This is a 2012 update to our mobile/cellular affordability Snapshot – to get some insight into the proportion of a person’s monthly income that might be expended on mobile/cellular service, and how that might have changed since May 2011.
A few weeks ago, we provided a snapshot of the likely monthly spend for mobile/cellular service based on pre-defined baskets of services, and compared those results with figures reported in May 2011. In this post, and similar to what was done last year, we will be examining how affordable mobile/cellular services is across the English-speaking Caribbean for the average consumer, and again compare those results with our findings from last year.
In our most recent update of mobile/cellular spend across the English-speaking Caribbean, Snapshot: Caribbean mobile spend update 2012, we used three distinct baskets of mobile/cellular services, shown in Table 1, to conduct that assessment.
The key results of our examination of mobile/cellular spend exercise, based on the rates advertised for prepaid service across the region, as at May 2012, are summarised below.
- For LV users spend on average USD 13.87 per month.
- For MV users typically spend USD 36.21 per month.
- For HV users, their estimated monthly spend is USD 67.02.
- The lowest monthly spends were experienced in Guyana, where the amounts ranged from USD 5.35 to USD 31.30 per month.
- The highest monthly spend for all baskets was recorded in the Cayman Islands, where amounts ranged from USD 23.23 to USD 107.08 per month.
This assessment of the affordability of mobile/cellular service offerings was determined by comparing monthly spends against estimated monthly income, based on the latest per capita Gross Domestic Product (GDP) available from the United Nations (2010). These ratios, which have been expressed as percentages, indicate the proportion of a person’s income spent on mobile services. The higher those percentages are, the less affordable service might be to the average consumer.
How affordable is mobile/cellular service as at May 2012?
The affordability of mobile/cellular service varied considerably across the region, and as shown in Figure 1 below, became more dramatic from the LV basket to the HV basket of services. With regard to the LV basket, the smallest proportion expended of a person’s monthly income would be in the Cayman Islands at 0.49%, whilst the same basket of services would likely consume approximately 4.98% of a person’s monthly income in Belize.
The Cayman Islands and Belize remained at the lower and upper ends for both the MV and HV baskets. An MV basket of service would consume approximately 1.15% of the average Caymanian’s monthly income, but in Belize, it would be around 11.55%! Similarly, for an HV basket of service, the average Caymanian would spend approximately 2.25% of his/her monthly income, whilst in Belize, the monthly spend would be in the region of 22.48%!
Across the sample group of countries, the average share of a typical monthly income spent on:
- a LV basket of service, is 1.60%
- a MV basket of service, is 3.78%
- a HV basket of service, is 7.91%
Moreover, across all baskets, there are 11 countries with percentages less than those averages. For the five outstanding countries, which are from Grenada to Belize (see Figure 1), a marked increase in percentages can be observed, relative to the other countries examined.
Is mobile service more affordable in May 2012 than in May 2011?
Similar to our comparison of mobile/cellular spend reported a few weeks ago, between May 2011 and May 2012, mobile/cellular service is consuming slightly higher amounts of a person’s monthly income across the majority of countries. Exceptions are Antigua and Barbuda, the Bahamas, Saint Lucia and Turks and Caicos Islands, where no change was recorded; and Belize and Trinidad and Tobago, where the proportion of monthly income decreased slightly over the period under review.
In keeping with Figure 2, the most significant changes across all baskets were recorded in Guyana, where the proportion of monthly salary spent on mobile/cellular service increased by nearly 0.2% for the LV basket, nearly 0.5% for the MV basket, and by 1.01% for the HV basket of services. On the other hand, the smallest increase in the percentage of monthly income spent on mobile/cellular services across all baskets was observed in the British Virgin Islands, where the differences ranged between 0.01% and 0.03%.
Conversely, in Belize, where monthly spend decreased between May 2011 and May 2012, the corresponding difference as a portion of monthly income, ranged from nearly -0.2% for an LV basket, to -0.88% for an HV basket of service.
It is important to note that although the above percentage might not appear significant, they can represent substantial amounts in dollars and cents. For example, a $30 increase in monthly spend ($360 per year) would appear as just a +1% change for a monthly salary of $3,000, but may cause a person to modify his/her spending behaviour.
In the region, mobile/cellular phones have increasingly become the primary telecoms devices for voice communication. Hence, based on Table 2, it is likely that a wide cross section of persons’ use would be aligned to either the MV or HV basket, although some pre-paid customers might still consider them low.
However, what could be the impact of those percentages on monthly income? Using Table 2 as a guide, if, for example, your take home monthly salary (after taxes and deductions) were $2,500, it would mean that for a:
- LV basket of services, you would be paying $40.00
- MV basket of services, you would be paying $94.50
- HV basket of services, you would be paying $197.75!
As the example indicates, and consistent with our earlier discussions of mobile/cellular services affordability across the Caribbean, the share of a person’s monthly income spent on such services is still too high in a number of countries and for higher volume users. For the MV and HV baskets, in particular, they can be as much as 11.5% and 22.5% of a person’s monthly income, as is the case in Belize. Moreover, that bill – for mobile/cellular services – would be one of many expenses that the average consumer must budget for within the month. Hence lower mobile/cellular prepaid rates are still necessary across a number of countries in the region in order to improve the affordability of the service.