Brislen on data roaming

October 31st, 2012 at 1:00 pm by David Farrar

Paul Brislen writes:

Roaming is one of those issues that makes most people despair of the telco sector. It seems so unfair and unjust and penalises customers for simply using their phones the way the telcos seemingly should want them to.

Yep – thansk to the outrageous data charges, I dump my NZ sim card and phone number when travelling overseas, and use local sims.

Firstly, let’s clarify a few points. Telcos should want you to use their services. They want to sign you up; they want you to give them money. They’re in business to make money and they do that by building products and services that you want.

What this means is my NZ telco gets no activity at all during that period I’m overseas.

The price for this is relatively low – the average 1GB offer for mobile devices in New Zealand is about $20-$30. I rang the Vodafone call centre and whined that my 1GB free add-on had disappeared and they reinstated it for me. That’s 1GB for free.

Travel to Sydney, however, and that all changes. That 1GB will set me back $500 and if that seems a bit steep for what is, after all, the same product. But take a moment to show your solidarity for Australians coming here. They’ll pay anything up to $20,000 for that 1GB of data.

I’m in Cambodia at the moment. If I used my phone in roaming mode it would cost me $30,000 per GB. I could but 1/6th of an X5 BMW for 1 GB of data!

Or I can get data for $3 a GB by using a local sim.  For US$20 I could get 10 GB of data – $300,000 of roaming charges.

In addition, when you look at the costings in the trans-Tasman ministerial review of all this, you’ll see that the price for data at a wholesale level is quite a bit less than you’d think. How much? Try about 35 cents/MB, which makes $20 seem a bit overly enthusiastic if you ask me.

There is no justification for data at the levels they are, except of course they are trying to profit maximise. Nothing wrong with that – but smart travellers know now to get local sim cards, and over time the telco prices will have to drop to sane levels.

The review has come up with a variety of options, ranging from that old “let’s keep a watching brief” chestnut right through to something the Europeans call “de-coupling” which, in effect, allows the roaming customer to keep their mobile number for voice and text but to buy data packs from a local provider. So, for example, you get off the plane in Sydney and stroll up to the telco booth of your choice and buy 1GB of Aussie data for the local price.

That would be great. The only hassle with using a local sim card is my normal number doesn’t work. In some ways that is a blessing, but it would be nice to be able to just keep your own sim card, but get your data locally.

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16 Responses to “Brislen on data roaming”

  1. Chthoniid (2,035 comments) says:

    but it would be nice to be able to just keep your own sim card, but get your data locally.

    Definitely, I don’t mind paying a reasonable premium on data to keep the convenience of being able to use my own sim card. But the premium that is being charged is astonishingly high.

    I’m not sure why there’s this reluctance to drop prices as it is easy to employ foreign sim cards- available at nearly every international airport- to escape the charges. I presume they’re making enough off naive travellers unaware of this ploy to forgo the revenues of others.

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  2. Reid (16,227 comments) says:

    except of course they are trying to profit maximise. Nothing wrong with that

    Well something is wrong because profit maximisation is supposed not to be possible by the free market competition mechanisms and yet we see outrageous charges for telco and interweb services, across the board, relative to overseas. So how come? It’s not supposed to happen, yet it has been happening here for twenty years now. Where’s the market been? And roaming charges are just one, admittedly egregious example, of that same phenomena.

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  3. Lloyd (125 comments) says:

    A friend just returned from China to a $17,000 bill from Telecom. Apparently his 3G iPad felt the need to download every possible update which might prove useful, as soon as he arrived there. Added a little extra cost to what was a 5-day visit!

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  4. RRM (9,776 comments) says:

    Brislen:
    Roaming is one of those issues that makes most people despair of the telco sector. It seems so unfair and unjust and penalises customers for simply using their phones the way the telcos seemingly should want them to.

    Firstly, let’s clarify a few points. Telcos should want you to use their services. They want to sign you up; they want you to give them money. They’re in business to make money and they do that by building products and services that you want.

