Warnings Over Complex Wi-Fi Pricing
By: MarkJ - 27 October, 2004 (1:11 PM)

Speaking at the Wi-Fi Business Development Summit in Paris sponsored by IBM, consultancy BroadGroup warned hotspot providers to avert the trend towards complexity in pricing Wi-Fi services and also to increase marketing emphasis on monthly subscriptions.

Using source material based on two recent European surveys of 122 Wi-Fi service providers and 83 GPRS operators, BroadGroup said that the findings suggested Wi-Fi is trending towards tariff structures that would leave users unable to comprehend what they were being charged.

Wi-Fi service providers now offer a wide variety of schemes and greater user choice, the offering is being “too finely segmented”. Although the need to differentiate offerings is driving marketing strategies, the result leaves users with 365 tariff schemes across 28 countries. The consultancy said this level of product complexity mirrored to an extent the launch of GPRS services several years ago.

BroadGroup research had also found that average pricing in the most popular timebands – 1 hour, 24-hours and 1 month had remained largely unchanged over the last 18 months. 24 hour pricing for example is now offered by 58% of all service providers in Europe with an average price of EUR 15.08. However in a market where prepaid methodologies now dominated, the consultancy believed there was a need to provide more marketing emphasis to the promotion of monthly subscriptions to sustain business growth.

The consultancy also noted that European Wi-Fi prices continued to be more expensive than the US and Asia.

One trend detected among some service providers, to offer inclusive volumes of MB, reflected the structure of GPRS tariffs. Yet in assessing GPRS tariffs, BroadGroup provided examples that revealed widespread inconsistency and diverse schemes across many MB volume points. The average price for 50MB inclusive is EUR 35.67.

BroadGroup also provided examples that revealed if users did not know how many MB they consumed each month, they could be penalised by selecting an inappropriate tariff. Although some websites provided an interpretation of MB usage, most did not. BroadGroup is currently conducting a study of business travellers in Europe to provide insight into data usage and what users understand as mobile data.

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