Measuring price change in mobile-telephony services: an arduous task

The authors wish to thank Thierry Lacroix for his helpful comments and cogent suggestions on this text. The recent but prodigious growth of mobile telephony has made it the emblematic product of the new information and communication technologies (NICTs). In France, its rise has been spectacular: introduced in 1995, it now boasts a combined total of nearly 40 million individual and corporate users. Three operators share the French market: Orange (50 % of the customer base at end-2002), SFR (35%), and Bouygues Telecom (15%). Individual users account for somewhat over two-thirds of their customer base. There are two reasons for the relatively high prices of mobile-telephony services. First, they are the counterpart of the massive investments by operators for their network implementation and expansion. Second, they reflect subscriber-acquisition costs in the form of bonuses paid to service-marketing companies and subsidies for handsets. Today, cards and packages are equally popular with the public. Cards are now by far the more common solution among individual users. This has not always been the case, as chart 1 shows