A possible solution to the mobile price comparison problem

Posted on December 4, 2011  /  0 Comments

LIRNEasia was unhappy with the ITU’s practice of reporting the prices of telecom services on the basis of a three-minute call. From 2006, we worked on popularizing the OECD basket methodology. We started becoming increasingly unhappy about the accuracy of the method because of the widespread use of discounts. At the same time, the ITU adopted the basket method and started reporting prices on that basis. We declared victory and stopped price benchmarking for voice calls.

Scientific Advisory Council member Johannes Bauer had developed a method to allow customers figure out the mobile packages best suited their use patterns. In 2010-11 we worked with him to convert his method to an online tool that could be used to compare broadband prices. This is now available to customers in Bhutan at the BICMA site.

Now LIRNEasia Research Fellow Christoph Stork and CPRsouth member Ibrahim Kholilul Rahman have come up with a new method to compare mobile voice prices:

Trying to apply the price basket following OECD framework to Indonesia is, unfortunately, not suitable, as the discounts and specials are mostly on a daily basis.

Therefore, a new daily basket is required to compare prices in Indonesia. Given the complexities, an alternative framework to assess prices has been constructed in this simulation. All prepaid products are being priced for a basket constituting six calls each for every hour of the day and night (24 hours) – three calls of the length 35 seconds, 75 seconds and 200 seconds to the same network (on-net) and to another network (off-net). The daily basket also includes one off-net and one on-net SMS per hour.

It is fully worth consideration, especially if it is offered as an online tool by the regulatory agency. The problem of ensuring that the fast-changing discounts are continually updated in the database remains. If that problem cannot be solved (involved commitment of resources by regulatory agency), we’ll just have declare that mobile is an FMCG (fast moving consumer good) and engage in forbearance ourselves.

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