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SAN FRANCISCO -- At the JavaOne developer conference here this week, wireless operators and mobile software infrastructure vendors are unveiling so-called value-based pricing schemes on their packet data networks as an alternative to charging users per kilobyte of downloaded data.

The prime example of value-based pricing is in Europe, where carriers charge 10 cents per SMS message. With the rise of J2ME applications that are small enough to reside on the cell phone, however, the problem has become how to charge users who are not connected to the network and who access an application only locally on the handset.

Sprint and others seem to have overcome the problem of charging for offline use. Sprint calls its solution BOBO (billing on behalf of others) and is currently testing this and various other pricing schemes, said Nancy Sherrer, a Sprint spokesperson based in Overland Park, Kansas. Sprint will offer value-based pricing schemes with its applications in the second half of this year when it launches its third-generation network, Sherrer said.

By placing a counter in each application--even if a user is playing a game on the handset while flying coast to coast, or if a salesperson is checking an SFA application for an address offline--Sprint can charge for usage.

"Think of it as gong to an arcade and paying 25 cents for a game. It's the same experience," Sherrer said.

Subscriptions or Sales Possible

Other pricing models Sprint is considering include subscriptions and outright sale of the application.

"Users will be able to go to a Sprint portal and download J2ME applications," noted Sherrer.

Tira Wireless, a publisher of J2ME applications, is currently working with operators in the United States and Europe to deploy applications that have a usage counter built in.

"We can help the carrier bill by action or item. The next time the user connects to the network, the counter tells the carrier how many times the application was accessed and for how long," said Tony Davis, CEO of Tira Wireless in Toronto.

Tira Wireless offers itself as an intermediary that sits between the carrier and developers. For carriers that sign up, Tira tests and guarantees the quality of the application; it also provides call center support and software infrastructure to create unique ways for operators to bill for applications--even when they are only used locally. At the same time, Tira Wireless offers developers a point of entry to the major carriers to have their products seen and tested.

Intermediary Handles Billing

Tira Wireless occupies a new business space, according to one industry analyst.

"A one-man shop with a Java application can't negotiate with the carriers. On the other side, there is a need for quality assurance. A middleman that has the relationship with the carrier to handle billing and other components is what's needed, but in the CDMA market that niche may be filled by Qualcomm," said David Hayden, CEO of MobileWeek in Palo Alto, California.

Eventually, Sun Microsystems will also have to play some role in getting carriers and developers together, Hayden added. "At present, Sun is not offering an effective way to get its Java developers before the carriers," he said.

Nextel has its own J2ME site with about 60 downloadable applications, according to Karen Lien Miller, a spokesperson for Nextel in Itasca, Illinois. But Nextel charges either by outright purchase or on a subscription basis.

The problem facing carriers, Tira Wireless's Davis said, is that charging for raw data or per minute doesn't work.

"The user has no way of tracking how much data they downloaded, and at the end of the month they may be hit with a huge bill," Davis said.

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