Subscribers lost when it comes to mobile roaming

mobile international roaming

Maybe you’ve read about it in the newspaper or maybe it happened to your neighbour. Or to Aunt Marion, or to the girl the next cubicle over at work. Or maybe even to you.

It’s all too common these days to arrive home after a vacation, rip open your cell phone bill – or, since this is the 21st century and all, log into your account online – and discover you’ve been dinged for hundreds, maybe thousands, of dollars worth of international roaming fees.

There’s even a name for it: bill shock.

Take the case of one Canadian traveler whose bill swelled to $2,290 after a short stint in Los Angeles. Then there’s the Ontario man who racked up charges of $17,150 during a trip to Russia, with his phone being disconnected by his provider only after the damage was done.

Worse yet, the story of the Vancouver woman who traveled to North Africa for two weeks in 2011. Her homecoming gift? A bill of $37,694, a figure high enough to make most of us faint.

A new study on international wireless roaming charges by the Public Interest Advocacy Centre (PIAC) is echoing the call to action consumers have made for years – to enact regulations requiring mobile carriers to notify users of roaming rates and put a cap on the pricey fees.

Though Canadians seem to be wising up to the high cost of international roaming – 16 per cent leave their phones at home when traveling abroad and 44 per cent keep it powered off, only turning it on for emergencies – many still don’t understand what it is, or why it costs so much.

Fifty-eight per cent of those surveyed by PIAC said billing related to international roaming charges is just too difficult to understand. And it appears most of the mobile companies are happy to keep it that way.

When you log onto the Internet on your phone outside your home country, it connects through a foreign operator’s network, which in turn routes the traffic through a transit service back to the domestic carrier. The two telecom carriers – and sometimes a few middlemen – will have wholesale rate arrangements. When you receive your monthly bill, the rates will include additional fees and transmitting costs, but will also be padded with a retail mark-up, ensuring your carrier makes a profit.

mobile roaming charges

So what is that mark-up? Are we being overcharged? The PIAC says it’s hard to tell since cost-specific information is not available in Canada. Even without hard numbers, the court of public opinion has made its judgement: Nine out of 10 people surveyed thought they were paying too much.

However, others elsewhere in the world have had more luck in getting to the bottom of the matter. A 2006 European Commission study found the average retail charge for a roamed call was approximately five times higher than actual wholesale cost. An Australian news outlet reported its domestic carriers often enjoy profit margins of 1,000 per cent on international roaming they charge to their customers.

North Americans appear to be at the top of the list when it comes to paying the highest fees for wireless roaming. Last year, an Organization for Economic Co-Operation and Development (OECD) study compared the rates. Canadians paid the most out of 34 countries examined, followed by the United States and Mexico in second and third place, respectively. Greek consumers paid the least. Whether on the high or low end, the issue appears to be endemic to every country, stated the OECD report.

It’s really no surprise nearly 90 per cent of Canadians report having received a bill with international roaming charges that cost more than they expected.

On the business side, a January 2012 study took a look at how Fortune 1000 companies were dealing with the roaming issue. Seventy per cent reported facing increased roaming costs, with 37 per cent spending $1,000 or more per user per month. Twelve per cent spend more than $3,500 per user per month. That’s probably why forty per cent of companies no longer allow their employees to use their wireless device while traveling.

Clearly a global issue, the only place where restrictions and regulations on wholesale and retail roaming fees exist is in the European Union. Carriers there are legally required to notify customers via text message when they are roaming and cut off access if a 50 Euro cap is exceeded. In Canada, it is voluntary for providers to notify through text message and some do it already, notifying a customer when they turn on their phone in a foreign locale, and warning them when they reach different levels of data consumption. The text notification practice is currently being implemented in the United States.

To clarify the rules of engagement for both consumers and service providers, PIAC has recommended the following:

– Consumers should receive text notification to remind them of data roaming rates when they arrive in another country.

– Providers should implement a monthly international roaming spending limit chosen by the subscriber or, if not selected, as a default amount.

– Consumers should be notified via text at least twice before their monthly international data usage reaches the cap.

– The Canadian Radio-Television and Telecommunications Commission (CRTC) should implement reporting requirements on international roaming for providers.

– The Canadian government should establish a policy to regulate framework for wholesale cost of roaming to ensure Canadians are given priority when visiting other countries.

“One the one hand, a price point is required where Canadian wireless providers are inclined to innovate in order to lower costs and continue their important contribution to the national economy,” states the PIAC report. “On the other hand, Canadian consumers should be operating their wireless devices in an environment where there are clear rules and indicators provided to them about their data usage.”