    DPF:
    There is no justification for data roaming rates at the levels they are, except of course they are trying to profit maximise

    Its almost as though your NZ telco doesn’t want you to do data roaming through them, innit? ;-)

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  5. RF (1,370 comments) says:

    Lloyd.. 1.43pm. I have heard horror stories about $5000.00 roaming phone accounts. Yours tops those.

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  6. gazzmaniac (2,307 comments) says:

    RRM – that’s the logical conclusion. I couldn’t imagine why though, since they’d make a good markup on somebody else’s product just by being the middle man.

    Reid

    profit maximisation is supposed not to be possible by the free market competition mechanisms

    It is a free market. Nobody in their right mind would keep their home sim when traveling. Result – Telecom misses out on profit. There is a pretty good argument to be had that they could maximise their profit by setting reasonable roaming costs, so what they are doing now is actually poor business.

    It’s a pretty easy distortion to avoid, and it’s not like it’s not publicised any more.

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  7. projectman (207 comments) says:

    If you are going to Australia, dump your local Sim, as I now do, and buy one for about $2-$3 from Amaysim. Their current rate (on pre-pay) is AU$10 for 1 GB data, call rates are 6c per minute to NZ landlines and 15c per minute to NZ mobiles. There are several plans that may be better than this depending on how often you travel to Australia. Check out the full details at http://www.amaysim.com.au. On pre-pay, what you load does expire (30 days for data, 90 days for other) but that can be managed. Unfortunately, international roaming rates are poor just like everyone else.

    Sure beats Vodafone’s data rate of NZ 50c per MB that they are proud to trumpet.

    When in Europe recently for 7 weeks, I did not manage to find a decent local sim with good rates, so relied on free WiFi where available. Interestingly, in Munich I went in to McDonalds for a coffee and the free WiFi that they often provide – they would not provide it unless I could demonstrate that I had either a Munich phone number or a Bavarian phone number! Needless to say, coffee was obtained elsewhere (Coffee Fellows) which does provide free WiFi if you make a purchase.

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  8. tristanb (1,126 comments) says:

    I hate to think of the roaming bills that we pay for politicians’ internet connections.

    They’re not going to bother going to the 7-11 in Asia to buy a cheap simcard. They’re just going to carry on wasting as much of our money as they like – it’s not their money, what do they care?

    I always buy overseas sims whenever I travel (although I find it hardest in the US). I like having a completely new number that no-one knows, and being able to cheaply keep in touch with people I meet overseas. You feel more a part of the country if you have your own phone number.

    Nowadays, you’ve got to be careful not to switch your phone on when you land outside NZ. All sorts of things are downloaded/updated constantly – you don’t want to be paying the ridiculous fares for these.

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  9. RRM (9,776 comments) says:

    Gazza –

    I wonder if it’s just a lot of shagging around for them? Could there be endlessly changing prices from a plethora of overseas carriers that they would need to stay on top of at all times, and it’s not just worth their while doing all that for a few dollars here and there?

    I imagine that when your NZ phone downloads data from the mobile network in Singapore or Peru or wherever, there has to be some system there that records all that data use, and tracks down your phone account in your home country New Zealand, and then invoices NZ Telecom or NZ Vodafone for that data at… some rate. Plus a Pain In The Arse Fee for making them go through all that. It makes my head hurt just thinking about it…

    (I seem to remember in my yoof seeing an advert for global cellphone voice call roaming – “He’s in Australia at the moment but you can still call him on his GSM phone…” or something. Maybe roaming is just an established market expectation that they’re stuck with providing – albeit grudgingly – because they don’t want to be the first provider to stop offering it?)

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  10. Camryn (538 comments) says:

    At least NZ phones operate on common global standards and haven’t been programmed to work only with the provided SIM. My US network now sells some “global phones” but it only means you can roam at their rates with their SIM. Most of their phones don’t even have the GSM etc bands.

