Roaming: the $110,000 per GB question

Roaming: the $110,000 per GB question

Summary: Be careful, or your mobile bill from your next overseas trip could end up costing more than your airfare. International roaming charges remain one of the last bastions of telco bastardy — but is there any way to fix them?

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I can't recall many times when a company has specifically advised me to not use one of its products, but that's exactly what happened when I was organising mobile roaming for a week-long trip to the US last year.

Even for a tier-one destination like the US — to and from which fixed-line and Skype calls are pennies per minute — international roaming charges were so high that the Optus representative I spoke with warned me to make sure I had turned off data roaming capabilities on my phone before I left Australia. Since this apparently didn't even always work, he also suggested I ring Optus before leaving to ensure it had disabled data services from its end. It may be the de rigueur practice for regular travellers, but this seemed comparable to having the electricity company advise I have my house disconnected from the power grid while away because unplugging my heaters wasn't guaranteed to turn them off.

Fortunately, disabling the data roaming apparently worked as expected: the rate in my bill is for domestic usage over the course of the rest of the month. Yet regular SMSes back to Australia, and a few phone calls, added over $300 to my mobile bill within a week. Yep, there it is: $302.60 for 124 minutes of roaming call charges, which works out to $2.44 per minute. The $57.20 for 104 SMSes is a not entirely unreasonable $0.55 each, although sceptics will note this represents a 150 per cent premium over the normal domestic rate of $0.22 per SMS.

Seriously? $110,000 per gigabyte? When the company charges us less than $20 per GB domestically? The only conclusion we can reach is that telcos do not want their customers using roaming services.

I should hardly be surprised: although it costs $0.29 per minute to ring a US phone while in Australia, Optus' roaming rates card tells us it costs $1.65 per minute for an Australian to ring a number in the US, while in the US. When someone calls you and you're in the US, you pay $1.45 per minute. To call back to Australia or any other country, you'll pay $3.50 per minute.

Had I gone to China, Israel, Portugal, Saudi Arabia or around 50 other countries, those rates would increase to $2.10, $1.80 and $6.60 per minute. Yet anecdotal evidence suggests you don't have to travel that far for the costs to rack up: visiting New Zealand telecommunications executive Paul Brislen recently copped a cringe-worthy $1800 bill after just three days in which he continued to use his mobile as usual while in Australia. New Zealand may effectively be Australia's ninth state, but as far as telco pricing is concerned it might as well be Greenland.

And these figures, remember, are without data turned on. Had I been so demanding as to actually check my email whilst out of Wi-Fi range, I would have been paying $0.02 per kilobyte, charged in 10KB increments. That works out to $20 per MB or $20,000 per GB of data — and, of course, thanks to incremental charging, I could theoretically be charged $20,000 by transferring 100,000 1KB blocks of data — 100MB — by using very chatty mobile applications.

If you're on a prepaid cap, you'll pay even more: up to $6.60 per 60KB ($0.11 per KB or $110 per MB or $110,000 per GB).

Seriously? $110,000 per gigabyte? When the company charges less than $20 per GB domestically? In what universe does this seem OK?

The only conclusion we can reach is that telcos do not actually want their customers using roaming services. Extortionate pricing hurts them as much as it hurts us: happy customers are good customers, but customers that feel they're being ripped off tend to tie up phone customer service reps for hours on end, hurling abuse and undoubtedly contributing to the early and frequent attrition that plagues the call-centre industry. And, in the end, telcos often end up forgiving the charges just to get customers to stop calling them.

Counting the cost?

It's one thing to complain about the ridiculous cost of roaming, but another thing entirely to do something about it. Yet despite some promising signs of telco proactivity and ministerial intervention on both sides of the Tasman, can anything really be done about this rorting?

One wonders whether the latest indictment of our roaming regime — an OECD report confirming just how badly our roaming rates compare with those in other countries — will be enough to spur the carriers into action.

