GPRS price fall 40% - report

September 14, 2004

Strategy Analytics' Wireless Internet Applications Service released, "GPRS Prices Fall by 40% as '3' Leads Drive Towards Value-Based Charging," a report which builds on last year's groundbreaking data pricing study. This report reveals that the cost of transporting 10Mb of data across a GPRS network has fallen by an average of 40 percent in Western Europe between May 2003 and August 2004.

As Service Director, Phil Taylor, notes however, "The average cost of transporting 1Mb of data on pay-per-use GPRS plans has fallen by only 13 percent since May 2003, to just over $18. At these rates, a single MP3 music track downloaded over the cellular network would cost over $25. With over 85 percent of GPRS users on pay-per-use plans, operators need to find ways of making data services more affordable to the mass market."

The study points out that carriers are beginning to recognize this pricing problem. In the UK, new entrant "3" has made its billing policy a sales feature, advertising the fact that its price plans are based on a simple and transparent event-based charging system linking payment to specific items of content downloaded by the customer.

David Kerr, Vice President of the Strategy Analytics Global Wireless Practice, adds, "Operators are beginning to realize that packets and Megabytes are alien concepts to consumers. More importantly, they do not extract maximum revenue from the services themselves. Although volume price plans still dominate the GPRS and CDMA 1X charging environments, there is a perceptible move towards value-based pricing and the removal of transport charges on the higher bandwidth services offered by carrier retail portals. The leading Asian network operators, such as SK Telecom and NTT DoCoMo, still seem wedded to the use of complex volume-based transport plans, however we believe that in Europe, value-based pricing will see increased use, particularly as consumer 3G service launches ramp up in Q4 of 2004 and 2005."