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THE INCLUSION OF MOBILE PHONES IN THE JAMAICAN CPI

THE INCLUSION OF MOBILE PHONES IN THE JAMAICAN CPI OVERVIEW Jamaica Mobile Phones in Jamaica A new era in Telecommunications The Old Series based on HES 1984 The New Series based on HES 2004-2005 Experience of Pricing and Compiling the Index The Treatment of Mobile Phones JAMAICA

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THE INCLUSION OF MOBILE PHONES IN THE JAMAICAN CPI

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  1. THE INCLUSION OF MOBILE PHONES IN THE JAMAICAN CPI Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  2. OVERVIEW • Jamaica • Mobile Phones in Jamaica • A new era in Telecommunications • The Old Series based on HES 1984 • The New Series based on HES 2004-2005 • Experience of Pricing and Compiling the Index • The Treatment of Mobile Phones Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  3. JAMAICA Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  4. Mobile Phones in Jamaica • Over 1 million subscribers for mobile phones in Jamaica which has a population of approx. 2.6 million • Government policy implemented in 2000 changed the face of telecommunications in Jamaica. • In April of 2001, an Irish telecommunications company Digicel entered the telecommunications market Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  5. The dawn of a new era in Telecommunications • Digicel offered both postpaid and prepaid services • Cable and Wireless house phone was considerably cheaper than a mobile phone but the latter was preferred. • Until December 2006 when the CPI basket was revised mobile phones were not a part of the CPI basket Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  6. Old Series (HES 1984) • ‘Communication’ referred to land lines in the Old Series because when the HES was conducted in 1984 that was the only telephone service that was available. • The telephone instrument was not included as an item because that was rented to the customer as a part of the service. Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  7. New Series (HES 04/05) • Expenditure on mobile phones has become a significant consumption item of the Jamaican Households. • Now they are major expenditure items in the COICOP Classes – “Telephone and Telefax Equipment” and “Telephone and TelefaxServices”. • The ‘Communication’ division which previously had a weight of 0.5 per cent in the CPI basket is now 4.0 per cent. Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  8. Table : Consumer Price Index Weight Distribution for the Division Communication: 2004/2005 versus 1984 (Low/Middle Income Households) Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  9. Experience to date with pricing and compiling indexes for mobile phones • Like personal computers the technology for mobile phones changes with some frequency. • This makes it difficult for the pricing of the same instrument each month. • The task of collecting data for mobile phones is certainly not as daunting as it appears on the surface. • By consistently liaising with the service providers who also sell the instruments a great deal of information can be obtained. • In addition, the CPI compiler has to keep abreast of the developments in the telecommunications market as the specification for these items is constantly changing. Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  10. Treatment of mobile phones • The Matched Model method is applied in the quality adjustment for mobile phones. • This method is seen to be the most appropriate for mobile phones and also requires the monitoring of changes in the availability of phones on the market and patterns of consumption. • This technique also allows for the collection of information on the instruments that are entering the market and those that are being phased out. • This ensures that as the instrument becomes unavailable in the market substitution can be made. • The model of the phone used last month may not be available this month so a substitution is made to the most comparable model. • In some instances, this means that the previous month’s price for the new model (which was not used in the previous month’s index calculation) will be collected and used to determine the current month’s index. • The matched model method ensures that the price change for each observation represents products of similar quality. • The difference in prices between the old model and the new model is treated as a quality difference when the index is calculated. Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

  11. THANK YOU Presented By: Andrelene S. Royal - Statistical Institute of Jamaica

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