Time to rethink data roaming

Paul Lambert/Informa Telecoms & Media
28 Sep 2011

European Commission regulation covering the region’s data roaming market is conceptually sound but ultimately out of step with the way roamers actually use data on their smartphones and, even more crucially when it comes to pricing, how smartphones interact with the network.

The EC regulation for wholesale data-roaming rates states that operators have to charge each other no more than €0.50 ($0.69) per megabyte of data consumed while traveling in the EU. This is intended to encourage operators to not just charge each other no more than €0.50 per megabyte of EU roaming data but to actually compete with each other below this ceiling so they can offer consumers per-megabyte rates that are lower than this. And this is in the hope that competition below the €0.50-wholesale-megabyte rate will lead more EU mobile users to access the mobile Internet while traveling in the region.

In effect, then, EC regulation guides operators to charge the device – the number of kilobytes it consumes – rather than actual usage; that is, the way people interact with their devices while traveling. On the face of it this sounds fair enough – you pay for what you use – but the reality is not that straightforward. Many smartphones, in particular those powered by the Android OS, consume data in the background by constantly interacting with the network to pull down data applications they need in order to stay up to date, even when they are not being accessed by the user.

This is much more of a crucial issue when people with these types of smartphones roam than when they are at home, because they are typically allowed to consume much less data while roaming than while in their home markets. The effect of charging the device rather than usage is that smartphone users can unwittingly consume data allowances much faster while abroad, leading to the perception that data roaming is still high. For example, Vodafone UK’s smartphone plans - which start at £26 ($41) a month - include 500MB of data for use in the UK, compared with £2 a day for 25MB while traveling in the EU on its special EC regulation opt-out rate, and £1 per megabyte for up to 5MB, then £5 for every 5MB after that on its standard rate.

Although, within the regulation, operators are free to price data in ways that are more in keeping with the way consumers use the mobile Internet, operators have proved reluctant to step out of the per-kilobyte framework. But until either the Commission or operators themselves better match data-roaming rates to the way people actually use the Internet on their mobile devices while traveling, usage will continue to lag behind its potential, with users turning off their devices’ data-roaming capabilities while traveling. Although operators are beginning to reduce the price of using data while abroad, they need to make more focused and aggressive changes to how they price data-roaming services.

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