Wireless Broadband too cheap?

Wireless Broadband is too cheap, Ericsson CTO Håkan Eriksson (left)  states in a recent news article in the Swedish engineering newspaper Ny Teknik. Ericsson states that customers could be willing to pay more that the 150 -200 SEK ( 25-30USD) they currently pay for a monthly subscription that until a few month ago used to be true flat rate, unlimited consumption. Other operatives from major operators concur.  Eriksson believes that the addiction to mobile broadband access, once you have tried it, is so strong that the willingsness to pay exceeds current price levels. A Ny Teknik survey amongs readers, maybe not surprisingly, shows the opposite: 3 out of 4 think that current prices is just acceptable or already to high

Operators  indeed have a dilemma as the addiction drives the demand so such an extent that operators face difficulties in deploying base stations at a sufficient rate. Although, production cost are declining (Eriksson claims 1 USD /GByte – in urban areas one may suspect), they still remain roughly proportional to the user experience (the instantaneous data rate supplied). Meeting the demand with more capacity and reliable  Mbit/s+ access  still requires significant new investments in an era of financial turmoil and uncertainty.  So operators currently need to proceed with caution. The “flat rate genie” is already out of the bottle and making too sharp maneuvers in pricing may scare users off or make them change their habits.

In the long run, production costs have to come done even more, at least in urban areas. Where mobility is needed, users may be will to pay a premium for access.  In dense area, where its more a matter of conveniance and competition in providing access will be fierce, prices will eventually need to get close to the production cost of fixed broadband access.

Jens Zander

About Jens Zander

Professor Jens Zander is professor in Radio Communication Systems at the Royal Institute of Technology, Stockholm, Sweden. He has been among the few in Swedens Ny Teknik magazine's annual list of influential people in ICT that have been given the epithet “Mobile Guru”. He is one of the leading researchers in mobile communication and is the Scientific director of the industry/academia collaboration center Wireless@KTH. His research group focuses on three main areas – the efficient and scalable use of the radio frequency spectrum, economic aspects of mobile systems and application and energy efficiency in future wireless infrastructures.
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