GPRS: The Next Big Thing?

VoicenData Bureau
New Update

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



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.


Tariffing Adopted by the Operators


Billing Business tariffs ( € )

BT Cellnet (UK)

Flat rate 70 for 50Mbit per month, 2.4 for each extra


Vodafone (UK)

Flat rate 23.70 for 5Mbit per month, 4.60 for each

extra Mbit

Vodafone (Germany)

Flat rate 10.9 per month includes 1MB of free data


Mobilkom (Austria)

Per minute 0.65 peak, 0.33 off-peak

EuroTel Praha (Czech Rep)

Per bit 0.01 per

kbit, no monthly charge

Europolitan (Sweden)

Flat rate  (introductory period) Either 15.7 per month, unlimited

access or 15.7 per Mbyte until Apr-01

Sonera (Finland)

Flat rate 17 per month, unlimited access until


Centertel (Poland)

Flat rate 27 for 50Mbit per month

Telefonica Moviles (Spain)

Per bit 0.02 per Kbit for low usage,

<0.01 per Kbit for over 10Mbit per month

NetCom (Norway)

Per bit 9.1 per month for 1Mbit, 3.05 for each extra


Telenor (Norway)

Per bit 0.01 per Kbit up to 1Mbit, 0.03 for each

extra Mbit

T-Mobil (Germany)

Per bit 0.1-0.35 for 10Kbit plus fixed monthly


Mannesmann Mobilfunk (Germany)

Flat rate 10 per month, up to 1Mbit

Time Wireless (Malaysia)

Per minute 0.015 per minute

Diax (Switzerland)

Per bit 4.9 euro per kbyte

Sonofon (Denmark)

Flat rate 40 per quarter, 2.70-3.30 for each extra



CSFB & operator Internet sites, *1MB roughly equates to a 90-page text



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


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



of Initial GPRS Traffic Generatiors

With any new service, it

is an important part of the business case to estimate what the

applications for that technology will be. We believe that the business

case for any network operator for GPRS is compelling, it confers a huge

increase in capability for a relatively small investment. The more popular

applications using GPRS are expected to be:

Ranking Application


  1. Corporate e-mail


  2. Internet e-mail GPRS

    or SMS

  3. Information services

    (qualitative GPRS)

  4. Job dispatch GPRS

  5. Remote LAN access


  6. File transfer GPRS

  7. Web browsing GPRS

  8. Still images GPRS

  9. Moving images GPRS

    or HSCSD

  10. Chat GPRS or SMS

  11. Home automation GPRS

  12. Document sharing or

    collaborative working GPRS

  13. Audio GPRS

The first of the

applications listed will be popular partly because they are widespread

over fixed telephone networks, but were previously not readily or fully

available over GSM networks. The Internet and e-mail are already in place

today, GPRS will allow them to be made fully wire-free and available

everywhere. The applications ranked further down the list, lack current

popularity in the fixed communications world and lack widespread

availability of specific software solutions.

Whilst these

applications are technically feasible or high-speed mobile data services,

such as GPRS, the volume of usage is dependent upon commercial factors,

such as pricing. It is expected that GPRS will incorporate volume-based

charging such that only the data sent will be charged for, paving the way

for widespread usage amongst customers with GPRS capable devices.

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