Editor’s note: This is the third of a five-part series looking at the arrival of 3G mobile services. When it comes to land lines vs. mobile services, more and more people are voting with their checkbooks to go mobile.
A recent report from International Data Corp. shows that 10 million landlines, or traditional telephone lines, were displaced by wireless services in 2001 and that this trend is likely to continue into the foreseeable future.
The IDC report also finds that most of those new customer are attracted to wireless services because prices continue to decline, the number of “free” night and weekend minutes continues increasing and the continued build out of wireless networks has made reception better in most areas of the U.S.
The cell phone boom dating back to the late 1990s indicates that the service providers found a theme that consistently worked in attracting new customers. For decades consumers have been taught that the cost of placing a long-distance telephone call varies depending on the time of day, so banking on the concept that minutes comprise a value proposition the cell phone companies told potential customers they would give away “free” minutes to anyone who signed a service contract.
It’s a marketing plan that produced massive returns.
Interestingly, it seems that no one has figured out a universally accepted value for the megabyte as wireless networks move into the mobile data marketplace.
Data-based pricing plans a fad?
Verizon charges its 3G Express Network subscribers $30 per month and that airtime can be used for either voice or data communications. Express Network customers also have the choice of paying for 3G services based on the amount of data they consume each month, such as $35 a month for 10 megabytes or $55 per month for 20 megabytes, and customers can purchase up to 150 megabytes a month. Or they can simply pay a monthly flat rate of $100 for “all-you-can-eat” data services.
Cingular has plans to introduce wireless data services in 2003 through a service company officials have named “EDGE,” and AT&T Wireless is planning to light its 3G network in 2003. VoiceStream already offers limited wireless data services over its “iStream” network in many areas of the U.S. with prices ranging anywhere from $20 a month for 5 megabytes to $60 per month for 20 megabytes of data. Nextel has not formally announced its intentions of entering the 3G arena. Sprint PCS has rolled out a variety of pricing plans for its new Vision network.
Bill Weiss, chief executive officer of Cary-based Promar Group, says pricing plans based on data consumption are an attempt by the industry to educate consumers on what they can do with 3G technologies — sort of a public relations campaign – but that currently there are not enough customers anywhere in the U.S. who are willing to pay for the unproven benefits these new services provide.
“Your basic PDA format or cell phone or terminal device isn’t going to give enough benefit to anybody to really justify 3G,” he says. “3G is being approached more like, here it is, what do you think? It’s just not there yet. There’s nothing on the user side to help people decide they need it. On the operators side they’re saying we promised 3G and now we have to deliver.”
Hans Davidsson, founder and chairman of Aerial Broadband, a company that makes wireless hardware that extends cable and DSL connections to structures that do not have direct access, and former vice president for sales and marketing of Ericsson’s U.S. mobile applications division, believes the industry is looking the wrong direction in searching for an answer to generating profits from 3G services.
“We need to defocus on technology and focus on what customers are looking for,” Davidsson says. “Mobility is the key. 3G services will happen because we are inherently lazy and want convenience. For this to catch on and become mass market consumers have to be able to go into, say, Best Buy, pick out a device, click on the Internet and instantly be connected to the Web site they are looking for. Today, there are too many tricks you have to do before you have service.”
Davidsson says he is curious to see when the wireless providers will begin educating consumers about the benefits of 3G, but foremost on the minds of industry officials is how to overcome the mountains of debt they incurred trying to build out their existing networks and upgrade to 3G.
Not All Service Providers Embrace 3G: www.localtechwire.com/article.cfm?u=1711&k=24&l=11
Part Two: 3G Puts the Web in Your Hands http://www.localtechwire.com/article.cfm?u=1697&k=24&l=11
Part One in Series: 3G Is Off to a Global Slow Start www.localtechwire.com/article.cfm?u=1684