GPRS: The Next Big Thing?

About 120 operators worldwide have purchased GPRS systems, and
over eighty networks have already been launched commercially. India is also
joining the league with BPL Mobile, the cellular service provider in Mumbai,
ramping up for a full scale launch within a few weeks. Players like Bharti and
Escotel are in the process of building out GPRS network.

While GPRS is the first and the most significant step towards
the third-generation (3G) networks and personal multimedia, offering numerous
advantages to the customer through the much-touted ‘always-on’ connectivity,
it still remains an uncertain market, in which no one can predict which
strategies could win. Though it has been almost years since GPRS was rolled out
in the European markets, nobody knows how the market will play out. But there is
no dispute regarding the fact that operators who acquire a modern,
service-oriented reputation through GPRS, will be in the best position to
harness the potential of 3G services. More than just preparing a testing ground
for 3G services, GPRS throws open a slew of opportunities for the operators. The
most notable among them being the new revenue streams. "With the voice
tariff rates going down substantially, the Average Revenue Per User (ARPU) is
also getting affected adversely. To shore up the sagging fortunes, adequate
value addition has to be brought to the customer. One of the ways is to compel
the value-added services supported by appealing content and applications. GPRS
provides the right technology platform to launch various content and
applications, and makes it available at right speeds to the user", says Ved
Prakash Singh, vice president, technical, Birla AT&T Communications.

Are We Ready Yet?

Though experts caution that one should not expect a wide
range of GPRS-specific applications, there are some services which will enable
it to drive revenue for the operators. "With GPRS, it is possible to
provide access to secure sites, which means that corporate intranet access is
possible for the executives on move. Other possible services would be e-mail,
intranet pages, database access and web-centric business applications",
points out Ripudaman Lamba, business manager, Nokia Networks.

WAP over GPRS is another application which is going to be
immensely popular for information and entertainment, believes VK Sethi, chief
technical officer, BPL Mobile. He points out that WAP has failed due to the lack of high-speed medium, and

GPRS might be just what the doctor ordered.

The potential for such services and products may be vast. But
is there a business case for GPRS in India, which is yet to see significant
penetration levels? Puneet Chopra, senior consultant with Pricewaterhouse
Coopers, says "The Indian cellular operators have been conservative in
rolling out GPRS, as they do not expect an overwhelming response. Nevertheless,
to exhibit technological leadership and to enable the early adopters to
experiment, they are gradually introducing the services on a small scale".

The timing is right and the opportunity is huge, believes
Pramod Saxena, country head, Motorola India. "The low Internet penetration
presents the Indian operators an opportunity to make the Internet experience for
the user wireless as against wireline. What they need to do before they launch
GPRS services is to clearly identify the target audience and understand them
completely".

Though the target audience in question is undoubtedly the
enterprise segment, many remain doubtful of the business benefits of mobile
data. Existing subscribers who form the most potential target base, do not see
any compelling value-proposition to migrate to GPRS. Another factor is
investment protection, as GPRS subscribers would need an altogether new handset,
currently priced very high, quips Puneet Chopra, adding that early adopters’
fraction would be small and applications would not drive initial penetration.

This is reflected in the fact that BPL Mobile targets only
10,000 subscribers in the first phase, including both corporate and consumer
market. "Apart from providing enhanced data services to our subscribers, we
want to leverage our strength in content development and ISP, to develop
applications", says BP Singh, chief operating officer, BPL Mobile.

Handsets Dilemma

While opinions are firm on the fact that the launch strategy
of the Indian operators should hinge around the

enterprise market initially, there is one factor about which they can do a
little–availability of handsets in significant volume and their prohibitive
cost.

However, the implementation strategy they adopt can influence the penetration
rates and volume, eventually bringing the prices down, according to Chopra. From the cellular operators
perspective, a good strategy would be to work as a forum along with the potential application providers like banks, FIs, ASPs, entertainment and media
industry, to showcase potential applications, keeping price-lines attractive, to
build a critical subscriber mass which could sustain other business models later.

Pramod Saxena advocates two options: either own the pipe or
own the end-to-end user experience. "If they own the pipe then they have to
try and be the best pipe in the country, and let the application providers own
the content. In this case, they would let content or application providers take
the majority of the revenue from data usage and keep a minor commission. This is
something that NTT DoCoMo has done well".

On the other hand, if they choose to own the entire end-user
experience then it is imperative to ensure that they have a wide array of local
content or applications, and appropriate middleware available. In this scenario,
the entire revenue from the data will flow directly to the operator, he adds.

However, targeting at quick returns or adopting competitive
positions, would be a wise thing to do, feels Puneet Chopra. The focus should be
on awareness building and on evolving sustainable applications with attractive
value-proposition. It would also be wise to start off with minimal investments,
given the fact that GPRS is not capital intensive and largely needs software
upgrades.

How and What to Bill?

With the implementation of GPRS, there are a wide range of
issues that operators would need to address. The prominent among them is
tariffing and billing. GPRS enables operators to implement various charging
models. The simplest is a flat-rate charge, which BPL Mobile is planning to do
initially. Charging different packets at different rates can make things
complicated for the user, while flat rates favor heavy users more than the
occasional ones, says Saxena. Motorola believes that the optimal GPRS pricing
model will be based on two variable models–time and packet. Network operators
should levy a nominal per packet charge during peak times, plus a flat rate, no
per packet charge during non-peak times. Time- and packet-related charging will
encourage applications, such as remote monitoring, meter reading and chat, to
use GPRS overnight when spare network capacity is available.

Adds Lamba "Initially, it is expected that operators
will introduce volume and transaction-based billing. As the market matures and
experience is gained of the right charging models for different types of
services and customers, then the scale of any changes needed to the existing
infrastructure can be much more accurately gauged.

Next comes charging for packet-based services. Compared to
voice, GPRS will provide an enormous amount of charging data. GPRS
specifications stipulate the minimum charging information that must be collected
in the stage 1 service description. These include destination and source
addresses, usage of radio interface, usage of external packet data networks,
usage of the packet data protocol addresses, and usage of general GPRS resources
and location of the mobile station. Today’s billing systems have difficulties
in handling charging for today’s voice services. It is unlikely that
circuit-switched billing systems will be able to process a large number of new
variables created by GPRS.

"The billing model would need to factor in that the cost
of measuring packets may turn out to be greater than their value. Upgrades to
the gateway and serving GPRS support nodes (CGSN, SGSN) for storing packet
information and forwarding it to the billing system, would also be
necessary", says Chopra.

He also points out that carriers will start facing a
bandwidth crunch, as GPRS uses the existing time-slots of GSM bearer to increase
bandwidth per channel. The allocated spectrum of 6.25 MHz bandwidth per circle
is adequate for nearly one million GSM subscribers. In the metros, this spectrum
is near exhaustion and would force them to look for spectrum for GPRS services.

Key to Future Markets

Indeed, GPRS holds many promises for the operators. Forrester
Research says it could prove to be a good technology like HTML or VHS, which
have been behind the success of the Internet and home-video recording. But to
capitalize on this opportunity, the operators must learn from the pitfalls of
previous WAP roll-outs. Market services, and not technology, emphasize the
ease-of-use to the end-customers, quips Lamba. This is the time for the Indian
operators to concentrate on building GPRS services, promoting SMS-based usage
and educate the customers on the new GPRS handsets. Nobody knows for sure what
is the key to success to compete in the emerging GPRS market. Nothing has been
proved, the outlook is uncertain. Hence, operators can only react instinctively
instead of committing to a long-term strategy.

MT Jeevan