Avoiding MMS pricing mistakes

date: July 27, 2002

MMS pricing is difficult to get right and dangerous to get wrong, says John Delaney, Ovum principal analyst, and lead author of MMS and SMS: Multimedia Strategies for Mobile Messaging.

MMS offers mobile operators their first real hope for making money from the mass market with 2.5G and 3G networks. They need MMS to take off in a big way and as quickly as possible. A key means of achieving this is to make it affordable. The cheaper it is to buy MMS-capable handsets, and to send MMS messages, the more rapidly service usage will take off. However, there are limits on how far operators can go in this direction.

The early MMS handsets on the market are expensive. Ericsson's T68i retails at around euro500, including camera, and Nokia's 7650 is about euro700. On top of this, subscribers need to activate a GPRS subscription before they can even start using MMS. If operators want to get things moving quickly with MMS they have to consider subsidies. Vodafone in the UK, for example, intends to offer the Ericsson T68I, with the clip-on Communicam, to its MMS subscribers at around euro315 (£199) - this is about euro200 less than the unsubsidised price.

The pricing of the MMS photo messages is also critical. The issues are, how high (or low) the price should be, and what tariff structure should it follow? So far, the predominant approach to MMS tariffs has been 'one price fits all'. Most operators have adopted this model including Telenor, D2, Telecel, TMN, MMO2 and Sonera.

There is considerable variation in the level at which pricing has been set. Telenor, the first operator to launch MMS, set its per-message price at around euro1.25 (Nkr10). Subsequently, lower prices have been set by other operators, Sonera charges euro0.59 and the other four operators charge around euro0.40.

Although one-price-all is the favourite model so far, a few operators have entered the MMS market with a different approach to MMS pricing.

- The Hungarian operator Westel has set three separate per-message prices, for 'small', 'medium' and 'large' messages

- T-Mobil's UK operator has launched MMS on an all-you-can eat pricing model - for euro32 (£20) per month, you can send as many messages as you want

- The Hong Kong operator CSL charges for MMS explicitly according to the GPRS network usage, plus an additional charge for premium content.

At this immature stage of the market, it remains to be seen which operators' approaches to pricing will be the most successful. But, at least now that MMS services are real instead of hypothetical, we are finally in a position to analyse this question.

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