Cellular9.05.2013

An inconvenient truth about high data roaming rates

By Staff Writer

High mobile data roaming prices are a global problem, with numerous international travellers receiving a massive bill from their mobile operator when they return home.

International roaming rates have become such a high profile issue that the European Commission (EC) had to step in to lower roaming charges in the European Union (EU).

The International Telecommunications Union (ITU) also got involved in 2012, urging regulators and policy makers to “introduce regulatory interventions on international mobile roaming service tariffs for the benefit of users”.

Possible interventions suggested by the ITU included a range of regulatory measures such as usage alerts, bill caps, tariff caps and pre-selection.

It is not surprising that international bodies had to get involved to lower roaming prices. Leaving it to the mobile operators has not resulted in much action.

South African operators and high international data roaming prices

When asked why South African mobile users have to pay well over R100 per MB (equating to over R100,000 per GB) to use data in many countries, the mobile operators point the finger of blame at international operators.

They said that they merely pass on to their subscribers the bill which they receive from their roaming partners.

But there is a flip side to this coin. Why does Vodacom, MTN, and Cell C then charge many foreigners well over R100 per MB when they use their networks in South Africa?

Telstra (Australia) customers, for example, pay R142.73 per MB when using Vodacom, MTN, or Cell C’s network. Orange UK customers pay R111.60 per MB on Vodacom and MTN’s networks, and AT&T customers have to fork out R178 per MB.

Considering that South Africans pay R2 per MB for data without a bundle, it is somewhere between 5,500% and 8,900% more expensive for foreigners to use data in SA than for local consumers.

The truth about mobile roaming data prices

International roaming involves unique costs such as IOTs (Inter Operator Tariffs), which is the wholesale cost an operator must pay to a foreign network for its customers to roam. The IOT roaming cost accounts for a large part of the overall cost of roaming.

Other costs to operators include financial clearing house, data clearing house, signalling, Global Roaming Exchange, roaming traffic management tool costs, and various other costs which must be considered in providing a roaming service.

However, the IOT roaming costs is where operators coin it. Mobile operators typically have very high IOT rates, which mean that travellers get nailed for using data when roaming internationally.

The long and short of it is that mobile operators make easy money from international travellers by charging high IOT roaming rates, and there may not be enough incentive for them to change the status quo.

Vodacom, Cell C explain

Nomsa Thusi

Vodacom spokesperson Nomsa Thusi explained that they negotiate bilateral agreements with foreign networks to ensure that their customers benefit from discounted pricing. However, in some cases they are not able to come to an agreement on bilateral discounts.

“In the examples provided [in this article], we do offer these networks discounted pricing but it’s up to them to decide what they charge their customers,” said Thusi.

“Some networks probably include us in a zone with countries or networks that have high rates – something that is entirely out of our control.”

Karin Fourie

Cell C spokesperson Karin Fourie said that roaming agreements are commercial in nature and therefore confidential.

“However, Cell C can confirm that the amounts it charge the respective operators [listed in the article] are well under the rates quoted,” said Fourie.

Sethunya Mbete, MTN’s GM for carrier services, said that MTN has in the past twelve months reduced it’s inter operator discounts with International Operators where it has preferred partnership agreements.

“However, a foreign operator may not receive the same kind of pricing from other SA operators, which can increase their blended retail rate for SA as a destination,” said Mbete.

“MTN would like to advise that there are other additional costs to providing a roaming service which are beyond the inter operator charges and these include exchange rate fluctuations, roaming traffic provided for and or roaming rates that occur on an operator basis.”

Mbete said that in the last 12 months MTN has reduced its blended retail rate for the UK from R110/MB to R14/MB and R10/MB for the MTN operators in the SADC region.

“MTN is committed to continued negotiations with other inter operator costs to reduce retail roaming rates in other destinations,” said Mbete.