Will carriers stop the roaming rip-off?

Regulators and good business sense may finally compel operators to reduce roaming fees this year

Written by Ken Young

This is likely to be something of a crunch year for the mobile industry, but not for the reasons that the service providers would like us to think.

As ever, the providers will be shouting from the rooftops about 3G and wireless working, but the really crucial aspect of how much firms pay for using mobile networks – notably when roaming abroad – is something that they prefer not to talk about too much.

The reason? Both Ofcom and the European Union want them to make costs simpler to understand and, in the case of roaming, far cheaper. Last summer, the European commissioner for Information Society and Media, Viviane Reding, warned telecoms operators to do more to lower roaming charges. The statement fired a starting gun on investigations by regulators in member states and forced something of a rearguard action by operators.

You could imagine the internal memos flying round: “Memo to business development at Acne Mobilco: The EU has rumbled the roaming rip-off. Find a way of making our roaming charges look cheap without actually hitting the bottom line. Pronto.”

The result was “special” pricing plans such as Vodafone’s Passport tariff. They might have impressed the odd customer or two but they don’t seem to have convinced Ofcom.

Ofcom is about to publish a consumer guide that provides the kind of advice you might not expect from one of the nation’s regulators. It will tell consumers to think seriously about buying a new SIM card when travelling or staying abroad, to get cheaper calls. The other bit of advice it offers – use a landline.

OK, the advice isn’t aimed at corporates – who have more bargaining power – but it indicates a pretty dire situation. Roaming costs are too high and could well be damaging UK competitiveness.

But the reality is that neither the regulator nor the EU has the guts to take on the operators with any great force. The regulator, with its close links to government, carries the collective guilt of having made billions out of the operators when it sold them their 3G licences; meanwhile the EU has a legal bill heading into the stratosphere just dealing with Microsoft.

But this year pressure from hardware vendors may help operators to realise that if you want to get people to make more use of mobile devices you have to reduce the cost of using them.

As operators begin to spend less on subsidising hardware sales and more on delivering apps that people really want, there is the glimmer of hope that they will move away from a business model that keeps competition on pricing just a theoretical notion.

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Further reading

O2 acquisition raises roaming doubts

£17.7bn purchase by Telefónica creates market distortion   More...

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