One also wonders how much of this is the fault of Telstra, Optus and Vodafone, and how much blame lies in their inability to negotiate decent volume-based pricing with overseas carriers. After all, if I can call someone in the US from my Optus mobile for $0.29 per minute but receiving a call in the US costs $1.45 per minute, that extra $1.16 per minute is going somewhere.

That said, US travellers coming here have comparable rates: US$1.69 per minute, US$0.50 per SMS and US$0.0195 per KB for AT&T customers, for example. That sort of equivalent two-way pricing implies that the $1.16 per minute extra may well be split evenly between the carriers — and suggests that the bulk of roaming charges is indeed nothing but fat.

To its credit, Optus has addressed the problem — sort of — with its participation in the Asia-Pacific Bridge Alliance program. This is an agreement between mobile operators in 11 countries, including Optus parent SingTel, that they will only screw international travellers to the tune of $0.015 per KB for data roaming, rather than $0.02 per KB. And for this, you pay at least $40 per month.

If the Bridge Alliance can give me a day of roaming downloads — up to 4.3GB in a 24-hour period, optimistically assuming a 512Kbps service — for US$12, why is Optus charging its own customers up to $473,000 for the same amount of data?

Here's the curious part: if you prefer, you can get a SIM direct from the Bridge Alliance (it'll mail you one from Singapore for US$15) and then pay US$12 per day for unlimited data roaming across Asia. That may sound like a lot, but for a week-long business trip you'll weigh in at under $100 for as much data as you like.

This is far more reasonable, but it also reveals just how much our telcos are overcharging us. If the Bridge Alliance can give me a day of roaming downloads — up to 4.3GB in a 24-hour period, optimistically assuming a 512Kbps service — for US$12, why is Optus charging its own customers up to $473,000 for the same amount of data?

I am aware of recent reports suggesting Optus is the worst of our mobile carriers when it comes to roaming pricing, and certainly hope it will come to realise that the way to get people to use a service is not to price it so high they will do anything to avoid using it. Vodafone trialled low-cost trans-Tasman roaming with little consequence late last year, and there is some encouraging news out today as Telecom NZ has apparently brokered a deal with Telstra that has pushed trans-Tasman rates down to as low as $1 per MB for heavy usage.

It's a start, but there is a long way to go. Just as SMS usage took off once it became possible to send messages to people on other networks, global roaming could easily become what it should be — a premium but affordable product to provide convenience for overseas travellers. Unfortunately, carriers continue to cling to archaic data measurement systems that do nothing but trap uninformed customers into bills that will probably be refunded anyway. Wary customers will simply make alternative arrangements while shaking their heads at the absurdity of it all.

What's the worst roaming bill you ever received? Should travellers just be expected to become smarter about their mobiles? Or can we pressure carriers towards more realistic pricing? And how much is global roaming worth, anyway?

Topics: Telcos, Mobility, Travel Tech, Optus, Telstra, New Zealand

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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10 comments
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  • I thought I would use my smartphone to find cheap accommodation in NZ and used maps to find the hotels. I probably saved $200. My roaming bill for the 43MB I used was $860; and I never dreamed it would be anything like this. I tried to find out online what roaming charges I should have been charged. Nowhere on the Optus site could I find the info (I don't think the others are any better). I kicked up a stink and wrote to their customer service (get it in writing!), eventually threatening to submit a written complaint to the Ombudsman. I was happy to settle for half or less. I don't know what I said, but they ended up refunding 100%. Success! - But could I guarantee that happening again? ALWAYS buy a cheap pre-paid SIM in the airport when you arrive. It's stupid, because the mobile operators are shooting themselves in the feet!
    therring-11fa3
  • Given that the overseas networks charge the Australian networks similar data roaming fees to what the AU networks charge the OS networks, is there a case for a cartel legal claim (similar to the airlines freight charges a few years ago)?
    goldcoastguy
  • Hah! you dont even need to go roaming. Im on a pension and despite putting in a TIO complaint last Feb that still hasn't been resolved, yesterday I got a nice courteous email saying that I had somehow downloaded 23GB of data on the wireless modem they supplied to try to fix my problem and that I now had a bill on the way for $56,490.24 excl GST. Then they had the nerve to say "Have a great day"!
    clarky
  • Even local SMSs at 22c is a rip-off for such a small amount of data, notwithstanding it is almost realtime. It is a legacy of telcos carving up the raw trunk data into artificial categories (voice, SMS, etc) and pretending that each needs its own pricing.

