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3G Data Destined to Fail If GPRS Pricing Models Are Maintained, According to the Yankee Group
URL(s): Yankee group
LONDON--(BUSINESS WIRE)--July 25, 2001--General Packet Radio Services (GPRS) networks are mushrooming across Europe as operators take the first major step
toward 3G. However, as operators make the transition from circuit-switched to packet-based data, the critical issue of how to
charge for next-generation services remains very much unresolved. A new Yankee Group Report, "Mobile Data Pricing: Will
European Consumers Pay a Packet?" reveals a lack of consistency and innovation coupled with high costs characterizing GPRS
offerings to date.
The Report examined the various pricing strategies employed for mobile data, including SMS, WAP, and i-mode, with a
particular emphasis on GPRS, given its role as a test bed for future 3G applications and pricing models. It also makes
recommendations on optimum pricing paradigms to stimulate demand, and ultimately, profitability for future data services.
"In most cases operators are still assessing market requirements through service trials, so strategies are still being refined, but
the favored model at present is to charge by the amount of data consumed," according to Farid Yunus, senior analyst for the
Yankee Group's Wireless/Mobile Europe research and consulting practice. "This has been determined for the most part by legacy
billing platforms and capabilities," he acknowledges, "but given the diversity and range of future data applications, this approach
will prove inadequate both in the long term and in stimulating demand right now. While we understand the need for operators to
recoup 2.5/3G network and service development costs as soon as possible, without lower and more flexible pricing we seriously
doubt that consumers will be enthused and that a mass market will be created."
Some of the key findings include:
-- For consumers, the average monthly cost for 10 MB of data is around US$170, rising to over US$1,500 for 100 MB if the
same entry-level rates are maintained.
-- Corporate packages provide much better value at high levels of consumption, averaging US$230 a month for 100 MB, but
cost per-MB increases rapidly in direct relation to diminishing levels of use.
-- Monthly subscription charges for GPRS access alone are as high as US$27.00 in Europe, comparing unfavorably to NTT
DoCoMo's highly successful i-mode service (US$2.78) in Japan.
-- On costs alone, GPRS is uncompetitive with PSTN data services beyond 500 KB of consumption and at around 2 MB
against ADSL.
NOTE TO EDITORS: For more information or to schedule an interview, please contact Farid Yunus,
fyunus@yankeegroup.com.
The Yankee Group (www.yankeegroup.com)
As a global leader in technology research and strategic consulting, the Yankee Group provides accurate, reliable, and trusted
research; custom consulting; and personalized one-to-one client interaction encompassing all areas essential to e-business
success: Internet, electronic commerce, communications, wireless, computing, and enterprise applications. Established in 1970
and headquartered in Boston, the company maintains offices throughout North America, Europe, Latin America, and the Pacific
Rim.
CONTACT: Kim Vranas
Media Relations
617-880-0214
kvranas@yankeegroup.com
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