February 9, 2006

Why are we paying through the nose for mobile data?

Posted in Articles at 9:57 pm by siddey

I agree absolutely with Glenn Latham’s recent contribution to LBSzone.com (08/02/06). As do I on many occasions, Glenn asks why should we be paying ridiculously high data charges? It seems counter-intuitive that a business need to achieve market saturation is being addressed by exhorbitant pricing on new 2.5/3G network data services. It would be hard to argue that we’re still in the “early adopter” phase of mobile telephony, in which companies will typically charge a premium. Either device manufacturers are in cahoots with Telcos (supporting more bells & whistles that consume serious data) or the two segments are seriously out of whack. Either way, consumers are being led down the garden path.

I’m sure the synergies are obvious to the corporate accountants, however, without any Telco explaining the payback calculations for their mobile data networks why should we believe that such high costs are justified? I do understand the need to achieve suitable returns on investment, however, I’m finding it difficult to stay excited about the 2006 range of Wi-Fi and GPS enabled mobile phone handsets when I imagine the ARPU our Australian Telcos are targeting to milk out of me.

My simplistic mental arithmetic tells me that a greater volume of users would potentially yield similar financial results and would eventuate as a result of more attractive market pricing. My key argument is that by significantly increasing your audience, you also create further opportunities for value-added services such as LBS. Many LBS concepts will require a reasonable concentration of users in a particular area to achieve their potential. In the current market, particularly in little old Australia, that is still a long way off.