Operator Game: GPRS Pricing
S38.042 Seminar
5.11.2003
Timo Ali-Vehmas
timo.ali-vehmas@pp.inet.fi
38.042/TAV/2003-11-05
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Content
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Current mechanisms
Rules of Today
Rules may change
New challenges
Conclusions
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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
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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
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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.
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Rules of the Game today
VF
VF
VF
VF
VF
= Vodafone
Pp = Talk and Pay
AT30 = Anytime 30
B = Business
B 100 = Business and GPRS100
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TS
TS
TS
TS
= Telia Sonera
PB = Basic and Basic Data
PO = Basic and Open Data
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
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Practical Service Pricing
250
VF Pp
VF AT30
200
VF B
VF B 100
Monthly Cost, Euro
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TS PB
150
TS PO
TS PP
100
Sa PD
RL PD
50
DNA PD
CS Voice
CD Data
0
0
1
2
4
8
16
32
64
128
Basic Voice and additional GPRS Data, MBytes
Simple
“MMS” Email
Active Email
Basic POC
Practical Email
Practical Browsing
POC
Practical MPEG
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Rules of the Game may change today
 Almost all operators overcharge GPRS by factor of 2 to 100
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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
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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
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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
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New challenges and opportunities
 Service and content bundle impacts significantly the value of
transmitted bit
Value of transmitted MB
(all radio channels included)
10000
1000
100
€/MB
10
1
0,1
RING TONE
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SMS
MMS
BitPipe
CS Call
MPEG
download
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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.
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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
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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
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