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Technology Stocks : 4G - Wireless Beyond Third Generation -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (43)	8/16/2001 3:43:09 AM
From: elmatador	Read Replies (1) \| Respond to of 1002

Who are most cost efficient, mobile or fixed? Pricing, comparison holding back 3G progress The451 - Aug 09, 2001, 01:32 PM ET San Francisco - Yankee Group analysts have recently blamed "astronomical> ...> suicidal pricing" of 2.5G elements for holding back 3G development. GPRS prices, especially, have come in for intense criticism, following new studies of European tariffs. Researchers at Analysys, however, in an interview with the451, pointed to even more fundamental obstacles in the path of 3G. > > Andrew Wright, head of Analysys' Mobile Group, says GPRS pricing - excessive as it is - does not constitute the major problem. What deserves to be called "suicidal," he says, is trying to compete with fixed broadband. Mobile data services (today's 2G and 2.5G, or tomorrow's 3G) appear at this point to be destined to be many times more expensive than fixed data services because of their underlying cost base. > > In a typical mobile scheme, Wright says, browsing over GSM data connections costs in the region of $5 per useful megabyte, GPRS about $2/MB, and 3G could eventually level off as low as $0.50/MB. (In urban environments at extremely high volumes, theoretically figures as low as $0.08 are possible.) > > The meaningful comparison for those figures is with current fixed Web browsing costs: about $0.20 per useful megabyte on dialup, $0.02/MB on DSL, and as low as $0.002/MB over an STM1/OC3 fiber in a corporate environment. > > Users of fixed broadband data reap the benefits of keener pricing and scale economies - which do not exist in mobile networks - so Wright poses the realistic possibility that mobile data might cost 100 times more than ADSL data. How to get around that kiss of death in marketing and selling? Wright has a fairly simple solution for mobile operators: avoid price comparisons with fixed data services. And the way to do that is to focus on selling products desirable to mobile users. > > For example, if a small amount of data volume is bundled with the right content or application, then the relatively high cost of the data will not seem important. Users can send mobile text messages of up to 160 characters to each other for a few cents on GSM networks. When the accumulated cost of this is worked out, it comes close to $1,000/MB, but users see it as a reasonably priced service, paying small amounts for tiny chunks of data. > > Text messaging is an extreme example, and there is no other application where the cost can be hidden quite like that. Still, services delivered in the $1-2 range (especially to a two-square-inch screen) may be feasible only if there are applications with a high 'value-to-volume ratio' - that is, services users both want and can afford when they are mobile. Large attachments, Wright says, "SirCam or otherwise, will generally have to wait for a fixed connection or an 802.11 access point." > > The Yankee Group 'Mobile Data Pricing' report showed that current first round per-packet pricing can go as high as $4,600 for 100MB of data a month from some carriers, a premium of 73% at low usage levels or a startling 1,000% at high usage. The report says that the European average for mobile cost is $214 per 100MB a month. > > Wright is not surprised by the high prices and extreme variables, considering the amount and level of sophistication of the equipment required to deliver sufficient quantities of data over the air interface across a wide area. Any comparison of mobile data service prices with fixed is problematic, Wright says in returning to his main point, because fixed data service prices are falling rapidly as new technologies are deployed. > > There is an effective scale economy that the user benefits from when moving to broadband, the Analysys group manager says, which is not mirrored in mobile because the radio network has a greater variable cost component than a fixed network - fixed broadband costs being dominated by the fixed cost of the loop and the cost of the DSL equipment at both ends.> Source: www.the451.com I will comment on that later (Central Europe later) today.