Paris, 6 July 2011
ARCEP wanted to have an index of mobile service prices, the goal being to measure changes in price – using a methodology adapted to the French market and common to all the stakeholders – and so ensure greater transparency in the mobile market by making the index publicly available.
Today, ARCEP is publishing the findings of its first survey of the consumer services market in France from 2006 to 2009, covering the customers of the country’s three main carriers: Orange, SFR and Bouygues Telecom.
An index based on typical consumption profiles
This survey, which borrowed from the methodology created by INSEE, is based on the notion of “minimum spending” – in other words the amount invoiced to rational, informed consumers with a freedom of choice during the period of the survey – associated with typical user profiles based on four types of criteria:
- the carrier providing the service
- type of offer (flat rate or prepaid card)
- consumption level
- time/distribution of calls throughout the day
A total of 18 profiles were thus defined for each carrier.
The hypothesis posits that, each month, each consumer profile chooses the offer best suited to their needs, and at the lowest price (1). The published results correspond to the average for the three carriers, so they represent an aggregated rate of change rather than the individual trajectories of each individual carrier.
The methodology used makes it possible to calculate theoretical minimum expenditure, and not customers’ actual expenditure.
Average 2.8% annual decrease in price between 2006 and 2009
Minimum customer spending has held steady in the market as a whole: this therefore means that the increase in volume over the period has been offset by a decrease in consumer prices, which came to an annual average of 2.8% from 2006 to 2009.
This overall trend nevertheless contains varying degrees of change: consumers subscribing to high volume flat rates enjoyed a greater than average rate of decrease, whereas the prices the lightest consumers (whether of prepaid cards or flat rate offers) were charged decreased less, and in some cases even increased during the period.
There are several factors that affect price decreases:
- consumption level: heavy users with flat rates were among the prime beneficiaries of price decreases thanks to the introduction of flat rates that include additional or unlimited calling during certain times of day. Over the course of the period, the price of these customers’ flat rates dropped by an average 9.1% a year, whereas the price of mobile services decreased by only 2.7% for the lightest consumers subscribing to a flat rate, who actually experienced a 1.8% increase in the price of their subscription in 2009, compared to 2008;
- time of the calls: consumers who call mainly in the evening and at the weekend enjoyed double the rate of decrease (an average -10.6% annually) as the one extended to those whose consumption was either more evenly distributed across the day, or mainly during the day: an average annual decrease of -4.9% and -4.6%, respectively, for these two profiles. This disparity can be attributed to the structure of carriers’ offers: because the additional or unlimited calling included in high-volume offers is confined to evenings and weekends, consumers who make most of their calls during those times are the ones who benefit the most.
But an increase in price for prepaid cards
Customers who use prepaid cards experienced a slight increase in the price they pay: 1% annually, on average. This increase comes primarily from the fact that the period of validity of certain cards has been shortened.
Publication which is due to become annual and expanded
ARCEP has set itself the goal of publishing a consumer price index for mobile services on an annual basis. For this first publication, data traffic (internet access, etc.), which generated only 4% to 8% of mobile revenue from 2006-2009, has not been taken into account but will be in the next publication (due for late 2011) covering the period running from 2006 to 2010.
This price index not only provides ARCEP with a means of better tracking the mobile telephony market’s development, but also gives consumers and carriers an important tool that will help bring greater transparency to a market which has undergone swift and deep-seated changes over the past several months.
(1) All of the hypotheses and the modelling choices (complete description of the method, parameters considered, bias ad limitations) are provided in detail in the document published (in French) by ARCEP on 30 July 2010 (http://www.arcep.fr/uploads/tx_gspublication/consult-methode-prix-serv-mobile-juil10.pdf (pdf - 314 Ko) ). ARCEP also indicates that, as with any methodology, this modelling exercise has its limitations, and any interpretation of the results must take the utmost account of this.