Used to segregate different aspects of one’s life, such as work-related calls and personal calls or relationships with spouse and paramour.

Based on this research, I have objected to the government imposing rigid limits on multiple SIM ownership. However, that does not imply that there is anything intrinsically good in public-policy terms of people carrying around multiple SIMs. Affinity calling plans reflect actual calling behaviors. They are offered by operators with the intention of making it more difficult for customers to defect, or to reduce “churn.”

Differential off-net pricing is prima facie evidence of failures of interconnection pricing. There is nothing to be proud about patchy signal coverage, causing people to develop workarounds in terms of multiple SIM use. There is nothing wrong with segregating aspects of one’s life through the use of multiple SIMs, but should not cause a country’s ICT development to be seen as superior to anothers where that practice is less common.

So it seems that the logical thing to do is to not reward a country for having more SIMs than, say 100 per 100 people, if it is difficult to arrive at a lower number that will be appropriate for all countries.

If this was done, Vietnam would not have experienced a 16-place jump in the Access ranking. Therefore, it would not have experienced a 10-place advance in the overall IDI ranking.

If the ITU wants its ICT Development Index to be taken seriously, it will make the above correction, among others, in its methodology.

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