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Operator Game: GPRS Pricing S38.042 Seminar 5.11.2003

This seminar discusses the current mechanisms and rules of GPRS pricing in the operator game. It explores the challenges, opportunities, and potential changes that may arise in the future. Topics covered include different pricing mechanisms, power dynamics among mobile operators, the impact of service and content bundles, and the emergence of new technologies.

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Operator Game: GPRS Pricing S38.042 Seminar 5.11.2003

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  1. Operator Game: GPRS PricingS38.042 Seminar5.11.2003 Timo Ali-Vehmas timo.ali-vehmas@pp.inet.fi 38.042/TAV/2003-11-05

  2. Content • Current mechanisms • Rules of Today • Rules may change • New challenges • Conclusions 38.042/TAV/2003-11-05

  3. Current mechanisms • Technology basis for different mechanisms are defined and limited by the GPRS/UMTS standards (e.g. 22.115 and 32.015) • Volume based metering, Time and duration, per each PDP context, Uplink and Downlink separately, support roaming and support Excluding SMS. • Information shall include also source and destination addresses, use of external data networks (APN name), location of MS. • Some other features such as support of change of tariff period. • Various GPRS pricing/charging mechanisms have been proposed. Known mechanisms include (Ref. 38.042 Spring 2003) • Metered Charging, Block Charging, Fixed (flat) Charging, Edge Pricing, Expected Capacity Charging, Paris Metro Charging, Market based reservation Charging 38.042/TAV/2003-11-05

  4. Rules of the Game today • It seems that only very basic mechanisms are in use today • Metered Volume based pricing • Block pricing • (Fixed pricing, for some users 100 MB block pricing may feel like fixed pricing !) • Short term improvements • Roaming pricing • Real-time charging for pre-paid • Recognised Longer term issues • Quality of Service based pricing (QoS), based on separate PDP Contexts, may require some congestion control too. • No time charge for PDP context 38.042/TAV/2003-11-05

  5. Rules of the Game today • Current power play, Mobile Operators have all the power • Mobile Operators have oligopoly in GPRS and mobile communications in general. Spectrum license limit the number of network operators. • Wide area mobile technologies are overwhelmingly competitive (Spectrum efficiency, seamless mobility, economy of scale in chip sets…) • Operator services get priority (WAP, MMS, SMS) • ISP’s currently have retail deal only with one operator. • Corporations may impose more competition between the Mobile Operators • Number portability works mainly for voice traffic. Services can not be ported as easily. 38.042/TAV/2003-11-05

  6. Rules of the Game today • VF = Vodafone • VF Pp = Talk and Pay • VF AT30 = Anytime 30 • VF B = Business • VF B 100 = Business and GPRS100 • TS = Telia Sonera • TS PB = Basic and Basic Data • TS PO = Basic and Open Data • TS PP = Basic and Pro Data • Sa = Saunalahti • SA PD = Basic and GPRS • RL = Radiolinja • RF PD = Basic and Data • DNA = DNA • DNA PD = Basic and Data • Circuit switched Voice Service = 1.64 Euroa/1 MB • Circuit Switched Data, Peer to Peer, 14.4 kbit/s = 2,03 Euro/MB Simple Email Simple “MMS” Email Active Email Basic POC Practical Email Practical Browsing POC Practical MPEG 38.042/TAV/2003-11-05

  7. Rules of the Game may change today • Almost all operators overcharge GPRS by factor of 2 to 100 • Only one peer link • Both uplink and down link charged separately • Only Best effort data • Low additional investments for GPRS but Calculating packets is expensive • Low price of GPRS may impact SMS, but not very likely because of difference service model • End user experience • Roaming, Addressing, Interoperability • Low price of GPRS will impact MMS, depending on usage model • Picture message to another cellular user • Voice message to another cellular user • MMS to legacy user, which has to use browser to download • MMS to legacy user, who also has email account • Practical email and Browsing will go wireless with corporate solutions and when tariffs are fair for internet addicts 38.042/TAV/2003-11-05

  8. New challenges and opportunities • Service and content bundle • Exist already for Ring tones, Wallpapers and some Games (I Mode) • New opportunities with MPEG music and other • Will require Worse than Best effort QoS Class • Will require additional billing mechanisms, fortunately GPRS/UMTS system specifications will support them. • Service bundle very important in basic browsing too. • Very low pricing for operator own pages • New innovative peer-to-peer services may appear, such as POC. • Pricing is much more difficult due to QoS requirements, due to competition with CS calls. • Time based GPRS pricing may emerge 38.042/TAV/2003-11-05

  9. New challenges and opportunities • Service and content bundle impacts significantly the value of transmitted bit 38.042/TAV/2003-11-05

  10. New challenges and opportunities • New radio technologies have some impacts • WLAN can be used in limited fashion but WLAN without roaming can not challenge the current GPRS and later 3G offering • Integration of WLAN using IMS may be interesting opportunity. • Growing bargaining power of big corporations • Corporations will build their internal IT infrastructure to provide all communication value added services, currently email, WEB services and Netwmeeting. Tomorrow also POC and VoIP and Videoconferencing. With EDGE/WCDMA and WLAN all of this can become mobile, for corporate citizens. • ISP’s may be able to follow the corporations • Corporate value added services are at least partially interesting for smaller enterprises and consumers. This may enable the ISP to gain bargaining power similar to corporations. 38.042/TAV/2003-11-05

  11. Conclusions • GPRS is still in its early phase • Roaming and Pre-Paid the main short term challenges • GPRS bit pipe pricing is not yet subject to competition, mainly because of lacking applications and because operators protect their SMS and MMS and WAP portal investments. • New services will emerge and price pressure by big corporations will push GPRS usage up and prices down. • Service bundles will be important differentiators and loyalty factors. • Some new intelligence may needed in networks but the current specifications shall be implemented by all players. • Whoever reach the lowest price with highest volumes will win. Nobody dare to just sit and wait 38.042/TAV/2003-11-05

  12. Learnings from the GAME • All the basic principles are in place • Starting point was very ambiguous and too few rounds were played in order to learn the market behaviour thoroughly • Applications were not modelled for GPRS and WLAN. Very difficult to estimate the impact of data pricing without the total visibility to the end users’ benefits. Plain GPRS data pipe does not interest that many. • More information on basic rules is needed – are the rules from real world ? • E.g. How long to invest in technology in order to make it operational ? • Any cross correlations ? Overall std effort by all players ? • Very good start but the tools needs further development 38.042/TAV/2003-11-05

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