OECD on international roaming rates

April 12th, 2010 at 9:00 am by David Farrar

The Dom Post reports:

“Unreasonably” high charges for using mobile phones and mobile broadband overseas could face the regulators’ axe under an proposal.

Mobile network owners pay hefty rates so their customers can use the networks of overseas carriers while travelling, and these fees are usually passed on to the customer.

A report by the Organisation for Economic Co-operation and Development proposes several ways to reduce global roaming charges – including regulation of wholesale access charges by governments around the world.

The report urges telcos to better educate customers about roaming charges so as to avoid “bill-shock”.

Wellington businesswoman Liz Price says she was horrified to discover she had been charged $3500 for two hours of internet use while on holiday in Australia.

The charges of $30 a MB are highway robbery, and represent massive profit margins.

Let’s say the cost of international bandwidth is US$1,500 a month for 1 Mb/second. That means it takes 8 seconds to get 1 MB of data, which is then charged to the customer at NZ$30.

US$1,500 a month is US$50 a day. That is a cost of US$2 an hour or NZ$3 an hour.

The cost per minute is 5c so the cost for that 8 seconds of bandwidth is basically NZ1c and you pay NZ$30 for it.

Now of course a pipe is not perfectly used at 100% capacity the entire time, but you get some idea of the massive over-charging in place for international roaming.

Tags: ,

14 Responses to “OECD on international roaming rates”

  1. krazykiwi (9,186 comments) says:

    Yes the rates are astronomical. I worked for a big telco a while back. Our IBT’s (‘International Business Travellers’) accounted for 1% of global connections, and 10% of global revenue. So these folks are seen as cash cows.

    Regulation isn’t that east though, because the high charges are levied by foreign carriers and billed back to the NZ-based IBT with the local carrier simply acting as a billing agency. When I was involved the roaming traffic in either direction between two countries was roughly the same, so carriers didn’t have any internal charging regime – they simply kept what they earned from their inbound IBT’s. We could regulate how much our local carriers charge back to visitors roaming here I guess, making NZ a fractionally cheaper country to visit while nailing local carrier’s mobile revenues.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. dime (10,089 comments) says:

    it just sucks. im super paranoid when overseas. having a blackberry helps, emails are compressed and i dont openattachments on it

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Pete George (23,677 comments) says:

    I’ve just been looking at roaming options for a trip next month – I’d have to get a new phone, and pay through the nose for any use. It’s better to buy a cheap phone when I get there.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. dime (10,089 comments) says:

    or just a pre paid sim card… unless youre using some steam driven piece of crap?

    if you do buy a phone, be careful as a lot are “locked”. not too hard to unlock em, but its a pain

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. krazykiwi (9,186 comments) says:

    Pete, I brougth a cheap 2Degrees handset recently. It accepts my Vodafone NZ SIM fine, so should also accept foreign pre-paid SIM for each country you travel in.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. Pete George (23,677 comments) says:

    Thanks kk, I checked 2Degrees and because they don’t cover some of the countries I’m going to I didn’t think they were worth it, I forgot about doing just the SIM.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Graeme Edgeler (3,289 comments) says:

    $30/MB is cheap for mobile data … we’re paying $1000+/MB to send text messages at 20c a pop.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. Nigel (517 comments) says:

    20c a txt for roaming ??, try 80c receive/send if you are the good ol USA.

    The telco’s are playing us for fools & it’s annoying, it just means you do stuff like use skype to send a txt back to NZ ( 8c Euro ) & for calls. A smarter play would be to actually encourage usage, instead they are encouraging people to buy sim cards at destinations & I don’t see how that is good for the telco back in NZ.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. krazykiwi (9,186 comments) says:

    $30/MB is cheap for mobile data … we’re paying $1000+/MB to send text messages at 20c a pop.

    Yeah that’s quite a rate isn’t it! The key thing is, of course, that many services have value-based pricing, while others have cost plus. To communicate and be connected is a basic human motivation so value-based pricing has worked well for the mobile carriers

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. brucehoult (200 comments) says:

    Your 1c per MB is at least an order of magnitude higher than ISP costs. I’ve been paying 0.15 c/MB as a TelstraClear domestic customer for about the last five years, so I’m sure their cost is a lot lower than that now. xNet sell to domestic customers at 0.1 c/MB.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. grumpy (270 comments) says:

    I have had the same experience with Vodafone in Australia. Vodafone NZ say “that’s the bill we got from Aus because you are not their custome”.
    Presumably the same thing happens the other way around!
    Vodafone NZ and AU charge their own customers around $NZ50 per month for 3GB but $30/MB under this rort.

    The thing is that Vodafone Global make a killing.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. insider (1,028 comments) says:

    kk nails it for me. 1% of the business want to wag the corporate dog. That number implies a premium to focus attention on it, otherwise why bother when you have a million other customers not wanting that? Many global companies have their own international telco agreements anyway that cover off regular global access.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. wreck1080 (3,956 comments) says:

    The local interconnect fee that the wireless telcos charge each other is a similar scam. The fee allows the telco to claim they are merely passing on charges from the other telco. Sounds fair enough, until you learn that there is a cosy little agreement between them to charge this. I’m surprised they are not prosecuted over this. It is not allowed in some other countries.

    And, if telecom / vodafone are so holy, then why do they sign a roaming agreement with other telcos to similarly over charge roamers? They’re like pigs in the trough.

    I always buy a prepaid sim when overseas. Eg, in Aussie recently, got a prepaid Sim with around 1 gig of data and some free calling for about $80 nzd.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. baudhead (1 comment) says:

    I have an iPhone with telecom global roaming. I recently flew to Brisbane and when I arrived I switched on my iPhone to check my emails. I had 2 new emails with no attachments in my inbox. When I got my bill from telecom they had charged me $263 for the ‘call’. How is that possible?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote