More competition needed to cut data roaming costs: OECD

The high cost of mobile data roaming has been heavily criticised, with Cell C CEO Lars Reichelt going so far as calling it a cartel.

Reichelt explained that even if they were to cut the amount they charge for other networks roaming their customers on Cell C, there was no guarantee that networks around the world would do the same for Cell C customers.

According to a new report by the Organisation for Economic Co-operation and Development (OECD), regulators and policy makers should boost competition among mobile telephone operators to cut the high prices being charged for international data roaming.

Analysis of pricing plans at 68 operators in the 34 OECD countries points to a strong case for new consumer protection and empowerment measures. “Current pricing levels indicate that there is, in general terms, either insufficient retail or wholesale competition,” the report said.

The OECD compared a variety of data roaming plans based on the amount of data users could send or receive when abroad. For 1 megabyte (MB) of data the average price by country across the OECD is USD 9.48 (based on purchasing power parity).

1 MB in one session – average price by country of origin of the traveller – USD PPP

The wide difference in prices, according to the report, can be explained by Greek mobile phone companies being charged less by wholesale operators than Canadian operators and passing those savings onto customers. It could also reflect greater competition in the Greek retail roaming market than in Canada, the OECD said.

Warn the user

More operators should put in place simple measures, such as sending an SMS to users when they travel abroad or setting up a “cut-off limit” based on price or amount of data used, said the OECD.

In Europe mobile operators have been obliged since March 2010, under the terms of the European Union Roaming Regulation, to give customers information on pricing when they connect to a data network for the first time.

“Opponents to this measure, especially from the mobile industry, have argued this obligation places an excessive burden and cost on operators,” the report says. “While the implementation of consumer protection measures is not cost free, the data roaming cut-off limit has been successful in providing protection against bill-shock. It will certainly assist in avoiding situations in which users incur a several-thousand dollar bill when returning from foreign travel.”

Wholesale data roaming charges have been regulated in the European Union but retail roaming services have so far been exempt from price regulation, the OECD said.

While retail and wholesale prices have fallen over the past few years in Europe, the gap between retail and wholesale prices has widened, highlighting “a possible lack of effective competition in this market.”