1. Tariff comparison: Global Trends The views expressed in this paper are those of the author and do not necessarily reflect the opinions of the ITU or its membership. Dr Kelly can be contacted at Tim.Kelly@itu.int. Dr Tim Kelly (ITU), Seminar on tariff strategies for competitive environments, ALTTC, Ghaziabad, 20-22 July 1999

2. Agenda The purpose of tariff comparisons Rate comparisons Installation charges Subscription charges Local and international call charges Tariff baskets OECD business and residential baskets OECD international basket Other baskets Trends over time

3. Tariff comparisons: What for? To carry out benchmarking between competitive operators in the same country To carry out benchmarking between similar operators in different countries To track effects of tariff rebalancing over time To provide comparative information for managers, regulators, users To create baskets of different services to compare like with like

4. Different types of tariff comparison Individual rate comparisons (e.g., installation charge, local call rate) Composite basket with fixed components (e.g., Siemens basket) Composite basket with variable components (e.g., OECD Tariff Comparison basket) Variations over time in same price variable

5. Residential installation fee, in US$: Selected countries plus World average, 1998 Source: ITU World Telecommunication Indicators Database. 250.01 225.57 202.79 171.31 124.00 106.94 106.81 61.35 46.38 34.80 22.03 17.77 8.20 Argentina China Indonesia Russia Average Mexico Thailand Hongkong Sar Brazil South Africa India Malaysia Philippines

6. Monthly residential subscription, in US$: Selected countries plus World average, 1998 Source: ITU World Telecommunication Indicators Database. 14.01 12.83 10.05 9.50 8.99 8.91 7.22 7.11 5.23 3.43 3.19 1.88 Mexico Argentina South Africa Average Philippines Hongkong Sar Indonesia Brazil Malaysia India Russia Thailand China

7. Business installation fee, in US$: Selected countries plus World average, 1998 Source: ITU World Telecommunication Indicators Database. 582.44 383.10 274.97 250.01 225.57 165.00 106.81 61.35 46.38 34.80 22.03 17.77 6.86 Russia Mexico Indonesia Argentina China Average Thailand Hongkong Sar Brazil South Africa India Malaysia Philippines

8. Monthly business subscription, in US$: Selected countries plus World average, 1998 Source: ITU World Telecommunication Indicators Database. 36.42 20.51 19.26 18.84 14.80 14.08 12.52 12.44 11.62 10.66 5.23 3.19 2.90 Argentina Philippines Mexico Russia Average Hongkong Sar Brazil Malaysia South Africa Indonesia India Thailand China

9. Local call charge in US cents per 3 mins: Selected countries plus World average, 1998 Source: ITU World Telecommunication Indicators Database. 13.2 10.0 9.6 9.3 9.0 7.0 3.8 3.2 2.2 1.4 0.0 Mexico Argentina Thailand Brazil Average South Africa Indonesia Malaysia India China Hongkong Sar Philippines Russia

10. International 3 min call to US, in US $: Selected countries, 1998/99 Source: ITU World Telecommunication Indicators Database. 7.39 6.65 4.36 3.58 3.28 2.76 2.63 2.49 1.83 1.29 1.18 0.63 Russia China India Thailand Indonesia Brazil Hongkong Sar South Africa Japan Mexico United Kingdom Australia

11. Rate comparisons versus tariff baskets Rate comparisons: Easy to construct and understand BUT, easy to misinterpret Can be misleading due to different tariff structures and different tariff strategies between countries Tariff baskets: Much harder to construct BUT, much more meaningful in terms of comparisons between countries or operators with different tariff structures More representative of experience of different user groups

12. OECD tariff baskets: Then and now... Six baskets defined: Business telephony Residential telephony International telephony Mobile communications X.25 data communications Leased lines at 9.6 kbit/s, 56/64 kbit/s and 1.5/2.0 Mbit/s Comparisons between countries Additional telephony baskets to take account of usage discounts (e.g. small businesses, multinationals, elderly) Combined national and international telephony basket Additional baskets needed for Internet, ISDN, digital mobile (roaming), PCS, ATM etc Comparisons between operators within countries

13. OECD residential tariff basket: August 1998 Note:Including tax. Calculation is based on Purchasing Power Parities expressed in US$. Source:OECD. Based on methodology defined in ICCP 22 Performance indicators for Public Telecommunication Operators

14. Off-peak, Internet access basket: August 1998, 20 hours per month Source:OECD. Based on dial-up Internet access via PSTN. Excludes any element of fixed charges.

15. 129.2 117.1 108.4 103.8 100.0 99.5 91.9 86.7 84.2 Japan (KDD) China India USA (AT&T) Average Indonesia Singapore Australia Hongkong Intl business call basket, 1996: based on call pairs, Asia-Pacific=100 Source: ITU, Asia- Pacific Telecom Indicators, 1997.

16. Trends over time Tracking trends in tariffs over time helps to assess: affordability of tariffs performance/efficiency of company competitive position of company Tariff rebalancing strategy Trends in local currency (Rupees) Provide most meaningful indicator for local customers Trends in US$, Euros, SDRs or PPPs Provide comparability relative to other currencies and relative to local price inflation

17. 0 50 100 150 200 250 19951996199719981999 North America Europe, Asia Neighbouring countries Trends over time: Indias international tariffs, 3 minute, peak rate call, in Rupees Source: ITU/TeleGeography Direction of Traffic, 1999

18. Trends over time: Indias international tariffs, 3 minute, peak rate call, in US$ 0 1 2 3 4 5 6 7 8 19951996199719981999 North America Europe, Asia Neighbouring countries Source: ITU/TeleGeography Direction of Traffic, 1999

19. Conclusions: the value of tariff comparisons A useful tool for management, for regulators and for users But, can be misleading if tariff comparisons are used selectively, or are quoted out of a wider socio-economic context Use of tariff baskets is a more reliable and meaningful indicator than simple rate comparisons Trends over time are best measure of company performance