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

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

3. Background  Traditionally a monopoly or oligopoly market  Deregulation and lower entry markets increased competition in recent years  Large growth experienced in recent years: Revenue stood at £864bn in 2010 - 13.5% higher than the £762bn in 2006 (OfCom, 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 (OfCom, 2011)

4. Background (cont.)  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  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

5. Classification - Industry ISIC (Rev. 4) NACE (Rev. 2) NAICS (v. 2007) ANZSIC (v. 2006/Rev. 1) Class (Group) 6110 51715801 Wired telecommunication activities 6120 51725802 Wireless telecommunication activities 6130 5174 5809 Satellite telecommunication activities 6190 5179 Other telecommunication activities

6. Classifications - Product  Product classifications not harmonized to the same degree  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  CPA 2008: 24 items in total - slightly different from CPC Directly linked with NACE industry classification  NAPCS (2007): More than 50 sub-items Complimentary to NAICS Some item not within scope (e.g. repair services for telecommunication equipments)

7. SPPI development  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  Summary of the Pricing Method for Telecommunications SPPI

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

9. Turnover statistics 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  Turnover statistics can be collected through surveys  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

10. Turnover statistics – Main issues  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  Turnover should be broken down by primary and other activities to avoid over/under coverage in frame and estimates

11. Further suggestions  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

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