Measuring price change in the CPI: residential telecommunications services : U.S. Bureau of Labor Statistics

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Price trends for wireless and landline phone services, December 2009-September 2015

Measuring price change in the CPI: residential telecommunications services

The Consumer Price Index (CPI) defines residential telecommunications services as those services associated with residential telephone communications, internet access, and television services.

The CPI category telephone services is part of the education and communication major group and has two components: wireless telephone services and residential telephone services. The CPI publishes monthly indexes for telephone services and both of its components at the U.S. level only.

Internet services, a component of the information technology, hardware, and services index, is included in the education and communication major group of the CPI. The CPI publishes a monthly internet services index at the U.S. level only.

Cable, satellite, and live-streaming television services, a component of the video and audio index, is included in the recreation major group of the CPI. The CPI publishes a monthly cable, satellite, and live-streaming television service index at the U.S. level only.

Definition for residential telephone services

Standalone residential telephone, including landline, service plans and bundled package plans that include residential telephone service, and one or both of the following: cable, satellite, or other residential television (TV) service and/or internet service, are eligible for collection. All types of residential telephone services, including residential VoIP (Voice over Internet Protocol), are also eligible for collection. All applicable service charges; per-plan charges; other charges normally listed as part of a selected landline local and/or toll plan; or individual charges for telephone, television, and/or internet segments of the plan are eligible for pricing.

Residential telephone services does not include any phone or calling cards; any phone service that is not tied to a residence, including cellular phones and nonexclusive residential VoIP services; any plans that are centered on business usage; any bundle that includes cellular/portable telephone service, non-residential television, or nonresidential Internet (even if the bundle also includes residential telephone service); any other service included with bundles, such as alarm or surveillance services; or web hosting or file hosting services.

Definition for internet services

Subscriber fees for residential internet access and other online services, such as web hosting, domain names, and file hosting for non-business use; residential telephone, including landline, and TV services bundled with residential internet service; and mobile internet access (in the home and outside the home) are all eligible for collection. Other monthly subscriber fees are included as well. Other monthly subscriber fees can include, but are not limited to, internet rental equipment, Wi-Fi service fees, installation and activation fees, and other associated taxes/fees.

Internet services excludes any charges not specifically related to obtaining residential internet access; online services such as web hosting, domain names, and file hosting for business-use; business services bundled with residential internet access; or mobile internet. Non-residential TV services; nonresidential telephone services; and any other bundled services, such as home monitoring services and wireless telephone services, are not eligible. Fees for online activities, such as music or video downloads, streaming media (both music and video), fees for online gaming, and subscriptions to online newspapers or magazines, are all excluded. Fees to access additional information or services provided by websites, such as those offered by popular sporting websites, are also excluded. Prerecorded video-on-demand subscription streaming services are excluded.

Definition for cable, satellite, and live-streaming television service

Subscriber fees for residential television (TV) service are eligible. This includes subscriptions to cable, satellite, and live-streaming TV. Other monthly subscriber fees are included as well. Examples of monthly subscriber fees include, but are not limited to, base plan prices, premium TV networks, TV rental equipment, streaming video services provided by TV providers, TV service fees, installation and activation fees, and other associated taxes/fees.

Residential telephone, including landline, and/or residential internet services bundled with residential TV service are also eligible.

Prerecorded video-on-demand subscription streaming services and satellite radio service are excluded. Nonresidential telephone services; nonresidential internet; and any other bundled services, such as home monitoring services and wireless telephone service, are not eligible.

Relative importance

Table A. Relative importance, December 2024
Item	Relative importance
Education and communication	5.732
Communication	3.149
Telephone services	1.450
Wireless telephone services	1.281
Residential telephone services	0.169
Information technology, hardware and services	1.644
Internet services and electronic information providers	0.926
Recreation	5.292
Video and audio	1.060
Cable, satellite, and live streaming television service	0.653

Sample selection

Data from the Consumer Expenditure Survey (CE) is used to determine where to collect information on specific categories, including the three residential telecommunications services categories. The CE survey collects data about where consumers purchase goods and services and how much they spend. The data are then used to select the retail establishments in which BLS monitors the prices of telecommunications services. Most outlets in the telecommunications services categories are residential telephone companies; cable, satellite, and streaming television companies; and internet service providers.

Bundled services are a common method for consumers to purchase residential telephone services, internet access, and cable or satellite television. Telephone companies, internet service providers, and cable/satellite television companies all sell these products, which can be bundled into one package eligible for selection in each of three different CPI categories. When selecting the sample in either the residential telephone services; internet services; or cable, satellite, and live-streaming televisions services categories, if a bundled service is selected, it is assumed that the customer’s primary intent is purchasing the service defined by the CPI category. For example, phone service must be included in the service bundle, along with either internet or television services, when selecting the sample in the residential telephone services category. Once an outlet is selected based on the CE, a specific service is selected for use in the CPI. Some characteristics of the service (such as type of payment plan and contract type) are informed via third-party data that tracks current market trends. These and other detailed characteristics are recorded so that the same item can be priced over time and, if the carrier discontinues that item, the most similar substitute can be identified.

NOTE: BLS is transitioning away from pricing bundled packages of telecommunications services. No new quotes of residential telephone, residential internet, and/or residential TV services bundled together will be initiated following the February 2024 initiation cycle. All currently priced bundled services will rotate out of the index by late 2028.

Price change and quality adjustment

For the residential telecommunications services categories, every month, the CPI returns to the sampled outlets or their websites to obtain the current prices of the selected items, including any changes or promotional offerings. Any characteristics of the selected items that have changed are also identified and reviewed. When the price of an item changes, BLS tries to determine a reason for the change; however, if the characteristics remain unchanged, the CPI usually reflects the price change without any adjustments.

If the originally selected item in the sample is no longer available for sale, a replacement item is selected, generally the one that is most similar to the discontinued item. A CPI economist evaluates every item replacement to determine whether the replacement is essentially the same as its predecessor item.

Price change

If the replacement is essentially the same as the predecessor item, the CPI can treat any price difference between the replacement item and its predecessor as pure price change. If the characteristics of the item changed and the reported change is one that provides little value to the consumer, the CPI will show the unadjusted price change. For example, changing to fiber optic cable for local phone calls makes carrier operations more efficient, but customers might see little change in their purchased service.

Quality adjustment

If the replacement is different from its predecessor and the value of the difference in quality can be accurately estimated, a quality adjustment can be made to the previous item’s price to include the estimated value of the difference in quality. For example, CPI economists have estimated the value of each additional TV channel. So, if a provider adds more TV channels to a plan, the CPI adds the estimated value of the additional TV channels to the price of the predecessor item. Similarly, should the provider reduce the number of TV channels included in the television service plan, the estimated value of the removed channels would be subtracted from the previous plan’s price.

CPI economists have developed estimates of the value of various quality-determining attributes associated with residential telephone; internet; television services; and bundles of those services, such as internet download speed and the number of included television channels, through the estimation of hedonic regression models. Quality adjustments based on those estimates are applied when possible.

Imputed price

If the replacement is different and the value of the difference cannot be estimated, the CPI uses an imputed price for the item in place of the collected price. An imputed price is the price of the predecessor item adjusted by the average change in price of other similar items.

Data

Data for residential telephone services; internet services and electronic information providers; and cable, satellite, and live-streaming television service can be accessed in our online database.

Additional information

Additional information may be obtained from the Consumer Price Index Information Office by email or calling 202-691-7000. Information on the CPI's overall methodology can be found in the BLS Handbook of Methods.

Last Modified Date: August 11, 2025