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  11. Reid (16,227 comments) says:

    I would assume RRM it’s just a regular standard reconciliation process. I would assume the providing network would pick up any external sim numbers as part of the user authorisation process, write them all to a file then bill the user’s provider company at the going rate. The provider company would I assume import the file of all their customer calls overseas and reconcile the invoices from the overseas provider networks. I doubt they’d have system-to-system interfaces and I doubt they use a clearing house model like the airlines do – there are too many players. But none of this is complicated, all of those details would be available from the sim card…

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  12. insider (1,028 comments) says:

    Paul is being a bit naive in his analysis given he was a top bod at Vodafone. Perhaps he is being politically forgetful? You may think it is hugely profitable but the volumes are not that great and you have to maintain a billing and international relationship infrastructure to fund it. Telecom’s business is in NZ not Vietnam. I’m not sure why telcos are expected to fund the lifestyles of the minority of travellers to other countries. Do you want them to enable you to do landline calls as well?

    THe cost of roaming has nothing to do with data costs in the country you are roaming to, as that may not be what they charge your NZ carrier. it is all about the risk to the home Telco that bills you of wearing the cost of setting up and being recompensed accurately for putting in place roaming arrangements and then refunding the cost of your calls to the foreign telco who has to support your phone use on their network. You’re paying for convenience, just like the premium you pay to park your car at a hotel or watch videos in room, or get food delivered.

    It would be much more useful to NZers if the focus was on getting the cost of local calls, texting and voicemail down. 20c to send a text or pick up a message, when the cost is microcents….Getting them down would be far more manageable, and far more people would benefit far more every day than the few who can afford to travel to random international destinations.

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  13. Audent (2 comments) says:

    Hi Insider, that really misses the point.

    When the government is going to have a look at an issue do you say “No, thanks. That rip off is huge but frankly doesn’t bother me so I’d rather you have a look at something else that’s already been regulated and has come down in price and now has competitive pressure on it instead”?

    The govts of NZ and Aus started a process and we’re simply joining in. The costs I quoted in that article come from the WIK report put together for the MED and its Aussie counterpart. You can read the report here: http://www.med.govt.nz/sectors-industries/technology-communication/pdf-docs-library/communications/mobile-phones/trans-tasman-roaming/TTR%20WIK%20Study.pdf and you’ll find the relevant section starting on page 54.

    The costs of providing the service at a wholesale level are measured in the cents per megabyte, yet we’re charged dollars per meg. Put another way, Vodafone’s new pricing, released after the report came out, hits $150 per GB of data. That’s great compared with the Aussies – it’s lousy compared with what it actually costs.

    We are much better off than the Aussies coming here, however. Telstra and others still charge $30,000/GB which is reprehensible. There is no justification for that.

    cheers

    Paul Brislen
    TUANZ

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  14. insider (1,028 comments) says:

    No I understand the point fine. You want the government to regulate for the convenience of you and a few others who choose to take your phones to other countries, for no other reason than you just don’t like the cost you are paying for being given that convenience, even though there are plenty of other cheaper options, like swapping a sim or getting a cheap local phone.

    This is playcentre politics – ‘i want i want i want’. Do you want the govt to also regulate your mini bar bills because you can’t be bothered jumping into the lift and going to the public bar in your hotel? Maybe the cost of your flights too?

    If you are going to take up expensive regulator time, at least lay out something more compelling than you can’t be bothered taking the battery cover off your mobile, because I woul rather they focus on stuff that delivers benefits for the 5.5m mobile users in this country rather than the 18,000 who visit Vietnam every year.

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  15. Dave Guerin (32 comments) says:

    Vodafone is getting better. I was texted in Paris that they had a $30 deal for $100 MB and $50 for $200MB. It could be cheaper but that’s getting into reasonable territory for convenient holiday email, FB, checking maps, etc. Not much use for work, but OK for personal use.

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  16. maringi (14 comments) says:

    Another example from my recent trip to the UK –
    Tesco data charges – 0.67c per meg. Vodafone $10 per meg.
    Yeah right.

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