Measuring Price Change in the CPI: Telecommunications Services

The Consumer Price Index (CPI) defines telecommunications services as those services associated with wireless and 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 Wireless Telephone Services

Charges for personal wireless/cellular telephone services where the telephone is portable and sends and receives signals for calls through the airwaves. Services priced are primarily specific plans offered by cellular companies and prepaid plans, which include voice calling (talk), text messaging, and most also include cellular data. All service charges, applicable per-plan charges or per-minute call charges, and other charges normally included in a cellular plan are eligible for pricing. Exclusions are pagers, pay phone charges, residential telephone service, and plans that provide only data access without voice calling. Other phone services, such as long-distance and phone service activation, are excluded unless they are automatically included with a plan at no extra charge. Monthly fees charged by the carrier for the cost of a device are not eligible. Any plans for use by businesses are not eligible.

Definition for Residential Telephone Services

Standalone residential, including landline, telephone 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.

Excluded are any phone or calling cards; any phone service that isn’t tied to a residence, including cellular phones and non-exclusive residential VoIP services; any plans that are centered on business usage; any bundle that includes cellular/portable telephone service, non-residential television, or non-residential 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

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

Excluded are any charges not specifically related to obtaining residential internet access; online services such as Webhosting, domain names, and file hosting for business use; business services bundled with residential internet access; or mobile internet are excluded. Non-residential TV services, non-residential 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 particular websites, such as those offered by popular sporting websites are also excluded. Pre-recorded 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.

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

Excluded are pre-recorded video on demand subscription streaming services and satellite radio service. Non-residential telephone services, non-residential 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 2023
Item	Relative importance
Education and communication	5.906
Communication	3.417
Telephone services	1.578
Wireless telephone services	1.372
Residential telephone services	0.206
Information technology, hardware and services	1.774
Internet services and electronic information providers	0.980
Recreation	5.307
Video and audio	1.190
Cable, satellite, and live streaming television service	0.780

Sample selection

In order to determine where to collect information on specific categories, including the four telecommunications services categories, a Consumer Expenditure Survey (CE) is conducted by the U.S. Census Bureau. The CE is used to collect data about where consumers purchase goods and services and how much they are spending. The data from the CE 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 wireless and 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 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 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.

Price Change and Quality Adjustment

For the telecommunications services categories, the CPI returns every month 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 analyst evaluates every item replacement to determine the following:

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 analysts 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.

Currently, the CPI records changes in wireless telephone plans from 4G networks to 5G networks, but does not quality adjust for these changes. The CPI continues to observe the changes in customer access of 5G networks to determine if quality differences can be quantified.

Additionally, CPI analysts 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

Access data for wireless telephone services, residential telephone services, internet services and electronic information providers, and Cable, satellite, and live streaming television service 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: February 9, 2024