HSDPA uptake hinges on pricing strategies

Informa: HSDPA networks are expected to be switched on in all major Western European markets before the end of 2006 and with a range of devices coming on stream, uptake of HSDPA will now heavily depend on 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 Euros. 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.

Please click the following link for a chart showing broadband uptake in Western Europe 2000-2005

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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 resistanceto embracing true flat-rate models, upper volume limits have been increased significantly and a consensus on a 'fair use' limit appearsto have settled between 1GB and 2GB.

Increasing the size of 'fair use' limits must go hand in hand with prices that are attractive to potential users. The average price for operators' largest HSDPA data bundles is somewhere between 50 and 70 Euros 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, comments 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.

HSDPA Informa Telecoms & Media

Publ 20060307