(October 14, 2002)
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:
base is pretty well saturated. Carriers have to find other uses.
This was the starting argument for 3G. Why are we not following
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.
Wireless data usage
is more elastic than voice - more benefit you get, more diverse
ways subscribers will find to use it.
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.
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