Online streaming, cloud computing and bundling of information and communication services Task Force on price and volume measures for services 3rd Meeting, Luxembourg 10–11 October 2017 Item 5.3

A) Online Streaming providing content (…constantly receiving the requested data) most relevant for motion picture, video, television programmes, music, audio content, and software relevant feature: provider acquires for specific content (information products) the reproduction and distribution rights for this content the customer acquires the right to use this content in a specific way/for specified time span Examples: Spotify (audio), Netflix (motion picture/video)

Streaming Classification In NACE Rev.2 class 59.13 motion pictures, videos and television programmes (Netflix, Amazon Video) class 59.20  Sound recording and music streaming (Spotify, Amazon Music) group 58.1  Online publishing of text, books, news, pictures, audio books group 58.2  software (computer games and other software publishing) class 60.10  internet radio class 60.20  internet television channel programmes, video-on-demand channels the distinction gets more blurred in practice as TV broadcasters offer more and more content for online streaming, while on the other hand companies like Netflix or Amazon started producing their own content and the distinction to video on demand channels is not clear cut

Streaming Classification II In COICOP: Newly foreseen COICOP classes are (still not final, may be subject to changes): 08.3.9.2 Subscription to audio-visual content, streaming services and rentals of audio-visual content 09.4.3.1 Rental of game software and subscription to on-line games 09.5.2.0 Audio-visual media 09.7.1 Books

In Business Statistics It is complex; would be necessary to follow up concrete cases at EU and individual country level (for example Amazon, Amazon music, Amazon video, Netflix, Spotify, Sky, radio broadcasters, TV broadcasters, or aggregators like Zebralution) seems to be a risk that online streaming activities are still not fully or correctly captured in business statistics (multinationals, international trade in services, resident or non-resident, from inside or outside the EU, breakdown into kind of activity units In the 2017 OECD questionnaire on digitalisation Canada explained that in some instances there are affiliates of digital platforms located within the country. However, their investigation has shown that the business structure of these enterprises is such that consumers are transacting with the non-resident establishment and the domestic establishment is simply providing advertising/marketing services on behalf of the non-resident parent company

Prices The CPI included in ECOICOP 09.4.2.3 Television and radio licence fees, subscriptions; not separately identified it will depend on the countries' individual survey sample plan if and how online streaming services are included in the aggregated index seems that countries simply price the monthly subscription fee Chance with updated ECOICOP?

Prices II The SPPI foreseen to produce SPPIs at two digit levels of NACE Rev.2, but not in a more detailed breakdown

In NA and Volume measures Deflation A-method: deflate the current price output data at CPA class 4-digit level with suitable SPPIs good alternative: suitable CPIs, adjusted to basic prices CPI could also serve as a good proxy for the price development in the B2B relation (to be tested) currently available ECOICOP 09.4.2.3 is an aggregate of numerous activities; do not exactly match the CPA/NACE classes 58 to 60

In NA and Volume measures II Quality Changes quality changes constitute a volume effect and should accordingly be taken into account in the price indices used for deflation Indicators like number of films in a package; content is in most cases dynamic and not static follow the developments in price statistics, currently desirable PI generally are not available separate research in concrete cases might be considered in how far the current practice could introduce a bias to the volume measures of GDP growth

B) Cloud Computing Users can be private households or corporations Services: digital storage space, computer processing power or specific software applications supplier and user of the cloud service can easily be located in different countries

In the Classification In NACE Rev.2: class 63.11 (Data processing, hosting and related activities) In the revised COICOP classification (may still be subject to changes): 08.3.3.0 Internet access provision services and net storage services

Prices The CPI: The SPPI: 'Cloud services' are included in ECOICOP 12.7.0.4 The SPPI: The SPPI for division 63 Information service activities is available

In NA and Volume measures Difficult to give recommendations for activities which are somewhere included in the aggregates indices (current price values and prices) More detailed data at individual MS level?

C) Bundling of information and communication services bundles get more and more common in the market the market is very dynamic and also the bundles on offer change constantly Bundles could combine different combinations of fixed line telephony, mobile telephony, fixed line internet access, mobile internet access, hardware (routers, mobiles, TV-sets), access to content (film, video, music) ….

In the Classification NACE Rev.2 classes: 61.10 Wired telecommunication services (including provision of internet access), 61.20 Wireless telecommunication services (including provision of internet access), 61.30 Satellite telecommunication services (including provision of internet access) and 61.90 Other telecommunication services (including voice over internet protocol provision). bundles of telecommunication services should be classified in NACE 61.90

In the Classification II ECOICOP classes: 08.3.0.1 Wired telephone services 08.3.0.2 Wireless telephone services 08.3.0.3 Internet access provision services 08.3.0.4 Bundled telecommunication services

Prices The CPI: The SPPI: CPIs for telecommunication services are available at ECOICOP 5 digit level for most EU countries recommendation on the treatment of bundling of telecommunication services in the HICP The SPPI: SPPIs are available at the level of NACE 61 Telecommunications, but not in a more detailed breakdown for groups or classes More details as MS level?

In NA and Volume measures Consistent approach to current price data Deflation with appropriated PI (CPIs or adjusted CPIs) For quality changes volume estimates have to follow the practice in price statistics (integration of vertical quality changes) discussion of the two alternatives for volume estimates – deflation vs volume extrapolation