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Corporate Service Price Index (CSPI) : Telecommunications Services

October 2001
Kuniko Moriya
Junko Kunihiro

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ABSTRACT

The Bank of Japan (BOJ) has issued the Corporate Service Price Index (CSPI) since 1985, providing one of the longest time-series indexes worldwide in the field of corporate services. Service prices are the most problematic areas in capturing actual price trends according to our ample experience in compiling this index. Capturing service prices has attracted many concerns of statistics organizations and users worldwide. Telecommunications services, especially, are an area of focus; they are characterized by rapid growth, by being driven by information technology, and by being advanced by government deregulation.

The purpose of this paper is to show how the index of telecommunications services is compiled in Japan by taking into account these features and to evaluate the actual developments of the index.*1 Remarks on limitations and future concerns are also included.

In this paper, the telecommunications industry of Japan is first explained regarding service providers, types of services, and government regulations to the industry as an explanation of circumstances of service price index compilation. Second, pricing methodology that is adopted for the price survey is mainly mentioned. For accuracy, representative or all prices are adopted as surveyed prices. Discounts are counted as price movements on a real-time basis or on a retroactive basis depending on the timing of receiving data. Third, developments of the price index for more than 15 years are analyzed and evaluated. The downward trends due to strong competition among telecommunications companies as a result of deregulation and to quality improvement of telecommunications services caused by technological innovation can be seen. Overall, the index has succeeded in tracking the actual trend of the prices, reflecting our continuous efforts to catch up with the changes in the telecommunications industry. Fourth, limitations and concerns of current price indexes needing to be solved in the future are discussed, such as in terms of pricing methodology adopted to the current price survey, quality adjustment in replacement of price data, and emerging new types of services not yet covered by the CSPI. The final section concludes with some prospects for the index. We continue to try adopting many new types of services emerging in the telecommunications field to the index and to deepen the study for the improvement of quality adjustment.

  • *1   This paper was originally a part of the paper presented to the 16th Voorburg Group on Service Statistics held at Örebro, Sweden in September 2001. The original paper was the joint paper compiled with Mr. Gregory Deuchars, Producer Price Index, U.S. Bureau of Labor Statistics (BLS). Comments on this paper from a wide range of views are welcome.