The costs of data roaming are far too high, and 'cannot be justified', mobile operator Three has told a Lords investigation into data roaming costs and 'bill shock'.
Different wholesale rates for data transfer across European operators push prices up for UK consumers, as UK operators charge based on the highest wholesale rate, Three UK head of public policy Julie Minns Three UK told the House of Lords EU sub-committee on the internal market on Monday.
"We don't believe these charges can be justified," said Minns. "The key is to do with wholesale charges."
Customers often face expensive charges for mobile data roaming, a situation that is exacerbated by relatively low-cost data charges at home. People suffer 'bill shock' or large, unexpected bills for foreign data use, after getting used to low-cost data in the UK. According to Ofcom, up to 1.4 million people in the UK have suffered mobile bill shock in the past six months.
Minns said that network operators needed to negotiate a wholesale rate with roaming partners, but that these rates differed according to the partner. Operators base the rates they charge consumers on the highest wholesale rate, leaving consumers with huge data roaming bills. "We need some certainty on the wholesale rate," said Minns.
Data costs in the UK are significantly lower than data-roaming costs abroad, which was reflected in usage patterns, Minns added. People tend to use far less data abroad due to charges.
Everything Everywhere, the combined companies of Orange and T-Mobile, put the case that data roaming costs were reasonable, and said prices were coming down over time.
"Mobile data is relatively new, and prices have come down quite dramatically," said Robyn Durie, Everything Everywhere director of regulatory affairs. "I don't think the charges are particularly high".
Durie argued that mobile data costs are higher than fixed line costs due to the costs of masts, spectrum, and transmitting the data through the internet "back to the country", said Durie.
Committee chair Baroness Detta O'Cathain asked Durie why T-Mobile and Orange charged different prices for data roaming. Durie replied that the two brands "were directed at slightly different markets".
Durie said that competition would bring the costs of data roaming down, and argued against price-capping through regulation, saying operators tend to charge prices close to the cap.
"We would like to see more competition in the market rather than price caps," said Durie.
"Competition is far more effective than price caps in bringing prices down."
Durie added that Everything Everywhere was looking at voluntarily notifying people when they were coming to a €50 limit for data abroad.
Ofcom is considering global price caps for data roaming to minimise 'bill shock', the regulator said on Thursday.