    0.1c is probably closer to the real price. Why the ACCC has challenged the telco cartels over this, I don't know!
    Patanjali
  • This is the exact reason that my sim card has now been permanently removed from my brand new $200 Optus prepaid mobile phone. And you do not need to go overseas for these pathetic charges. Just as well it also has gps built in, or I would be looking for one of their representatives to make a depository in that play that never receives any sunshine.....
    zothen
    • Out of curiosity, how do you use your mobile without a SIM? Are you a fully VoIP-on-WiFi person?
      braue
  • A 160byte SMS at 22c = $1.4M/GB

    And people think SMS prices here are OK.

    An Indian guy at work told me that SMSs in India are equal to less than 1/100th of a cent.
    Patanjali
  • Look at it this way from the point of the telco.

    Calculate how much it cost to negotiate with 3rd paty telcos, implement and maintain roaming capability. Divide that amount by the number of customers (or minutes/SMS/data) that will actually be utilized (very few customers). Thats how much 'surcharge' you need to add to your standard network utilization charges.
    AndersonL-e0a14
    • Most certainly; I suspect overseas carriers are as complicit in this as any local carrier. I read the Optus guy's statement as an apology for a situation over which they had no control. Yet you wonder why it's been so hard to do anything about it – surely even massive US telcos realise it's better to have happy customers that are ready to pay a bit more for convenience, than incensed customers that contest every charge and see telcos as devils incarnate. Or, at least, you'd think.
      braue
  • AndersonL - the carriers need to be transparent about their pricing arrangements, only once they tell us what their buy rate is will I accept (subject to the numbers) their crying poor argument.

    However I think its unlikely; I know for a fact that a 2Gbps akamai port is only $2k a month. Considering that iTunes, Sony, facebook and Microsoft and many other companies use akamai for their, a carrier with a 2gbps port will have terabytes of billable traffic going over this service.

    I cannot not tell you how many times a month we bill a customer several thousands bucks worth of usage that was derived from this port. When I have made the argument that we should move customers to cheaper, more effective usage plans, I am given the economist argument that it would take years to earn the same margin from those users, compared to their old plans.

    ISPs and Telco's don't give a crap about customers. They really don't. Its about the money and how much effort is required i.e. if its a lot of effort then we'll right off the excess.

    A certain organisation in Sydney recently had a massive spike on their bill. The rationale as to why we're writing it off; we don't want to be on Today Tonight.

    But god help it if it was just a normal punter. you'd be up **** creek then, despite the fact that we make 1000% on your account (on excess usage alone) for that month.

    What is really required to make change across the industry is if everyone who receives excess charges, regardless of whether its domestic or international, raises a bill dispute.

    Per communication alliance code a Provider has 5 working days to give a confirmation of the dispute and an indication as to when it will reply. Failure to do so allows you to raise immediately to the TIO. If 100,000 customers who were billed excess charges in the last month raised a bill dispute to their provider the billing teams of those companies would be swamped. If on the next month another 100,000 raise disputes, imagine the chaos. The TIO $20 for a lvl 1, plus the spiralling costs from there, would force the providers to make the economical decision to simply provide unlimited roaming access plans (with fair use policies) then to continue receiving so many disputes (and therefore costs).

    This is something GetUp needs to campaign on.
    chugs@...