No defence for roaming charges

The GSM Association wants you to believe that making things cheaper will cost you more. That's not the way a free market works, even in telecommunications

After months of criticism from irate subscribers, pressure groups, the European Union and even ourselves, the mobile industry has been forced to address the issue of mobile roaming rates.

However, anyone who thought that the days of roaming rip-offs were over is in for a shock. Instead, the GSM Association has worked out that if operators are forced to cut overseas roaming rates then they'll have to raise domestic prices to make up the shortfall, or even ban roaming completely.

It's tempting to conclude that these calculations were made on the back of a beer mat at the end of an extended session. It's certainly hard to imagine anyone keeping a straight face when they argue that: "Yes, we could make things cheaper, but then users would have to pay more for their service."

The reality is that mobile roaming rates are a scandal, and more and more people are waking up to this fact. It simply isn't fair or justifiable to charge five, 10 or even 40 times as much when someone uses their mobile phone abroad than at home. The technology being used is the same, and the cost of moving the data that extra distance is barely measurable. Imagine if the Internet was run on that basis — yet it uses identical infrastructure.

Mobile operators appear keen to justify these rip-offs on the grounds that users should be grateful for the opportunity to use a mobile phone abroad. This is a specious argument. Supply and demand should work together to bring prices down to an affordable level. A situation where market forces don't or can't operate stinks of cartel rules.

The European Commission wants mobile phone calls within the EU to cost the same whether the user is at home or abroad. Technically, this is impeccable. Politically as well as commercially, it could be the savviest move the mobile operators could make — if they want to keep the market at all.

While operators lobby politicians with spurious reports, more innovative rivals are stealing a march. Just ask BT, which must look back nostalgically to the 1980s when it could charge more than £4 for an hour-long local call. Twenty years later, that call costs you 5.5p at most, and even BT acknowledges that zero is on its way. Competition and technology have won low costs for all — and this at the same time as international landline rates are collapsing. If costs across the board have fallen in this sector, why should the mobile world be any different?

Voice over IP (VoIP) is the death knell for the argument that telcos can charge the earth for long-distance calls. Once VoIP-enabled Wi-Fi phones hit the market, eye-watering roaming rates will seem as bizarre and old-fashioned as the Window Tax of 1696.

Understandably, the mobile industry has come to love its roaming rates. But the days of feathering its nest at the expense of its customers are over. If it can't find a better argument than "making things cheaper will cost you more" then it should cut its rates today, before the competition authorities are attracted by the stench.