All the rage about roaming

26 Apr 2006

The European Commission has decided to slash, if not actually eliminate, roaming charges. In response the world's GSM operators - all of whom make a living from publicly-owned spectrum - stood up as one to denounce the evils of government interference in business.

While Unwired is wary of urging further rules on the mobile industry, there is nothing about roaming that delivers genuine competitive choice.

On the contrary, operators have for years benefited from the technological mystification that goes with roaming. Most mobile users have no idea how to switch networks. Those who do know don't bother unless they wish to carry around current comparative price lists (3 Hong Kong's roaming price table is 36 pages).

Where you have players in a market with inadequate information, you have a market failure. It is in the case of market failures that regulators have the right to intervene. That doesn't mean they should, mind you, but they do have the right to bring about outcomes that the market on its own cannot.

In a paper produced in response to the EC's consultation, the GSMA's protests are just a little too loud and more than a little unconvincing.

When it thunders that the EC has not provided 'any evidence of why or whether there should be regulation of international roaming,' you really wonder what universe its members live in. Unwired's straw poll of the Wireless Asia office on mobile roaming fees office elicited responses that ranged from mocking to sarcasm to visceral anger. That's not scientific, sure, but it's certainly representative. Unwired challenges the GSMA to produce anyone who has not had roaming sticker shock after a trip abroad.

Much of the GSMA's argument is unhelpful to its cause. When it claims that roaming prices from key EU operators fell 8% last year, this merely underlines just how high the charges are. (The EC notes that some major operators, like 02, have actually hiked charges by one euro a minute.) Likewise when it asserts that operators are improving the 'simplicity, transparency and value' of their roaming services, it is admitting these problems exist, yet specifics on actual improvements are thin on the ground.

How much‾

The one thing the association doesn't do is attempt to compare its prices with regular domestic call charges or IDD charges. Why is it that mobile operators charge as little as 3 cents for IDD, but more than $1.50 for roaming calls‾

Access charge, backhaul, international part, wholesale, roaming clearing house, termination: how much can it all really cost‾

Let's take a Singapore-Hong Kong example. Being city-states with penetration of 100% or more, they must be the two best destinations in the world to roam to. In Hong Kong, Hutchison 3 users pay as little as HK28 cents (US 3.5 cents) for international calls. Roaming to Singapore, they can choose incoming rates of between HK$8.65 and $8.83 a minute from the three operators - that's all of a 2% difference, paying more than $1 a minute.

Calls to Hong Kong range from HK$6.68 to HK$8.10 whether peak or off-peak. You can halve that to HK$4.32 by choosing M1 and using a dedicated prefix. How many users know that, one wonders‾

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