Pricing Vital to HSDPA Uptake

David Murphy

Research from Informa Telecoms & Media suggests that HSDPA networks are expected to be switched on in all major Western European markets before the end of 2006, and that uptake of HSDPA services will depend heavily on the pricing strategies implemented by mobile operators.
"Looking to the fixed world, broadband uptake only truly took off  after the introduction of flat-rate tariffs and the settling of average  monthly fees at a level of around 25," says Informa Telecoms & Media Principal Analyst, Devine Kofiloto. Mobile operators have to date resisted moving to flat-rate models, but if mobile operators really aspire to the data traffic volumes of the fixed world, they must also recognise the factors that have so successfully underpinned growth for fixed broadband providers.
Informa's analysis of early HSDPA pricing strategies shows signs that mobile operators are aware that existing pricing models have stifled data uptake. Although there still seems to be resistance to embracing true flat-rate models, upper volume limits have been increased significantly and a consensus on a 'fair use' limit appears to have settled between 1GB and 2GB.
But the Informa research suggests that increasing the size of 'fair use' limits must go hand-in-hand with prices that are attractive to potential users. According to Informa's analysis, the average price for operators' largest HSDPA data bundles  is somewhere between 50 and 70 per month.
"What is clear is that mobile operators will leverage HSDPA's one  key advantage over both fixed DSL and Wi-Fi to justify pricing the service at a premium: mobility," says Kofiloto. "In the voice  world, the so-called 'mobile premium' has for years allowed mobile operators to get away with vastly higher tariffs than those charged  by their fixed-line counterparts. As competition continues to exert  downward pressure on prices and to narrow the price differential in  the voice domain between mobile and fixed, so mobile operators will  look to leverage HSDPA's mobility benefits to establish a new  mobile premium  for mobile broadband, over its fixed counterparts of Wi-Fi and DSL."
The findings are contained in the latest edition of Informas World Cellular Investors report, a quarterly publication available on a subscription basis from Informa.
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