Reverse the charges

There is no need for mobile phone companies to be reasonable when setting roaming rates, an arbitrator has found. But is 'buyer beware' the best slogan for wireless data?

The decision that Orange is within its rights to charge what it likes for data roaming is not welcome. In effect, the arbitrator said, the company could not be expected to know what its customers would regard as unreasonable and so had no particular duty to make the roaming rate plain. The information's on the Web site. That's enough.

This is balderdash. As the unfortunate user said, he expected to pay a premium of perhaps as much as four or five times the normal rate — not a hundred times more. Orange, of course, is unrepentant: that's the market rate, it says.

The arbitration ruling is wrong on every count. Orange knows full well that its customers will find the rates unreasonable, as everyone with a data card is also a user of wired international broadband. We all know that moving a packet of data from Adelaide to Aberdeen costs no more than moving it from Croydon to Chelsea — and while we also know that mobile phone companies use termination costs to mutually and massively overcharge for international services, we do expect them to have some shame.

That's an unwarranted expectation, apparently. As the arbitration says, there's no obligation on mobile phone companies to adopt business ethics or show integrity. You can always move to a different one, it continues — but oddly, fails to mention that they all charge enormous rates for international data roaming.

You'll note that no operator pretends that its charges are in any way related to the costs to it of providing the service, with one exception — we have to charge this much, operators claim, because that's how much the other operators charge us in termination costs. That comes perilously close to an admission of cartel pricing.

Ofcom says that it isn't in the business of over-regulating a developing market. You don't need to be John Maynard Keynes to spot that the market isn't going to develop while it's being used to extract money from hapless businesses and guard against the growth of mobile VoIP services. And while Orange has promised new roaming rates as part of a bundled Wi-Fi/3G/GPRS deal, there is no sign that these will properly reflect the true cost of service provision.

There is an unanswerable case for Ofcom and its counterparts in other countries to move swiftly to end this rip-off. The whole affair stinks, and the stench is stifling innovation and market growth — that's one charge that deserves to stick.