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With wireless high-speed packet data networks just starting to come online in the U.S. and some trials and commercial launches around the globe, operators have already learned a lot about the technology. But what they havent figured out is how to price the services, and that missed focus may stymie the market at its start.
Pricing models for portable or mobile wireless data services are tough to develop. Some are blaming the demise of Metricom on its high cost; $80 per month got you unlimited use of the broadband network, but attracted only a smattering of users.
At the other end of the scale, AT&T Wireless, Verizon Wireless and others offer data demise on their Cellular Digital Packet Data (CDPD) networks at decent prices, but the offering is pokey — AT&Ts most expensive plan is $14.99 per month but can only reach speeds of 19.2 kilobits per second.
Moreover, the coverage area of CDPD networks is small, so users often must roam into another operators territory, which is where it gets expensive. WISP, a Cleveland company that helps enterprises minimize their CDPD roaming costs, estimates downloading a spreadsheet while roaming can cost $16 and claims some of its customers have individual users that rack up $1,000 per day in roaming charges.
Operators launching packet data services in Europe are following NTT DoCoMos trail, charging for data transferred rather than all-you-can-eat plans. But in Europe prices are high, averaging about $170 per month for 10 megabytes, a recent study by The Yankee Group found. Monthly subscription fees are as high as $27, compared with NTT DoCoMos $2.78. Those fat fees wont fly and the big operators wont have much more luck than Metricom if they are only trying to sell high-speed data.
AT&T Wireless recently launched a next-generation data service in Seattle with a variety of price plans. The cheapest is $29.99 for 5 MB of data; voice is extra.
Andrew Wright, head of consultancy Analysys mobile group, has caught a clue. He says wireless operators cant compete with terrestrial broadband technologies, estimating Asymmetric DSL users spend about 2 cents per megabyte, compared with $2 per megabyte on General Packet Radio Service, the global system for mobile communication upgrade and the technology used by European operators.
Instead, Wright says, operators must find products that will be extremely useful and valuable to mobile users. The perfect example is the Short Message Service (SMS). Users on many networks can pay a few pennies to send messages that often have a cap of 160 characters and dont use much bandwidth. But, add them up and a megabytes worth of short messages can generate about $1,000.
Hopefully, while operators are working out the technology kinks, they are also focusing on discovering more services like SMS that will help pay off their data network investments.