The jury is still out on the economics of HSDPA services

Stuart Corner
Friday, 13 July 2007 10:32

Opinion and Analysis

Faced with the growing momentum of HSDPA, this is an angle that would be WiMAX operator, Unwired has been pushing. In its half year results presentation in March this year it included a chart showing the total cost of ownership of WiMAX, HSDPA and rev A EVDO networks against total throughput in gigabytes per month. While costs for all three were comparable at 2Gbytes per month, the costs of the other two rose rapidly as volumes increased whereas the cost of WiMAX was much less affected. At 12Gbytes pre month the cost of WiMAX had risen only 25 percent, but the cost of EVDO was up 300 percent and of HSPA about 400 percent.

The comparison, however was largely meaningless without more specific information, which Unwired declined to provide. This is why the European all you can eat plan is so interesting. Halen added that "Half a year ago [the cellular operator] positioned the service as a complement to fixed broadband. Now they are going after the fixed customers with services costing to 30-40 Euro per month. You save 20 euro and get mobility."

Probably lack of competitive pressure is the main reason none of the operators has tried this in Australia. The nearest thing is 3's X-Series, launched in May which offers 2GB and 4000 Skype minutes for $40 over and above the price of any standard 3 mobile service

X-Series services are all accessed via a 3G handset, so are not directly comparable to HSPDA modem plans. But they are much cheaper. 2MBytes on Vodafone would cost twice this per month and on Telstra's Next G for a service at HSDPA speeds, twice as much again.

In other words, there is a strong correlation, currently, between 3G data prices and ubiquity: from Next G at one end of the spectrum (excuse the pun!) to 3 with only major city 3G spectrum.

At the launch of Optus Fusion yesterday, Optus' head of Consumer Warren Hardy and director of marketing, Michael Smith were grilled on HSPA rollout plans and service costs. They admitted that prices would come down (no surprises there) but still suggested it would be seen as a premium service. Just how 'premium' will be an important question, and in that context the latest report from Wireless Intelligence - the market research joint venture between Ovum and the GSM Association - makes interesting reading.