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High-Speed Wireless Data is Still Over-Priced

Yet another wireless sector analyst laments about how the broadband service providers are using a Gucci-like marketing model, unsuccessfully -- keeping prices high and making product availability scarce.

However, I wonder if perhaps this strategy is intended to limit new subscriber sales, so that these unproven data networks aren't overloaded by the few subscribers that actively use them. Maybe carriers are trapped in the early-adopter stage of market development by severe technical limitations.

More wireless network operators are deploying HDSPA technology to significantly boost data rates for subscribers, but most carriers haven't adjusted their pricing schemes to make high-speed wireless data more attractive to users, according to a new worldwide mobile data service price report from Light Reading.

With almost 90 commercial networks launched in 2006, HDSPA is driving a vast change in wireless data rates from peaks of 300 kbit/s per user with regular 3G services to almost 3 Mbit/s in advanced HSDPA networks. Combined with benefits such as lower latency and an increase in network capacity that allows operators to support six times more users per cell, this dramatically improves operator economics and enables providers to offer faster and lower-cost services.

But the economic benefits of HSDPA technology have yet to filter through to the end users, notes Gabriel Brown, Chief Analyst for Unstrung Insider and author of the report. "Wireless operators are using the extra capacity of HSDPA to sell faster services, rather than lowering prices for end users, with many tariffs on the market originally formulated for 2G services," says Brown.

"Data limits designed for GPRS, or even regular 3G networks, do not translate into the broadband world. Operators need to share the benefits of HSDPA technology with their customers."

Key study findings include the following:

- Operators are using the extra capacity of HSDPA to sell faster services, rather than lowering prices for end users; this is a major mistake.

- 1GB data tariffs, at an average cost of ~$60 per month, are emerging as the most popular service plans for operators worldwide.

- Nearly all flat-rate data plans come with 'fair use' limits or restrictions on streaming and VOIP applications; such limits are reasonable, if clearly stated.

- There is not yet a clear link between underlying network costs and the price of the services in different markets; nor is price clearly linked to ability to pay for services.

- International roaming prices are considered to be 'extortionate,' and negate 3G's advantage as a world standard.

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