OECD call for more competition and regulation to curb huge roaming costs

The price of international data roaming is too high and regulators and policy makers should step in to boost competition according to a new report by the OECD.

The price of international data roaming is too high and regulators and policy makers should step in to boost competition according to a new report by the OECD (pdf). The report looked at charges for mobile phone and laptop use while abroad, made by 68 operators throughout the 34 countries in the OECD area.

It found that “data roaming prices are very high compared to domestic rates in the country of origin”. The average price per MB of data, (the equivalent of sending ten photos) is “between 6 US dollars (USD) and 10 USD, if the average price in the country of origin of the traveller, across OECD countries, is considered”.

The report goes on to say:

“If the least expensive destination for a given country of origin is selected, the average price drops from USD 6 to USD 2.5, which is still several times more expensive than comparable domestic use.”

The report is complimentary of EU actions to deal with this issue highlighting action taken that could be used throughout the OECD area. It suggests that:

“There is a strong case for the implementation of measures that seek to empower or protect consumers, as data roamers can be exposed to the phenomenon of so called ‘bill-shock’.”

Examples of such measure include “sending an SMS to users when they travel abroad or setting up a “cut-off limit” based on price or amount of data used”.

The OECD point out that the “European Union Roaming Regulation is the most widely known and most comprehensive example of regulatory intervention in international mobile roaming services”. The regulations have been amended and expanded since implementation in 2007. As things stand the EU has tried to strike a balance between operator costs and consumer interests, with price regulation of wholesale roaming combined with transparency of unregulated retail costs:

“Wholesale data roaming charges have been regulated in the European Union and the European Economic Area, while retail roaming services have, so far, been exempted from price regulation but are subject to transparency and bill control measures.

“Both retail and wholesale prices have declined in Europe, with average wholesale rates around half of the regulated average cap. Nevertheless, the retail margin has widened, which highlights a possible lack of effective competition in this market.”

It also admits there has been an increase in implementing similar consumer safe-guards as the EU have introduced across OECD areas.

The report concludes:

“Nonetheless, a sound cost-benefit assessment, in order to evaluate different options and ensure an effective implementation, should be undertaken. The measure most likely to have success is to find ways to increase the effectiveness of competition in the market.

“Current pricing levels indicate that there is, in general terms, either insufficient retail or wholesale competition.”

Introducing measures to support extra competition could prevent a wasted opportunity both for users and operators, as customers are deterred from taking their phones and laptops abroad or only using it in emergency, thus denying the operators what could be, if fairly priced, an excellent source of revenue.

The real time transference of data both retail and wholesale, has changed how we do business and interact. Through excessive charges and lack of competition operators would effectively restrain the expansion of this market. Further evidence that bad capitalism hurts capitalism at large.

And as we all know “bill-shock” is no laughing matter. As a reminder of this we leave you below with this (slightly dated) cautionary tale from a friend. Luckily for him, his hair was already grey:

A cautionary tale about 3G phone ‘data roaming’

“Great story this, with thankfully a happy ending. Before going on holiday to South Africa I called up Orange and told them I wanted to use my phone for emails, keeping up to date with news etc but knew it could be expensive so wanted advice.

“With this in mind I got them to recommend the best data bundle to me to cover my typical monthly usage and after a £5 package was recommended I thought ‘how lovely’ and even did a text questionnaire for the call centre operative afterwards as I thought I’d received good customer service.

“Throughout the holiday I used my iPhone to keep up to date with the important things (the protracted Fernando Torres transfer saga, England v Australia cricket scores etc) but upon my return was greeted with a one month phone bill to the tune of…drum roll please… £2,924.34.

“As you can imagine, this left me somewhat vexed. However after several phone calls to Orange they have accepted culpability and blame for all of the costs incurred and acknowledged blame for giving me atrocious advice (The person who took the call didn’t understand the difference between megabytes and gigabytes silly eh?) and have even been credited £100 to my account as an apology.

“The fact I also told them I would go on a one man Rambo-esque PR mission to drag Orange’s name through the mud and threatened to go to the national papers with the story ‘Man spends more money browsing newspaper websites while in South Africa than on the rest of an entire holiday for three after receiving incorrect advice from Orange’ may also have played a factor in their thinking.

“Obviously this is something of a cautionary I was keen to share with people – and I would suggest making bloody sure you’ve got your story straight if a three grand mobile phone bill ever lands on your doormat!”

2 Responses to “OECD call for more competition and regulation to curb huge roaming costs”

  1. AltGovUK

    RT @leftfootfwd: OECD call for more competition and regulation to curb huge roaming costs: http://bit.ly/iLCbXW reports @dbr1981 #NewsClub

  2. mr. Sensible

    I can’t quite believe that a phone company would behave like this…

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