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Home Page Editorial
(October 14, 2002)

From Editor's Desk...Dichotomy in Wireless Voice and Wireless Data Pricing 

Our rather simple analysis of pricing plans for the new 2.5 wireless networks (GSM/GPRS and 1xRTT CDMA) suggests that wireless data users are treated differently than wireless voice users. We have argued in the past on the following page that this is not a wise strategy on the part of carriers to use up the capacity that they have built during the past 12-18 months.

Wireless operators must encourage increased use of wireless  data by offering more aggressive pricing plans. This will expand the market, we are sure. In support of lower prices for wireless data, we give the following arguments:

  1. Voice subscriber base is pretty well saturated. Carriers have to find other uses. This was the starting argument for 3G. Why are we not following the script?

  2. Wireless data subscribers use up the spare network capacity that operators have. Unutilized capacity is dead capacity. You can not save it, nor can you store it for future use. When the users are hooked to the applications, carriers will increase the ARPU even though prices per megabyte stay the same or even come down. 

  3. Wireless data usage is more elastic than voice - more benefit you get, more diverse ways subscribers will find to use it. 

  4. Wireless data subscribers, especially enterprise users, are more stable with lower churn rate because they find it more difficult to hop around because of the data applications they use and user interface they may be used to.

  5. Billing and Customer Care and Service (BCCS) costs may be higher today but will come down. It is like R&D that you should expense out over longer period in future.

Do you want to make any comments on this editorial? Send us an e-mail.

Related Resources:
Past Editorials
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