Bundled Value Index Methodology
Bundled Value Index Methodology:
RIA created the BVI as a means to capture the value of combined data, sms and voice packages on offer. Given the complexity as well as increased number of products on the markets, only bundles offering data combined with voice and SMS or, data and voice, or data and SMS are captured.
Previously RIA used the OECD price basket to capture and assess voice and SMS bundles. Blended packages which include data, however, cannot be captured on the OECD basket given the different in-bundle and out-of-bundle prices. Adding data to voice baskets does not reflect the value for data use accurately. BVI measures the value a customer gets for bundled minutes or SMSs and data per month. OECD usage baskets that RIA uses for prepaid products are based on minute, SMS and data tariff capturing the monthly basket cost. The BVI complements this as it calculates the value for the blended bundle, beyond monthly basket cost.
The BVI adds the value of bundled voice minutes, SMSs and data and divides it by the price. The value of bundled minutes is derived by multiplying the number of minutes with a fixed USD value, based on quarterly average, inclusive of tax. The BVI is constructed from the perspective of a smartphone / OTT user. Any time minutes or SMS are not network restricted unlike on-net. One MB of data is more valuable than 1 minute voice call or a single SMS. One any time minute is valued at 0.002 US cents, 1 on-net minute is valued at 0.001 US cents, 1 anytime SMS at 0.001 US cent, 1 on-net SMS at 0.0005 US cent and 1 MB data at 1 US cents and 1 MB dedicated to Social Media at 0.005 US cents. An offering with any time 50 minutes, 500 SMSs and 1000MB data bundled, with a price of 10 US$ will then have the following BVI:
BVI =(50*0.002+500*0.001+1000*0.01)/10 = 1.06
This means that the consumer gets 1.06 times the value of the bundle offering. The higher the score in the index, the higher the value. We used the same USD values across all operators and countries for comparative purposes. Unlimited calls, SMSs or data contracts were made comparable to capped packages by applying the following rules:
Unlimited minutes = 240 minutes per day or 7200 minutes per month
Uncapped SMS = 240 SMSs a day or 7200 per month.