Suicidal GPRS pricing puts 3G at risk

Official

GPRS is a flop so far, and astronomical pricing models introduced for such 2.5G services are putting the 3G adventure at risk. That's what analysts Yankee Group conclude after a new study of the European GPRS tariffs.

Telcos pricing models vary widely, as the report entitled Mobile Data Pricing: Will European Consumers Pay a Packet shows in some detail. But the costs using the first round of per-packet pricing can go as high as $4,600 for a 100 MB of data a month from some carriers. Compared to fixed rate data access or ADSL, that's a premium of 73 per cent at low usage levels or 1000 per cent at 100Mb.

The European average works out at $214 per 100Mb per month, which for some folk is a day's worth of SirCam attachments?

Yankee Group warns of "potentially dire consequences for future data services" if flat-rate pricing isn't introduced.

"We've always maintained data is the icing on the cake," author Farid Yunus told us.

His report warns that the viability of the 3G project is in doubt unless tariffs are reduced, and recommends networks should consider GPRS as a loss leader until consumer critical mass has been achieved.

A couple of interesting statistics leap out of the report, too. Yunus reckons the cost of transport is only 8 cents pre MB, so GPRS and 3G can be priced at less than $2.00 per MB (enough for seven average-sized SirCam attachments) for the networks to see their investment recouped and profit handsomely.

Actually some of Vodafone's business tariffs (40, 100 and Volume) squeak in under this, so it's clearly possible. Yankee estimates that $157 billion has been invested in 3G infrastructure in Europe. ®

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