The Price of Peripatetic Computing

As wireless carriers evaluate their options for charging for advanced data services, some believe they could use an NTT DoCoMo (www.nttdocomo.com) model. That model is predicated on charging a small pittance per byte of data. No way. I believe flat-rate billing is the only model that can work.

Yes, carriers need to “monetize” their investments in their data networks. They need to increase ARPU per customer as well as show growth to their investors. However, from a strictly U.S. customer perspective, there are serious reasons why this won't work.

First, customers will not pay more for content. The U.S. Internet customer has been steeped in flat-rate charges. The Japanese Internet customer had no previous experience, which is why DoCoMo's model works there.

Second, U.S. carriers have embraced the term wireless Internet or some variation thereof. With this moniker, consumers associate the applications and services of the wired Internet with wireless. To them, it's merely an extension with a different transport.

However, I'm afraid the die has been cast. I agree that many of the offerings that are bound for wireless data networks across the land will be more personalized and of greater service and functionality than those of the wired Web. And yes, it will turn out to be something quite different.

However, once consumer expectations are set, it'll be impossible to redirect them.

Even if carriers wanted to stem the tide of associating their services with the Internet and pick up something more accurate, such as “peripatetic computing,” as Mark Davis, Mercator Partners (www.mercatorpartners.com) founder, suggested, it's not like a light switch. They can't just turn it off. For example, AOL Mobile offers wireless e-mail access and applications (www.aol.com). According to the company's president, Lisa Hook, it's a natural extension of the consumer-friendly AOL. That's how AOL is marketing it.

Likewise, some carriers suggest that they may be able to charge more for transaction-based m-commerce. Again, I can't see the consumer biting. In isolated incidents, it could hold appeal. However, if m-commerce is expected to take off, carriers want mass-market appeal, not niche appeal.

For example, the m-commerce model suggests that if a consumer pays for a toll pass, there could be a plan in which he could wirelessly pay and process rather than stopping at the gate. With a Bluetooth-enabled feature (www.bluetooth.com), the transaction could be dated and charged automatically against the wireless account. For this, some say the carrier could charge an added fee per month for individual m-commerce services. In isolation, this could be successful for a small percentage of customers. However, if similar transaction ideas arise for different potential purchases, customers may feel like they are being gouged. Imagine the sticker shock if carriers attach a fee for Ticketmaster (www.ticketmaster.com) services, a separate fee for UBS/Paine Webber (www.painewebber.com) services and another fee for candy-machine-vending services. Or if carriers embed charges with each transaction, there could be rebellion as customers tally how much they paid in fees.

The only model that makes sense from a consumer perspective is flat-rate pricing. OK, it's duly noted that wireless data networks aren't altruistic efforts. How will carriers make money from their wireless data networks? As the networks become more elegant in offering personalized, location-based, transaction-oriented features, I predict customers will be encouraged to pay more only for broad-based features.

They already are paying a flat rate for voice services. They likely will pay an added flat rate for wireless data. After that, they can pick and choose among negotiable extra features. For example, as permission-based marketing takes off, a broad base of customers may pay more for anonymity. Business customers may pay more for speed. Different monthly rates could be applied to average data speeds vs. the more elite super-fast data speeds. Finally, as location-based services take off and become more common, some customers actually may pay more for a “coupon clutter cutter.”

From a customer perspective, these types of charges make sense. They also are more manageable. As a consumer, would I want the hassle of considering how much it costs every time I check the weather or my stocks or buy a Coke? No way. Would I pay an added $5.95 a month for greater wireless data speeds? You bet.

It's the only plan that makes sense.

How should carriers price wireless data? E-mail rwickham@intertec.com.