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Nov 18 2011

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Snapshot: How affordable is mobile services in the Caribbean?

This post builds on our monthly spend update as at November 2011. We now examine the affordability of mobile/cellular service across the English-speaking Caribbean.

In the Caribbean, mobile phones have become integral to everyday life. However, as a paying service, their use must be balanced against all other expenses that the average customer must normally bear. This post is a follow-up from our previous post on the amount spent on mobile/cellular services per month across the English-speaking Caribbean. Now, we are examining the extent to which mobile/cellular service is affordable, based on those previously calculated monthly spends. Additionally, since we are also updating our earlier Snapshot of the sector, we will compare the percentage of a customer’s monthly income that is spent on mobile service, as at May 2011 and November 2011.

Methodology

In the November 2011 instalment in this series, Snapshot: How much do we spend on mobile service across the Caribbean?, we used three distinct baskets of mobile/cellular services, shown in Table 1, to conduct that assessment.

Table 1: Service baskets used in mobile spend calculations (Source: OECD)

The key results of that mobile spend exercise, are summarised below.

  • For LV users spend on average USD 14.40 per month.
  • For MV users typically spend USD 33.82 per month.
  • For HV users, their estimated monthly spend is USD 69.76.
  • The lowest monthly spends were experienced in Guyana, where the amounts ranged from USD 4.28 to USD 25.04 per month.
  • The highest monthly spend for all baskets was recorded in the Cayman Islands, where amounts ranged from USD 23.07 to USD 106.48 per month.

The affordability of mobile service offerings was determined by comparing monthly spends against the estimated monthly income, based on the per capita Gross Domestic Product (GDP). These ratios, which are expressed as percentages, indicate the proportion of a person’s income spent on mobile services.

How affordable is mobile/cellular service?

Similar to the outputs from the November 2011 mobile spend review, and with regard to the affordability of mobile services, Figure 1 shows a wide disparity across the region,. However, for countries where mobile spend might have been considered comparatively high, such as the Cayman Islands, it does not automatically correspond to a large portion of their residents’ income.

Figure 1: Percentage of monthly income spent on mobile/cellular service as at November 2011 (Source: ICT Pulse)

With regard to LV usage, the monthly spend ranged from approximately 0.4% of income in the British Virgin Islands (BVI), to almost 5.5% in Belize, with an average of 1.7% of monthly income across the region. For MV and HV usage, the BVI and Belize again set the lower and upper limits for both of those assessments. In Belize, up to 25% of monthly income could be spent as a HV user, whilst in the BVI, a user would expend only 1.8% of his/her monthly income for the identical basket of services. On average, MV and HV users would spend between 4% and 8.6% respectively, of their monthly income on mobile service.

Is mobile service more affordable in November than in May 2011?

In the six months that have passed since our assessments, rates for prepaid mobile calling have increased in Anguilla, Barbados, Dominica, Grenada, St. Kitts and Nevis, and St. Vincent and the Grenadines. However, rates have also decreased in Guyana and Trinidad and Tobago. All of these changes have had an impact on the portion of a person’s monthly income that is spent on mobile service and are reflected in Figure 2.

Figure 2: Percentage changes in a person’s monthly income spent on mobile service in May 2011 versus November 2011 (Source ICT Pulse)

For the most part, where rates increased, the change in the percentage of a person’s monthly income spent on mobile service might be considered relatively small, ranging from 0.01% in St. Kitts and Nevis, to maximum of1.0% in St. Vincent and the Grenadines. However, in Guyana and Trinidad and Tobago, the percentages dropped by up to 0.25% for a LV basket of services, whilst a difference of up to 1.5% was realised for HV baskets of services.

Discussion

When considered in isolation, the results of this review might seem reasonable – that up to 5.5% of a person’s monthly income is spent on mobile service. However, paying one’s mobile phone bill is only one of a number of expenses that are normally borne by the average consumer, which could include housing expenses, along with those for utilities, food, transportation, and even for other telecoms services, such as Internet and cable/subscriber TV. In other words, mobile calling rates, particularly for prepaid calling services, are still too high in most Caribbean countries.

Further, although the service baskets used, might be indicative of the volume of calls and text message made by the average, LV, MV and HV user, it is entirely possible, especially in the Caribbean, that the “average customer” might be a MV user. It therefore means that monthly spend on mobile service could represent as much as 12.7% of a person’s monthly income, and become a commodity s/he can ill afford to maintain, although they are prepaid subscribers.

However, it must be highlighted that traditionally, prepaid mobile plans were considered a special/premium service. Although these plans might predominate across the region, their revenue streams are inconsistent, since customers decide in advance how much and how frequently they will top-up their accounts, which make service providers nervous. This uncertainty results in higher calling rates for prepaid plans than post-paid plans.

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About the author

Michele Marius

Michele Marius has a wealth of experience in the telecoms and ICT space, which has been gained in the Caribbean, Southeast Asia and the South Pacific, and in the public and private sectors. She is the Editor and Publisher of ICT Pulse.

Permanent link to this article: http://www.ict-pulse.com/2011/11/snapshot-how-affordable-is-mobile-services-in-the-caribbean/

1 comment

  1. Thaddeus M. Antoine

    Very interesting

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