Through the fog... mobile tariffs

How much clarity is there for end users wanting more than voice?

Mobile operators love juicy business accounts where end users aren't always worrying about how much each service is costing. But consumers and SMEs can be more discerning. What sort of problems will that lead to, asks Quocirca senior analyst Dale Vile, as they increasingly use complex data and multimedia offerings? For the last decade mobile operators have succeeded in baffling customers with incomprehensible charges for something as simple as making a telephone call. Even the latest supposed 'no nonsense' tariffs can look pretty complex if you read the fine print. The bundles of free minutes sound simple enough and options for peak/off-peak usage and calling different networks are just about understandable. But it is often extremely hard to predict those extra charges that creep in as you move outside the realm of your free bundle. Once your free minutes are used up, for example, your price per minute can become very high, especially when connecting between networks. There is then the surprising number of exclusions from your free minutes along with extra premium rate charges for retrieving voicemail, calling directory enquiries, diverting calls and so on. Of course, the exclusions and additional charges depend on the type of contract or pre-pay tariff you opt for. And operators claim this is simple? Of course the operators know exactly what they are doing and why, the aim being to maximise returns from users unwittingly incurring the exceptional charges that sit behind the advertised offers. Some practices even border on the unethical, such as having a directory enquiries agent matter of factly offer to make a connection for you without warning that the call will be excluded from your free minutes and charged at a premium rate. Sure, this is explained on the website but users are tempted into making decisions spontaneously so concealing the high associated cost is no less than a confidence trick. Orange in the UK has been particularly guilty of such dubious practices in the past. By contrast, mobile data tariffs were uncharacteristically very straightforward when the early WAP offerings were introduced in 1990. A data call would cost you 10p per minute in the UK regardless of the time of day or the voice tariff you had signed up to. Spend five minutes surfing the mobile internet and you pay 50p. Crystal clear. The fog started descending with the advent of GPRS, which is an enhancement to the GSM voice networks that allows data to be sent around in packets, just like on the internet and private fixed networks. When new GPRS data services were rolled out, users had to switch from thinking in terms 'price per minute connected' to 'price per megabyte of data transferred'. Fine for techies but largely meaningless to the general population. How many megabytes could a subscriber expect to use in a month if all they wanted was to occasionally look up a football score, stock quote, train time or horoscope on their WAP phone? What if they hooked up their mobile phone to a PC and started using it as a GPRS modem for full web browsing and email synchronisation? The trouble was that no one could confidently translate activity to megabytes in the early days, not even the operators and high street mobile phone retailers. Subscribers therefore found it difficult to make decisions when operators started offering deals based on pre-paying for a certain number of megabytes per month. Did they need 1Mb, 5Mb, 15Mb, more? Today, the situation with mobile data charges is starting to become as foggy as voice tariffs. The introduction of services such as Vodafone live! and O2 Active has brought with it the ability to download games, access premium content and take advantage of multimedia messaging (notably picture messaging). The early 3G services also offer video calls, video streaming and the potential to download music. And there are different charging schemes for all of these services. In order to clear the fog we need to understand that there are three basic mechanisms used to charge for mobile services. The first is 'time-based', which is the most familiar as we simply pay by the minute for the time we are connected. This applies to voice calls and video calls and could in the future be applied to streaming media – movies, music and so on. The second mechanism is 'volume-based', the original GPRS charging approach in which we pay for the volume of data (the number of megabytes) sent or received. The third is 'event-based', which involves making a one-off fixed charge to complete a discrete action – sending a text or picture message, downloading or playing a game and so on. The event based approach is favoured as the basis for charging for operator-branded services targeted as consumers. With Vodafone live! in the UK, for example, you would pay 36p to send a picture message, 15p for an extra long text message, around £2.50 to download a ring tone and anywhere from £1 to £5 to download a game. Whether or not you think the level of these charges is reasonable, at least you can understand what you are getting for your money and make a judgement on value, which is the big advantage of event-based charging. Users need to beware, however, that volume based charging can still lurk behind the scenes in many cases so the old price per megabyte fees are being quietly clocked up for every game downloaded, picture message sent and so on. Just as with voice tariffs, the headline charges therefore do not always tell the complete story. It would be nice to say that this could be clarified with a quick call to customer services but unfortunately most call centre agents do not understand mobile data tariffs and we have found that three different calls can easily lead to three different (and incompatible) explanations from the same operator. It would be hoped that mobile data charges will settle down and become simple and straightforward as the services become established. Sadly, this will probably not be the case. As all of the other operators catch up with Vodafone, the range of services and content is likely to be similar from each. We will therefore be back to operators differentiating on bundles and offers, exactly as they do in the voice space. As usual, the only sure way of knowing how much you are being charged is to wait for the bill to drop on to the doormat and figure it out from there. **Quocirca is a leading, user-facing analyst house known for its focus on the 'big picture'. For a full summary of its activities see www.quocirca.com, or reach the company's founding directors by emailing quocirca@silicon.com. Also in this series: Through the fog… Management of utility IT Through the fog... How to buy content management software Through the fog... Getting your business processes finely tuned Through the fog... Better connecting users to technologies Through the fog... Better connecting users to technologies Through the fog... Predictive texting Through the fog... Business continuity and disaster recovery Through the Through the fog... Wireless email at work dilemmas Through the fog... Storage as a service Through the fog... Buying an application server Through the fog... Corporate content management Through the fog... Automated speech recognition Through the fog... Public Key Infrastructure Through the fog... Vendor-channel relationships Through the fog... What future photo messaging? For Quocirca's 'What's the fuss about...?' series for silicon.com, see this page And for their earlier 'Surviving the Recession' series, see this page.