Compare What Matters When Assessing Broadband or Mobility Behavior

If one spends a lot of time looking at statistics on global broadband and mobile trends, one sees lots of comparative data about take rates, subscriptions, prices and speeds. One also sees a lot of data comparing various indicators across countries. 

There always are methodological issues when trying to compare broadband or mobile prices across countries, however. Living costs and income vary, so prices vary in ways that reflect those differences. Currency differences also operate. 

There are big distortions created when researchers select particular service plans to compare. Results are different when choosing the lowest-priced plan; the lowest-usage plan; the highest-priced plans; highest-speed or highest-usage plans or some “median” plans (retail price, usage allowance or speed). 

So distortions are inevitable across countries when rate of adoption, typical speeds, typical prices and usage allowances vary widely. Consumer buying patterns also matter.

source: OECD 

Researchers must decide, before comparison, whether the service plans consumers actually purchase are a relevant sorting criteria. In other words, some argue it makes most sense to look at the plans consumers actually purchase, not the plans they could buy. 

That is abundantly clear when looking at buyer behavior in Organization for Economic Cooperation and Development countries, where a high of 100 percent and a low of about 35 percent of customers buy “service bundles” rather than any “single-product” plan. 

That of course distorts results when researchers compare only single-product plans. In other words, where many to most consumers buy bundles, the “single-product” plans tell us close to nothing about the actual prices consumers pay. 

Those plans exist, but do not represent actual buying behavior. 

If researchers insist on using those plans for comparison, they can compensate by using methods such as purchasing power parity to normalize real prices. Done that way, actual prices can vary substantially from what the data appears to show. And that has been true most of the last decade. 

In fact, when adjusting for purchasing power, broadband prices globally are quite uniform, different studies show. 

Comparing single-product plans might be useful when most consumers buy them. The exercise does not tell us very much when relatively-few consumers buy them.