Orange dreaming of a WAP Christmas

1999-10-26

UK mobile telephone operator Orange is to launch a Wireless Access Protocol service in November, ready for the Christmas rush. The up-front services will be basic, but given the general excitement about WAP this is unlikely to be the case for long.

The WAP forum was launched by Ericsson, Nokia, Motorola and Phone.com, with an aim to make information-based services more accessible to the mobile user. The forum now has nearly 200 members and is on the brink of real products, a number of which were demonstrated at Telecom 99 two weeks ago. Orange’s new service will be based around a WAP-enabled phone from Nokia, with initial information services including sport, news, weather and a business directory.

What is really, really interesting about the Orange service is the charging mechanism for services, or rather the planned charging mechanism. Initially, WAP data calls will be charged at less than the price of a voice call, however the plan is to cease charging for the connection and to start charging for the services themselves. Basic services will remain free, but according to Rory Maguire, Strategic Relations Manager for Orange (quoted on Excite UK), basic content would remain free but “premium content” would be charged.

This is fascinating stuff as not only does it turn the existing mobile phone charging model on its head, but it also flies in the face of other, wire-based Internet services, who already give away a great deal of what we might term “premium content.” Consider share prices, for example. It used to be the norm to charge Web users a subscription before they could access share prices. The model then changed, as this information was given away by portal sites (suchas Yahoo) as a way of luring custom towards other, advertised services. Money could still be made, however, from the share deal. Now, however, services are setting up which do not even charge a fee for the share deal, as it is reckoned that hedging the funds and bulk dealing is worth far more than the fifteen quid transaction fee. In other words, the tide is rising: whenever there is a higher level way of making money, the lower levels become given away. There is a caveat: as you move up through the levels, you need more information (and expertise) – in the share dealing example, the free trading is only open to “experienced traders.”

So – what we have is two rules:

Rule 1 – a service will be given for free as long as the supplier of the service stands to gain

Rule 2 – if the customer needs help, then such help is also a service, which must be paid for unless covered by Rule 1.

These two rules should come as no surprise as they are the twin pillars of retail pricing, understood and applied instinctively by customers and suppliers alike. If buying a car, for example, we do not expect to pay for the advice, guarantees and so on. If we buy a car from a trade outlet, we will be able to get the car more cheaply but at the expense of having less advice, expertise and guarantees to go on.

Orange may intend to charge for premium WAP services. Indeed, they are ideally placed to do so as they control both the data feeds and the billing mechanisms. However when doing so they should take the rules into account.

(First published 26 October 1999)