Mobile Bill Woes

Surprise, Denial, Anger, Bargaining are all stages we go through when experiencing tragic loss.  I go through all these feelings once a month, when I see my mobile phone bill.

I have a flat-rate contract which includes more minutes then I will ever use and an unlimited data plan.  The tariff isn’t cheap but it’s within my budget and the service is very good.  So, as long as I stay within the borders of Germany this flat-rate applies.  No problem.

My job requires me to travel extensively which means roaming charges and that turns an acceptable mobile phone bill into a nightmare.  Roaming charges make up around 80-90% of the amount of my monthly bill and frequent conversations with other frequent business travelers confirm that it’s a widespread issue.

This issue isn’t new, the EU Parliament has been passing legislation to relieve customers from excessive roaming charges.  In order to strengthen the idea of a single EU market Since, the European Commission has imposed a roaming cap in 2007 that is currently being argued in the European Courts.  The EU’s goal is to have a “Euro Tariff” for all services at a flat rate anywhere within the EU.

To show some sort of goodwill, Carriers have been implementing their own roaming protections, price-cuts or caps.  The mobile bill I get each month tells me that this is the same-old, tried-and-tested gouging with a “feel-good” name something like “Smart Traveller”.  Here is a side-by-side comparison for calls within the EU:

Legacy Standard Tariff

• Call connection charge – €0.25
• Average Per minute roaming charge – €0.59
• Average 3 minute call costs – €2.02

Smart Taveller Tariff

• Call connection charge – €0.75
• Per minute roaming charge – €0.39
• Average 3 minute call costs – €1.92

As anyone can plainly see after spending a lot of money in legislation, lawyers, meetings, etc.  We now have a whopping 5% drop in our average call costs.  Furthermore, any calls under 3 minutes cost more than the old tariff and any calls over 60 minutes have a completely different per-minute cost structure.

In other parts of the world roaming charges have become less of an issue.  In Asia Pacific Region (APAC) the competition for customers is so fierce that prices have fallen dramatically and in North America most carriers have a flat rate plan for all of North America, from Canada, to Mexico to the Caribbean.

So where is the international flat-rate for Europe?  It’s geographically smaller than North America and more densely populated so instituting a flat-rate is a no brainer.  After years of searching I have found that It doesn’t exist because of a little known thing called “Inter-Carrier Call Termination Fees”

When a call is made while roaming at least 2 different carriers are involved.  The handoff point between these two carriers is where per-subscriber usage is tabulated and the roaming charges are applied and these appear on financial statements as “The Inter Carrier Call Termination Fees”.  These fees are responsible for up to 15% of a Mobile Carriers revenue.

This is high-margin business for mobile carriers for a few reasons:

1. 1.  Inter Carrier Call Termination Fees are in addition to Roaming fees, although better hidden on the bill
2. 2.  Roaming and other fees are imposed even if the subscriber is on the same network as the home country network.  i.e. Vodafone Germany and Vodafone UK are considered foreign network to each other.
3. 3.  When a call is routed between two countries on the same carrier(i.e. Vodafone/O2 or T-Mobile) their own infrastructure is used;  Meaning that there is no cost to the carrier if the call stays on the same network.

International Flat-rate in the EU is long, long overdue and the first company to offer it would see a massive subscriber growth of high-value customers.  Personally I would be willing to pay €500 per month if I knew that no matter where I was in the EU a flat-rate would apply.

Let us know if you’ve had issues with “Bill shock” by commenting below!

Tagged as: European Market, Mobile, Regulatory