How to pay $1m per gigabyte for mobile data'¦

Stuart Corner
Monday, 23 May 2011 14:25

Opinion and Analysis

Simple. Just send and SMS, or several million. The amount of data transferred with an SMS makes it the most expensive data service on the planet by a country mile. And while that might be an extreme example, a report from Market Clarity lays bare the huge variation in the prices of fixed and mobile broadband data services in Australia.

For example, on a per gigabyte basis, a mobile user can pay 1,333 times as much for a gigabyte of data as a fixed user. And if you think that is something of an apples-with-oranges comparison, note this: the lowest price a postpaid contracted consumer can get for mobile data is $1.66 per gigabyte and the highest a prepaid customer could pay would be $80.00 per gigabyte. It would be hard to find any other product or service where the rewards for commitment and for buying in bulk ran to a fiftyfold price reduction.

Market Clarity has made the report 'The Cost of Mobility - Comparing the Value of Fixed and Mobile Broadband Services', available at no charge as its contribution "to the ongoing debate over the National Broadband Network."

It argues that: "While debate rages over whether emerging wireless services can challenge the speed offered by the National Broadband Network, both politicians and advocates on both sides have overlooked the growing price gap between fixed and mobile broadband'¦The mobile broadband sector is still challenged to deliver equivalent data value compared to fixed networks. Without a radical change in mobile broadband tariffs and data allowances to compete with fixed services, this is likely to remain for the foreseeable future.

The main focus of the report is to expose and analyse this value gap between fixed and mobile broadband. However it is particularly instructive in highlighting the huge, and sometimes irrational differences between prices for the broadband service (fixed or mobile) from the same supplier.

For example: "One would expect that higher priced plans, which include larger GB allowances, would yield the most cost effective per GB prices. However this is not always the case. Even within the portfolio of a single provider, we found numerous cases where more expensive plans - with higher per GB allowances - were more expensive on a per GB basis, than cheaper monthly alternatives."

So, the big question is: could mobile broadband tariffs be made competitive with fixed, and if so when? The answer at present is almost certainly no. We are constantly told that upcoming air interface technologies like LTE will be more spectrally efficient and that its supporting network infrastructure, the evolved packet core, less costly than today's mobile networks, but the likelihood is that mobile broadband networks will still be capacity constrained compared to fixed networks, and demand for data will continue to grow.

As Market Clarity CEO Shara Evans observes "The mobility premium is the result of many factors, most particularly the higher underlying network costs, which are escalating with the success of new devices like the iPhone and tablet computers.

"While carriers are looking for ways to increase the revenue they receive from mobile broadband services, fixed providers are expanding their data allowances. The resulting dynamic is that the 'value gap' between the two technologies is widening, and may continue to do so for some time."

NBN doomsayers take note.