Changes to the Internet Access Services Index of the Consumer Price Index (CPI)

Background

The Consumer Price Index (CPI) measures the change in prices of consumer goods and services over time. In order to accurately reflect changes in the market and the behaviour of consumers, Statistics Canada periodically reviews and updates the methods applied to the various components of the CPI program. The release of the November 2015 CPI (published on December 18, 2015) marks the implementation of the new methodology of the internet access services (IAS).

The IAS index is part of the communications index and ultimately belongs to the household operations, furnishings and equipment index, which is a major component of the CPI. Upon publication of the January 2015 CPI, the basket weight of the IAS component, with a weight reference period of 2013 and at link month (December 2014) prices, was 0.96%.

The IAS index is obtained by comparing, over time, the cost to consumers of purchasing a constant quantity and quality of internet access services. The central product of the index is a monthly internet access services subscription through a wired line to the household’s residence. Access to the internet bundled with voice calls over a cellular network is not included as this service is covered by the cellular services index. However, all other methods of accessing the internet are represented by the internet access services index, even if they are not explicitly priced.

With the new methodology, wired, broadband internet access services plans from numerous internet service providers (ISPs) are included in the sample. Plans are differentiated by characteristics such as download speed, upload speed and usage cap.

Weights are assigned to each ISP to account for their share of the consumer market. Lower level weights are also applied; in the absence of timely quantity or expenditure data on individual plans, each ISP’s plans are weighted based on their download speed. 

In conjunction with the new sampling scheme, a new quality adjustment method using hedonic regression has been implemented to control for changes in quality between a newly introduced plan and its predecessor.

 

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