Data decisions

The rollout of almost any new service to a market yields a period in which the service provider grapples with pricing and positioning. It's no different for wireless data.

Sprint PCS got the data ball rolling when it recently introduced a nationwide wireless data service. It was followed quickly by many operators rolling out similar services. And although some of the offerings resemble each other, there are differences, making it clear that operators still are searching for the best way to price and deliver them.

Last week, Bell Atlantic Mobile introduced an offering that delivers information to microbrowser-equipped handsets and allows customers to connect those handsets to a laptop for Web access. BAM's service is "substantially different" from Sprint PCS,' said Bob Hirsh, executive director of data sales and marketing for BAM. "The key difference is our pricing," he said. BAM subscribers with those handsets pay an extra $9.95 per month to their existing bucket plans. From there, "a minute is a minute," Hirsh said.

By contrast, Sprint PCS offers one plan that adds a similar monthly fee to existing buckets but limits data minutes. Sprint PCS also has separate plans that include voice and data minutes.

AirTouch Cellular also has rolled out a service in selected markets that allows access via laptop for an extra $4.95 per month. "Net Access is the beginning of a family of Internet services," said Cliff Fitterer, managing director of wireless Internet services for AirTouch Cellular. By first quarter next year, AirTouch will roll out service throughout its territories and begin offering services to handsets with microbrowsers.

Some analysts, though, criticize the concept of charging anything extra for using data. BAM's plan is priced better than Sprint PCS' but isn't quite there yet, said Barney Dewey, consultant for The Andrew Seybold Group. "That's a step forward; it's just the $9.95 should be zero," he said. "I don't understand the logic - what is the point of charging you an extra $10 to use minutes you've already paid for?" Rather than encouraging interested people to try the service and get hooked, the fees may stifle uptake, he said. "It seems shortsighted to me if they really want a significant part of the market."

Others agree. "All these price plans are too high," said Becky Diercks, senior director of telecom and wireless research for Cahners In-Stat Group. Operators are on the wrong track by highlighting the fact that they don't care whether customers use a minute for voice or data. "But a user will care," she said. Because the services are circuit-switched, data use becomes expensive. The first operator to come out with a fixed data fee will have a leg up on the competition, Diercks said.

Issues such as how to set prices may have made some operators hesitant to roll out data services even if they had the capability, and it's probably no coincidence that several operators introduced service on the heels of Sprint PCS' nationwide rollout. Some believe that BAM has been ready to launch wireless data for some time but was waiting to watch the competition, Dewey said. "It's a competitive thing. No one knows what people will want."

Operators also may fear complex customer support issues. Allowing customers to connect their handsets to laptops and access the Web presents potential for complex integration problems, which some operators may be shy to support.

Support is less of a problem for BAM, which has been offering cellular digital packet data (CDPD) services for more than three years. "While the CDMA service is new, the whole approach is not new," Hirsh said. "We know how to deal with customer support."

Configuring AirTouch's offering is simple, and customer support wasn't a major issue, Fitterer said.

The question of which services will be most attractive is still an issue, as most offerings deliver the same type of information services. Customer care applications may turn out to be significant traffic drivers for operators. Diercks calls it a "sleeper service." Although customer care applications won't drive revenue, they reduce on call center costs, allowing operators to turn call centers in to profit-generating centers, she said.

Ironically, despite GSM's inherent capabilities, U.S. GSM operators have fallen behind their CDMA competitors, including Sprint PCS, AirTouch and BAM. "GSM networks are more data-ready than CDMA networks," Dewey said. However, GSM has some disadvantages in the U.S., even though it's the most established standard worldwide. In the U.S., all GSM operators use the PCS frequencies, which could make coverage a bigger issue for them, Dewey said.

GSM operators also might run into capacity problems, Hirsh said.

Sprint PCS

Add-on option

For voice plans $29.99 and above, an additional $9.99 buys 50 data minutes and 50 Yahoo! updates

Wireless Web plans*

$59.99 buys 300 voice or data minutes

$89.99 buys 500 voice or data minutes

$129.99 buys 800 voice or data minutes

$179.99 buys 1200 voice or data minutes

*Includes 200 Yahoo! updates

Bell Atlantic Mobile

For an extra $9.95 customers can use their bucket plans for either voice or data

AirTouch

Services only available via connection to laptop

For $4.95 customers use minutes in existing monthly bundle. Current promotion waives that fee.