Wireless Data Prices To Drop????

SL10 · Posted: Wed Mar 01, 2006 11:42 am Post subject: Wireless Data Prices To Drop????

http://www.dslreports.com/shownews/72424

Service Prices Trending Downward

02.27.06

In good news for enterprises, many analysts and industry figures see the downward trend in prices for wireless services -- including voice, data, and email -- accelerating over the next 12 to 18 months.

In fact, some observers contend that the advent of powerful new broadband wireless technologies, near-zero-cost alternatives like municipal WiFi, and discount service providers such as mobile virtual network operators (MVNOs, i.e., third-party providers that offer branded cellular service plans on carrier networks) could have a disruptive effect on the wireless industry in general.

For enterprise users, falling prices present something of a devil's bargain, says Joseph Paolillo, director of information services at Yale University: "In terms of improving technology and the drop in price, every month you wait, [wireless networks] get cheaper and better. But you can't wait forever."

Danish research and analysis firm Strand Consult released a study today outlining "10 Mega Trends" for the wireless industry. The top two "Mega Trends": the threat from discount mobile service providers," a.k.a. MVNOs, and falling profit margins on essential mobile services. These downward pricing pressure, says Strand, mean that "a business-as-usual approach to the future will... mean the start of the end for those mobile players that do nothing."

While that may be hyperbolic, there's little question that as enterprises shift more toward wireless voice and data services they will have more leverage in seeking lower and more flexible payment options.

Small businesses leading
Another market study, released today by research firm In-Stat, finds that small and medium-sized business, in particular, are seeing prices for wireless services fall.

From 2004 to 2005, the In-Stat survey of 600 enterprise wireless decision-makers found, the average mobile-voice bill for small businesses fell 17 percent, from $82 to $68, while for medium-sized businesses it fell from $108 to about $83 -- a 23 percent drop.

Larger enterprises, meanwhile, are actually paying slightly more for wireless voice services, says Charles Gerlach, managing director of consulting at In-Stat. Often locked into long-term contracts, and unable to track usage as precisely as smaller businesses, large enterprises so far have been unable to take advantage of falling prices and new, more flexible payment plans.

"Many large organizations are paying monthly charges for at least some employees who don’t use their phones," adds Gerlach, "or are not even employed there anymore."

Complex market forces are forcing service providers to offer attractive and innovative plans and pricing options to enterprises. While revenue per user (RPU) has been falling for sometime for cellular voice service on the consumer side, carriers have been able to keep prices relatively flat on the enterprise side. That is no longer the case, particularly as enterprises shift to voice-over-IP and data services become more important and widespread.

"Voice RPUs are going down," says Tole Hart, research director for mobile devices at Gartner Inc. , "so [carriers] have to find additional data revenue. They're trying to figure out a way to do that, and that's really the challenge."

The shrinking premium

That challenge is made tougher by the fact that average revenues for data services are also falling.

"The data pricing trend is downward," says Craig Mathias, principal wireless analyst at the Farpoint Group . "We're expecting unlimited wireless broadband services in the $35-$45 range in the next year or so. There will always be a premium for wireless, but the objective is to get to the same price point as wired."

In this case, big corporations can learn from their smaller rivals, as the aggressive approach to tracking employee use -- and finding attractive service options that combine voice and data -- filters upward.

"We see evidence that large organizations are becoming more aggressive at seeking to understand and control their spending on wireless services," says In-Stat's Gerlach, "and we believe that this is likely to lead to some pressure to reduce the rates that they are paying."

Other factors include the spread of dualmode WiFi/cellular handsets, and the market debut of true mobile broadband connections, in the form of WiMax networks. Once the handoff from cellular networks to WiFi becomes truly transparent to the user, says FarPoint's Mathias, prices have only one way to go.

"WiFi, of course, is terribly inexpensive to deploy," Mathias says, "so that will have a downward effect as well." (See Going Global, Keeping It Simple.)

Once WiMax becomes a reality -- which will likely not be for another year or two -- it will force more pricing upheaval onto service providers. Enterprises may be willing to pay more for new WiMax service, if it allows them to replace other legacy networking equipment and services. (See WiMax Anti-CliMax.)

"For half again of what you're paying for a DSL connection, for example, if I can give you broadband anywhere you want it, would you pay for that?" asks Andy McKinnon, principal for WiMax in Europe, the Middle East, and Africa for Motorola Inc. (NYSE: MOT - message board). "We're seeing this rapid increase in the nomadic use of high-speed connections in terms of WiFi hotspots. Once you have true broadband on the move, many people would pay for it if it provided a similar experience. That's the capability of WiMax technology."
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xenophon · EVDO Addict Joined: 30 Aug 2005 Posts: 1969

Michael · Posted: Thu Mar 02, 2006 9:37 am Post subject:

I think we all can agree, that wireless prices (EVDO) will drop at some time. The question is when? I would bet sometime this year and I am sure when one carrier does that, the other(s) will quickly follow.
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vtoljaga10 · EVDO Fledgling Joined: 24 Nov 2005 Posts: 18

For those of use who are in the middle of a two-year commitment for a connection card plan, would it be reasonable to assume that any price reductions would be automatically applied to our existing plans?

xenophon · EVDO Addict Joined: 30 Aug 2005 Posts: 1969

I'd guess new EVDO plans would work like voice plans. When you switch to a different plan with different rates, you recommit to another 2 years contract.

Nexx9 · EVDO Fledgling Joined: 27 Dec 2005 Posts: 11

Another term for it is 'unintended servitide'. On the part of the customer of course. Nex

Michael · Posted: Sun Mar 05, 2006 8:07 am Post subject:

On the Verizon side of things, any plan change (pricing, etc.), your contract gets extended for one additional year.

On the Sprint side of things, we are getting the official response and will post it here.
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poopskooper · EVDO User Joined: 30 Jan 2006 Posts: 68