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GPRS Prices: The Readers Have Their Say

Light Reading
LR Mobile News Analysis
Light Reading
3/28/2002

Our recent article on the high cost of GPRS (general packet radio system) data services in Europe (see Commentary: Cut Those Crazy GPRS Prices!) certainly seems to have struck a nerve. Here at Unstrung Towers we received a mixed bag of emails regarding the high cost -- or otherwise -- of the GPRS wireless data service offered by Vodafone Group PLC and others. Here’s a selection of the correspondence:

Dan,

Regarding your recent article on the high price of GPRS services -- do the algebra. Compare the cost of 1 Meg of data to the equivalent voice time. If you want GPRS to be low cost then the implication is that voice would be virtually free. As it is, the carriers have bandwidth constraints (and quality of service issues accordingly). I think $7-$10/Meg is a huge improvement over the pricing we've seen for earlier services (i.e., CDPD [cellular digital packet data]), given the substantially faster and more ubiquitous GPRS.

Rather than pan the service, why not focus on the new capabilities it offers? GPRS is a powerful enabler for connecting mobile workers to their enterprise systems. With the right software, mobile workers can interact with these systems as if they are in the office -- for just a few megabytes of consumption a month.

Regards,

Jeff Kleban
Executive VP Strategy & Product Management
Syclo LLC

*****
Dear sir:

What's happening is fairly easy to understand if not to excuse. A coded voice call takes about 8 kbit/s; if I download at (say) 32 kbit/s, I've used up capacity for 4 phone calls. Thus 1 Mbyte (8 Mbit) ties up 4 phone circuits worth of capacity for about 4-5 minutes, or 20 minutes worth of chargeable phone calls. At $0.20/premium minute that's $4: This is what the service provider would like to charge to stay revenue-neutral, and of course they hope to make extra money from data.

The problem is that a normal human being wants to pay by the minute of use, and as we know, 1 Mbyte is just a Web page with a few nice graphics on it. In 20 minutes of normal Web usage one will probably download 10 Mbytes of data: $2.50 if you're hooked up via Voicestream/MobileStar 802.11b connections on their most expensive pay-as-you-play plan, or $70 via GPRS (with a longer wait). Fundamentally, the problem is that the price we're willing to pay for data bits is much less than for voice bits, because human beings want to pay by the minute of useful information, not by the bit. The problem only gets worse for "3G" services, where the data user kicks off more potentially-lucrative phone calls for a serious download but expects to pay the same per-minute price.

The solution, of course, is a fundamentally cheaper pipe -- i.e., Ethernet-based, like 802.11 -- for data services.

Dan Dobkin
WJ Communications Inc.

*****
On my recent visit to the UK and 3GSM [conference in Cannes, France] I racked up $210 just for GSM roaming -- GPRS wasn't even available. Add rates like Vodafone are quoting and I can see me doing $500 bills easily for a week's trip abroad.

Also, in our testing on Voicestream’s network of our PC card, we ran it for 24 hours of continuous downloading, and our bill was >$1000 for that one session! Wow! Well, at least we know the upper limit (sort of) for GPRS users!

Prices have to come down. I fear for the content providers too -- corporate email might just about scrape through as a justifiable GPRS expense, but how can a consumer app developer (game studio say) convince VCs that anyone is going to pay such high airtime rates and pay for their content???

Perhaps operators will fix this by having device-specific rate plans, but this is pure speculation.

Ben Gibbs

*****
If you want to have your say on GPRS prices or anything else in the wonderful, wireless world of Unstrung write to [email protected].

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