Wireless data may be heading for a pricing pit - WaterCove warns

by Guy Kewney | posted on 28 June 2002

It won't be good news for the mobile data user if there's no money in the business - but unless the operators grasp the idea of "flexible charging" they may not be able to make money, warns WaterCove's Dave Mancuso ...

Guy Kewney

With the evangelistic fervour of a true apostle, marketing director Dave Mancuso is on a mission to convert the world's mobile phone operators - and anybody else in the mobile data business - to the concept of providing multiple services at the same time on the same phone/PDA - but at different price rates.

Quoting a recent Analysys report on the potential size of the future market for mobile data, Mancuso emphasised the fact that there are good possibilities for the market - but also, the possibility of failure.

"The fact is that today's infrastructure can't differentiate between a high-rate data call, and a low-rate voice call," he said. "But streaming video has a different value to the user, from a picture postcard message. So the operator may want to bill them at a different rate; you may want to bill messaging on a volume basis, and streaming video on a value basis. And today, they can't do that, because of the way they are set up to handle data."

Today's mobile operators structure their networks to handle GPRS data in packets. A device called a GGSN (GPRS Gateway Support Node) fits into the network; and it takes data packets and sends them to the right spot. "You take the packet, switch it to its destination, route it, and send as many packets as possible," summarises Mancuso. But WaterCove believes it has found a way to handle the packet on a per-packet basis, from a variety of sources, and over a variety of wireless technologies - and at different prices.

Mancuso is selling expensive router boxes, and urgently needs the market to understand why this may be a better deal than the cheaper routers they are currently considering.

He has a good story to tell, too. The trouble is, some people may not understand it.

"We say GGSN routing is only one function required in order to roll out profitable data services. You have to route it, but you also have to hold it in state; fire up the session, know the subscriber profile, know where it is going, and then link back into the service core, the service enablement plane."

For example, it's no use getting a GPRS data packet which is a high-priority, high-quality-of-service item, and handling it at rock bottom rates just because the user happens to be connected on a low-tarrif connection at the time. If the operator wants to make money on these transactions, they need to be classified. "You have to be able to say: this one is a pre-paid call, and the user's credit needs to be metered down. But they may have multiple sessions going. They may have a high priority PDA based email session; but they also may be waiting on a simple phone query for the local cinema, or a train schedule enquiry. They simply won't accept your top rate for the local cinema call, merely because they happen to be doing email at the time. But if you, the operator, charge the lowest rate for the session, you're going to lose out badly on revenue for the high-rate session."

The danger, says Mancuso, is premature commoditisation. "If the operators can't get this flexibility of charging which our three-component mobile data service system provides, they will be able to compete only on price. It will be impossible for them to launch new services quickly - it takes over a year to roll out the software to support a new service, today, but they need to be able to do it in weeks, or even days. All they will have open to them, is to sell data at the lowest possible rate."

The Analysys report warns that the European mobile data services market could range in value from as high as E52 billion to as low as E28 billion. The lower forecast would be caused by slow adoption of data services by customers and lower retail and wholesale prices for services driven by regulatory intervention.

"This has nothing to do with whether WiFi networks and hot-spots compete with GSM networks doing GPRS, or whether 3G phones take over," insists Mancuso. "We're agnostic. We take packets, and monitor them."

His pitch: "We provide Mobile Data Service System, with three components. There is the WN 1200, which is an intelligent support node, similar to what exists in the GGSN today. It's carrier-class switching equipment, five nines reliability but with a great deal more intelligence than today's GGSN. On top of that, there's the Sentient Service Core, software based intelligence to allow that transport node to link back into the existing network infrastructure, where the service logic resides. And the Vigilon Network Management software platform is the third; a next generation management component, with dimensions beyond what exist today."

Today, he says, it's element based management that the GGSN does. In the future, it has not only got to manage multiple elements through the system, but also, has to manage the services that are being provided. Each session may contain a different billing structure, based on what the operator's customers are selling. "The operator has to have the flexibility to manage multiple sessions for that subscriber, and interact with it differently, and have to adjust charging - the level of complexity goes up. So we have to simplify the provisioning process. Each service is going to have multiple parameters."

I found it interesting; you'll find more details at WaterCove's web site.