The role of consumer and business sentiment in forecasting telecommunications traffic

Abstract

The objective of this study is to investigate the relevance of consumer and business sentiment surveys in forecasting international telecommunications traffic. The components of telecommunications data used in the study relate to total telephone traffic outgoing from Australia and its social and business telephone sub-categories. Three sentiment surveys are considered: one consumer survey conducted by the University of Melbourne, and two business surveys, each conducted by a business association and major bank. The above data series are available on a quarterly basis from the first quarter of 1973. The approach employed consists of the application of transfer function modelling techniques to the traffic and various indexes measuring consumer and business sentiment. A major finding of this study is that sentiment series are correlated with international telephone traffic, and that in all but one case, the relationship can be modelled by some form of transfer function. The forecasts of the estimated models satisfactorily incorporate directional swings in the traffic.