The aim of this analysis is the rebuttal of the conclusions of the reports published in the website Digital Fuel Monitor on the evolution of mobile Internet prices, since, as proved in the study, an erroneous methodology is employed.
The theoretical analysis links two clearly separated concepts, price levels of a carrier (traditionally measured by baskets) and price changes based on data volume (the metric price per incremental gigabyte). This conceptual confusion leads to inconsistent results as compared to the mobile Internet market reality and can lead to seriously misleading claims.
To observe these inconsistencies three specific examples extracted from real market studies are presented in this report. Applying their very same methodology we find that:
- Following the introduction of the new price plan with more data and a lower price per gigabyte, this methodology would claim that the carrier has increased its prices.
- The simplification of a tariff structure with reduced prices and an increase in the volume of data would lead to a price increase.
- If we compare two carriers within the same country, where one of them is indisputably cheaper than the other, applying this methodology we would find that the carrier with lower prices is more expensive.
These results are due to the fact that when it takes the slope of the line as a measure of price comparison, is not the price level of a carrier per se, but rather the variation in the latter's prices in response to changes in the number of gigabytes provided as part of the different price plans.
In view of the methodological limitations, it is evident that the use of price per incremental gigabyte as a yardstick against which to compare prices is not methodologically sound and is in no way representative of reality.