Thursday, May 19, 2005

Priced out of the market

Martin Geddes - Telepocalypse


I reader points me to this quietly aging New York Times article on how the phone as Swiss army knife isn’t playing out too well. In talking about how data plans are badly priced, there’s a great laugh-aloud quote (my italics):
Many industry analysts blame the wireless carriers for clinging to confusing, and often costly, metered payment plans on their networks, including some by-the-megabyte pricing plans for pictures. “Consumers don’t know megabytes from dog bites,” said Delly Tamer, chief executive of LetsTalk.com, an online cellphone store. “Complexity is a huge bottleneck.”
I’ve been hunting for a cellular plan with reasonable GPRS roaming rates, as I wanted to be in touch with my email while on holiday but the expense was just outrageous on a pre-paid mobile. The operators seem determined to neither tell you the price of data, nor sell a plan suitable to my needs, so for the time being they can get lost and I’ll find other ways of managing.
Many data products appear to be mispriced. Take MMS. The purpose of MMS isn’t to send pictures. It’s to share experiences with people who aren’t there. When we go to the zoo and want granny to share our day out, a dozen MMS messages would cost as much as the zoo entrance. That’s just crazy — a scarcity business model in a world of increasing abundance. A better pricing model would be for the first message in a day to cost you two dollars, but the rest are free. People are willing to pay a premium for predictable pricing and unlimited usage.
Sprint has done a good job of this in the US, by eschewing metered usage and shepherding people onto bundled monthly plans with uncapped usage. They haven’t cracked the initial jump from casual usage rates to a daily impulse-buy bundle. And this doesn’t help you in the long run solve the move to a world of stupid networks, since your carrier-offered services become of decreasing relevance.
Likewise GPRS is competing against dial-up and Wi-Fi hotspots. Charging by the megabyte is dumb. A better model would be a daily charge. I paid €5 for Wi-Fi access, and only used 20 minutes of the 5 hours of credit, but felt I got value for money. The total uncertainty of a GPRS bill (as well as the slow data rates) makes it a non-starter. But I’d gladly pay a fixed fee for unlimited access during my holiday, and it’s a lot more money that the operator would have seen otherwise.

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