Indicators for Public Telecommunication Operators

1
Price comparisons Purpose and Practice An
introduction to the OECD Tariff Comparison Model
Dr Tim Kelly, ITU Workshop on Trends in Regional
Telecom Prices in Asia-Pacific Bangkok, 11-15
Sept 2000
The views expressed in this presentation are
those of the author and do not necessarily
reflect the opinions of the ITU or its
membership. Tim Kelly can be contacted at
tim.kelly_at_itu.int.
2
In the beginning, defining telecommunication
performance indicators was relatively simple ...
3
But then life got complicated ...
4
In 1988, OECD launched a new work programme on
comparative costs of telephone calls. In 1989,
the programme was extended to cover other
telecommunication performance indicatorsIn
1990, OECD report published Performance
Indicators for Public Telecommunication Operators
Original OECD report available online at
http//www.oecd.org/dsti/sti/it/cm/prod/ICCP22.htm
5
Product evolution
Performance Indicators forPTOs
OECD Communications Outlook
ITU World Telecoms Indicators Database
OECD/Teligen Tariff Comparison Basket
Development of Asia-Pacific Tariff
ComparisonBasket?
ITU World Telecom Development Report
6
Objectives of OECD Tariff Comparison Model

• Methodology should be internationally neutral
  (not favouring traffic pattern of any one
  country)
• Tariff comparisons should be based on a basket
  which covers a mix of fixed and usage charges
• Basket should be dynamic, allowing for changes in
  underlying assumptions and reflecting trends over
  time
• International call comparisons use a different
  methodology, based on call pairs
• Comparisons expressed in comparable currency unit
  (e.g, US) using Purchasing Power Parities

7
Performance IndicatorsThen and now ...

• Performance indicators mainly concerned with
  tariffs, networks Quality of Service
• Indicators mainly used by PTO managers and
  regulators
• Indicators mainly presented historical trends
• Operators happy to share data

• Indicators needed to define market opportunities,
  for policy evaluation and regulation
• Indicators also used by users, shareholders,
  consultants, investors journalists
• Major interest is in forecasts, company valuation
  and market opportunities
• Operators regard much data as commercially
  confidential

8
Tariff comparisons Then and now ...

• Similar tariff structure applied to all customers
• Most countries had only one supplier
• Telephony service relatively simple (vanilla
  flavour only)
• Tariff changes introduced infrequently
• Most tariffs were post-paid
• Limited options for international service

• Many users eligible for some type of discount
  scheme
• Many countries have multiple suppliers
• Many optional features available (e.g. itemised
  billing, call forward etc)
• Tariff changes and new options introduced
  regularly
• Pre-paid very popular
• Multiple options for international service (e.g.
  calling cards, IP Telephony)

9
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 for Internet, ISDN, digital
  mobile (roaming),
• Comparisons between operators within countries,
  and comparisons over time

10
National telephone tariff basket Then and now ...
November 1989 Business basket US931, 2634
calls Residential basket US346, 920
calls Business basket Iceland, 1st Sweden,
2nd France, 10th Italy, 11th UK, 13th Japan,
14th Germany, 17th Spain, 18th USA, 19th
May 2000 Business basket US1071, 3600
calls Residential basket US480, 1200
calls Business basket Iceland, 1st Sweden,
4th, France, 10th Germany, 12th UK, 15th Spain,
20th Japan, 22nd Italy, 23rd USA, 24th
11
Innovations introduced since 1990 include

• Greater range of baskets (e.g., old and new,
  composite and individual, Internet-oriented etc)
• Fixed number of calls as well as variable
  fixed/usage component
• International calls introduced into domestic call
  basket
• Calls to mobiles, Internet, national dial
  numbers, directory enquiries, fax
• Volume discounts
• Multiple operators in each country
• User-definable baskets

12
National business basket, May 2000
13
Data requirements National Tariff Basket

• Fixed charges
• Installation charges
• Call price sampled by
• Distance (3, 7, 12, 17, 22, 40, 75, 110, 135,
  175, 250, 350, 490km)
• Time of day/week (Weekdays at 11.00, 15.00,
  20.00, 03.00, Saturdays at 11.00, Sundays at
  15.00)
• Call set-up charges and meter units
• Taxes

14
Additional information

• Call patterns
• Old OECD pattern, 1988-1999
• New OECD pattern, 2000 onwards
• Pattern specific to individual country
• Ratio between fixed and usage charges
• Old OECD fixed at 33/67 for business and 20/80
  for residential
• New OECD fixed number of calls, 3600 for
  business and 1200 for residential
• Exchange rates Actual and Purchasing Power
  Parities (PPPs)

15
Extending the OECD tariff comparison model

• Original OECD model 24 Member States
• North America, Western Europe, Australia, Japan,
  New Zealand, Turkey
• Current OECD/Teligen model 29 Members
• As above plus Mexico, Rep. of Korea, Poland,
  Hungary, Czech Republic
• Developing a tariff comparison basket for TOT
• Defining similar operators in other countries
• Data collection and input

16
Quality of service indicators Then and now ...

• Six main indicators selected covering waiting
  lists, payphones, call failure rates, faults per
  line, fault repair time, and operator service
• Additional features customer satisfaction,
  transmission quality, account queries, accuracy
  of directory services

• Key measure is customer satisfaction, measured by
  level of churn between operators
• Technical network quality important as data
  compression grows (esp. mobile)
• Bundling of features in basic price
• Low probability/high magnitude events (e.g. fire,
  software crash)

17
Information requirements of regulators

• For policy analysis
• Comparisons before and after policy change
• Aggregation of national statistics to allow
  comparison with other countries
• For regulatory purposes
• Tariff rebalancing including facilities charges
  to other service providers
• Market share, growth rates
• For customers
• Quality of service indicators
• Handling of account queries

18
Purpose and practice of price comparisons

• Price comparisons provide a means of evaluating
  the performance (benchmarking) of public
  telecommunication operators
• By comparison with other similar operators in
  other countries
• For TOT, over time
• Price comparisons allow for analysis of tariff
  levels and tariff structures
• Purpose of this workshop is to develop a price
  comparison basket for TOT and for Asia-Pacific