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Is the great foreign mobile phone rip-off about to end?

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Old 08-07-2007, 02:34 PM   #1
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Is the great foreign mobile phone rip-off about to end?

Is the great foreign mobile phone rip-off about to end?
By Nic Cicutti
April 17 2007
Quite a few years ago, I went on holiday to Egypt. Back then, I had only had my mobile phone for a short while and was not very knowledgeable about how much these things cost to use while abroad.
However, I did know that making a call from a foreign location was potentially very expensive. No problem, I thought, I’ll simply take incoming calls and speak to people who ring me rather than make them myself.
Big mistake. When the bill came in for that two-week holiday, it came to almost £200, of which one call alone – made by my partner to inquire about the welfare of our small puppy being looked after by another family member – was almost £45.
What we hadn’t realised was that so-called “roaming” charges, some of which can reach up to £2 a minute, apply not just to outbound calls but also incoming ones.
This scandal has lasted for years. Indeed, the European Commission, which has carried out a long investigation into the cost of mobile telephone calls across Europe, calculates that mobile operators concerned profit from this to the tune of around £5.7 billion a year.
This is an astonishing sum. And although the EU’s calculation applies not just to calls made to and from UK-originating telephones, but all European users, it is also the case that the costs for UK holidaymakers using mobiles abroad are among the highest in Europe, in some cases up to 50% more than users from other countries.
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EU acts to cut roaming charges
Luckily, the end of sky-high mobile phone bills for UK holidaymakers who make or receive calls abroad was in sight last week, as a key European Parliament committee agreed to push for legislation to reduce roaming charges.
The proposals could see the cost of roaming cut by as much as 70%. The vote is expected to go before the full European parliament in the next few weeks, with cuts in place by this summer, although they will still need to be approved by individual EU countries.
If approved, the cuts could bring to an end a situation where some people pay up to £8 for a four-minute call across Europe.
Read more about the EU’s decision on mobile roaming with MSN News
How much do we pay?
Of course, the key question for consumers is exactly how much we pay – or rather, how much we pay unnecessarily - for our right to use a phone while abroad.
Luckily for us, the EU, so often derided for its ineffectiveness and overweening bureaucracy, has done its homework on this issue.
What it found is that UK consumers can pay as much as £3.25 a minute to make a call using their mobiles in France or Italy and a number of other EU countries.
In some cases, making a call from, say, Malta, can cost as much as £5 a minute. This research by the EU was as of last September.
See the full results of the EU’s investigation into UK roaming charges
Receiving calls is almost as expensive: they range from about £1.25 a minute for Virgin, Orange and 3, to £3.50 for O2.
By contrast, an Italian user has a much-reduced number of mobile telephone suppliers: they charge between £1.75 and £2.60 a minute to for call to be made abroad. Receiving calls from abroad generally costs about £1.25 a minute.
A French mobile user pays between £2.70 and £3.50 a minute to make a call and between £1 and £2 a minute to receive a call.
See the EU’s investigation into roaming tariffs across Europe
How much does it cost the operators?
Mobile phone companies have always justified the charges they make because of the costs they face when routing calls on rival networks.
However, many operators, for example Orange and 3, are the same across several countries and roaming costs are high regardless of which country you come from or go to.
In effect, Orange in the UK may face a high cost from TIM, the Italian provider, for calls made by UK mobile phone owners in that country. But it then makes a bundle out of Italian mobile phone users when they want to call their loved ones from the UK – or receive calls from Italy.
In a report published in February by the European-wide consumer group BEUC, it cites recent technical analysis from the European Parliament which estimates that international roaming costs are between 10% and 30% higher than a national-only system.
The report, presented to the House of Lords a few weeks ago, concludes:
“From a pure cost perspective, roaming tariffs should not be more than 10% to 30% higher than domestic prices. A proxy of the costs to provide domestic telecom services is the Mobile Termination Rate (MTR).
“On average, the MTR in the EU is 13 eurocents (8.6p). Adding 30% for providing the service and an extravagant 50% margin for overheads, roaming charges above 16.9 p a minute can be considered as excessive from a cost perspective.”
In other words, consumers are paying up to 10 times more than the true cost of the service.
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What do consumers think?
The research here is mixed. On the one hand, the EU rightly points out that most consumers hate the excessive costs of roaming.
On the other, despite the high prices paid, SimplySwitch, a price comparison service, says its own survey shows three quarters of UK mobile phone owners don’t know how much they currently pay for making or receiving calls abroad.
Why should charges come down?
Quote apart from the fact that they are a blatant rip-off, the EU parliament rightly argues that high charges for using a mobile phone while abroad stifle competition and business development.
It is not just holidaymakers, in other words, who are ripped off, but people who may need to use their phones for genuine business reasons.
What are the telephone companies doing?
Service providers have clearly been stung into doing something. They know that if they try to keep things as they are, they will incur the wrath of the EU parliament.
So, some UK operators have already announced cuts to charges.
For example, O2 allows its users to sign up to a “Chosen Country” for £5 a month, allowing them to receive calls while abroad there for free. Calls to the UK are charged at a flat rate of 25p per minute. This was initially launched for customers visiting Spain, but O2 is planning to add further countries.
Vodafone has introduced its "Passport" scheme, which allows subscribers to use inclusive minutes that come with their monthly plan, subject to a connection charge of 75p per call. Calls can also be received for a flat charge of up to 75p per call for the first 60 minutes, and a 20p charge applies after the first 60 minutes.
Meanwhile, 3 has launched "3 Like Home", allowing customers to make discounted calls back to the UK from its partner networks in countries including Austria, Australia, Denmark, Italy, Ireland, Hong Kong and Sweden. When visiting these countries, calls to the UK cost 20p a minute and incoming calls are free.
What else can you do?
If you think charges are excessive, even those above, there are a number of things you can do.
Consider purchasing a local country or global SIM card. This option is consistently cheaper than calling via one of the UK networks and could bring the cost of making a call from Europe down to just 22p per minute, with no charge to receive calls. Be aware that you may have to pay £35 or more for that local country SIM card, though, so it depends on how long you intend to be abroad and how often you use your phone.
Alternatively, find an internet café or consider taking your laptop with you to use Skype or Voice over IP (VoIP) services to make free calls over the internet.
Buy a calling card and use a local payphone to make calls home.
Either way, the cost of making calls from abroad with our mobiles is likely to fall dramatically in the coming months.
It would be nice to think that it will come this year, but even if it doesn’t, this summer will be the last time that I pay sky-high prices for the privilege of being told that my border collie appears to have gone off her food…
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