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Commentary: Cut Those Crazy GPRS Prices!

This week’s announcement by Vodafone Group PLC that its customers will soon be able to roam around Europe downloading data via General Packet Radio Service (GPRS) networks was supposed to give the technology a bit of a boost. For me, however, it did the reverse. It made me wonder whether wireless data was ever going to get off the ground.

Why? It’s got nothing to do with technology and everything to do with price. Vodafone is planning to charge a phenomenal amount for downloading a Megabyte of data over GPRS when users are away from their home country – something like US$11. And the price isn’t that much lower – US$7 to $8 per Megabyte – without roaming (see Vodafone Launches (Expensive) GPRS Euro Roaming).

You recall the initial promises about GPRS? It was supposed to be the second coming of the “Wireless Internet” after the failure of initial WAP (wireless application protocol) services. A year-and-a-half ago, many carriers were saying that the problems of the early wireless data services would be solved by the advent of GPRS. Downloads too slow? GPRS will fix that, the carriers told us. Bored by the green screen? GPRS will sort that out, they cooed.

Well, time has passed, and we already know that GPRS isn’t the superfast, anydata, anytime, anywhere panacea that was promised. However, the underlying technology does at least mean that operators can bill users for the amount of data they download rather than the length of a call.

Trouble is, carriers are charging too much. Vodafone isn’t alone in (over-) charging GPRS customers. The sheer expense of using GPRS was one of the constant grumbles heard at the 3GSM Congress in Cannes earlier this year.

Its true that if people use GPRS in the same way that they now use data services over GS, – that is, sending each other tiny text messages back and forth – then it might (and we stress might, not having seen any serious comparisons yet) work out cheaper using the newer system. But that is hardly the point: GPRS is supposed to be a technology that encourages people to access more wireless data, downloading bigger files, checking their email on the phone more often – just generally doing more than “texting.”

In fact, more wireless data traffic on GPRS is supposed to be one of the things that will drive up the average revenue per user (ARPU) figures for carriers. This won’t happen if people feel they need to keep a close eye on the number of bytes they are downloading each time they access their inbox.

It could be argued that carriers are really targeting corporate customers with their initial GPRS offerings, that employees on the road can use GPRS to access corporate data rather than paying the outrageous amounts that hotels charge for phone calls. However, the charges for GPRS services could easily mount up with the current pricing schemes.

For instance, lets say you use a Bluetooth-enabled GPRS phone to wirelessly connect to a handheld like the Compaq Computer Corp. iPaq or a laptop, essentially using the phone as a modem. Rather than just downloading text-only emails - which is how a lot of the current mobile phone-based email services work – this would enable you to download email attachments as well as text and read them on the bigger screen of the handheld or laptop. Using a GPRS phone in this way, it would be possible – if somewhat slow – to download several megabytes of data in one sitting. Let’s say a few days’ worth of email with a couple of PowerPoint presentations in amongst the attachments. This could cost anything from $20 to $34, depending on where the phone is being used.

These costs soon add up, and, as it stands, corporations will have no idea what their final bill for wireless data usage will be each month until it arrives. This is why it is unlikely that corporations will make heavy use of GPRS until fixed-rate plans start to arrive and they can purchase plans that allow users to download a fixed amount of data per month for a fixed price. Well, why worry? you might ask: The price will come down over time, and fixed rate and all-you-can-eat plans will emerge. However, carriers are marketing GPRS as if it were more than just a simple network upgrade. They are marketing it as a new service, as they did WAP. And if there is one lesson to learn from WAP it is that users are loath to give wireless data services a second chance. WAP services have got better and easier to use over the few years since they were introduced, but many people got burnt by their initial experiences and never went back.

Carriers should watch that the same thing doesn’t happen with GPRS. Canalys.com Ltd. analyst Andy Buss says that using GPRS is akin to using a landline 28.8k modem with a less stable connection. If users find they are paying through the nose for a patchy service then they are unlikely to find much use for it. After all, with the GPRS prices as they are, no email is so urgent that it has to be downloaded right now; and if people need to reach you - well, they can always call.

— Dan Jones, Senior Editor, Unstrung
http://www.unstrung.com
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