August 21, 2002 4:00 AM PDT

Lowering the bar for wireless Web

High prices have dissuaded many consumers from accessing the Web via cell phones, but there are some indications that prices are falling.

Mobile phone carriers have sold phones and services for several years that allow subscribers to check sports scores or purchase merchandise online. But not many have. According to various estimates, fewer than two million of the nation's 140 million cell phone owners do any phone-based Web surfing.

Small monochrome screens and the clunky interfaces that make typing a Web address into a keypad challenging are partly to blame, but pricing has also been a deterrent. Carriers generally charge by the minute or by the amount of data that is downloaded, significant hang-ups for people used to all-you-can-eat Web access via their home and work PCs.

Now there are reasons to believe that the pricing structure could change, which could boost the number of mobile Web users.

Carriers such as Cingular Wireless have been selling unlimited e-mailing and Web surfing on popular BlackBerry pagers for about $40 a month. Earlier this year, Verizon Wireless introduced an "all you can eat" Web plan for $99 a month. Sprint PCS is now offering three months of unlimited downloading as an incentive to buy a Handspring Treo.

Later this year, T-Mobile will set a new low-price mark by selling a combination phone and data device called a Sidekick for about $200, less than half the cost of comparable devices. But what has also generated interest is the cost of using the device: Unlimited Web access, including e-mail and instant messaging, with 200 minutes of phone calling will run about $40 a month, according to sources.

"Competition is going to force all the carriers to eventually offer the same kind of plans," said Alan Reiter, president of an industry consulting company called Wireless Internet & Mobile Computing. "Carriers are being dragged into 'all you can eat,' kicking and screaming."

Although some industry sources say the move to one-priced wireless Web access may spread slowly, even a gradual shift could increase use and prompt companies to offer more content geared toward matchbook-sized screens. And better content could lead to more consumers finding a reason to surf while commuting and lying on the beach.

Online use, for example, was relatively modest in the 1980s and early '90s when providers charged flat rates as well as additional fees for access to particular content or when a certain amount of time was exceeded. In the mid-1990s scores of small Internet service providers began charging $15 to $25 per month for unlimited Web access.

America Online jumped on the bandwagon in 1996, a move that sharply increased its subscriber base.

The target customers for mobile services are people like Greg Kirsch, a lawyer and partner at Needle & Rosenberg in Atlanta. He's used the BlackBerry pager for about two years to read his e-mail on the go. Last week, he bought a Treo from Sprint and says he's enjoying the unlimited use of the Web on the device. But he wishes Sprint would permanently offer the plan after the three-month trial period.

"I'd definitely be interested in a permanent plan like that, assuming the price isn't too outrageous," he said. "If so, I'd probably dump my BlackBerry."

Analysts and industry sources agree that unlimited access for a set fee makes sense, to a degree. For consumers, it eliminates the worries about running out of time and paying additional fees to buy extra time or kilobits. It also offers what most American Net users are accustomed to: no limits.

Still, Reiter said carriers are reluctant--and with good reason. They can make more money charging by the download, and they have only limited spectrum available to sell both Web service and phone calls.

Some carriers, such as Cingular Wireless, limit the amount of spectrum used to transfer data such as e-mail to prevent jams in their networks. They prefer to reserve most of their wireless network for voice callers. After all, they make nearly all their revenue handling phone calls.

"Carriers are afraid, with some justification, that people are going to start downloading giant files if they don't have to pay on the metered basis," Reiter adds. Once they do, "there goes your network."

Most carriers have instead settled, for now, on the same kind of tiered-pricing plans that broadband providers are adopting, said Keith Waryas, an analyst with IDC.

DSL (digital subscriber line) companies sell access by how fast customers download items, with a faster network costing more money per month. In contrast, wireless carriers offer pricing based on the amount of data that is downloaded.

Covering the bases
The carriers themselves seem split on unlimited access.

Verizon Wireless and Sprint introduced "all you can eat" plans to complement their new telephone network services, but they also sell the more traditional by-the-kilobit service.

"For the foreseeable future, at least until there's critical mass in wireless data, we intend to continue to offer various ways of paying for data," Verizon Wireless spokesman Jim Gerace said.

Sources say T-Mobile will charge about $40 for unlimited Web time in September, but only if customers buy a specific device. The company will also keep its per-kilobyte plans, the sources said. A T-Mobile representative declined to comment.

AT&T Wireless offered an unlimited access plan when it was still selling subscriptions to its wireless Web service called "PocketNet." But the company changed gears when it began selling service on a new telephone network, spokeswoman Danielle Perry said. Its new "mMode" service charges by the download. Perry said the "all you can eat" model made sense for PocketNet because the wireless Web was still new. The goal was to "whet" the appetites of users, she said, but now that's not necessary.

"The rationale back then was that data was so brand new and this was the way to get people going," she said. "It eliminated all the hurdles of worrying about running out of minutes or bits. But now things have changed. Data use has matured."

Cingular Wireless has a high-speed Web network, but has so far chosen not to offer unlimited access. "We're still looking at (it) but just don't see the business model at this point," Cingular Wireless spokesman Ken Keatley said.

Though pricing is important, content also is key to adding more customers.

"Anything that enhances or promotes new data services is a good thing," Nokia spokesman Keith Nowak said. "But its got to be a little of everything. Good content is perhaps more important. You get all you can to eat, but you've got to have something good to eat." Because Web surfing can be less that filling, many carriers sell content such as games, photo messaging, screen savers or ring tones.

Motorola recently launched its "Get Your Moto" campaign, offering flashier phones and more data services such as text messaging. And Sir Richard Branson showed up wearing nothing but a phone costume recently to launch Virgin Mobile. The joint venture between Sprint and Virgin Group offers wireless Web services such as text messaging.

 

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