Mobile Data Roaming Rates Drop, But Confusion Follows

When the European Commission put into effect, on 1 July, a cap on data roaming charges, many hailed it as a win for the consumer leading into the August holiday season.

"This is the definite end of the roaming rip off in Europe," said EU Telecoms Commissioner Viviane Reding in April, when a vote passed the European Parliament. "The new roaming rules were agreed in the record time of just 7 months, just in time for the summer holidays. European citizens will now be able to see the single market without borders on their phone bills."

In practicality, the new roaming rules are a reaction against egregious abuses in roaming data charges.

"I had a nasty experience in 2002 when I came to Spain for the first time from the UK," said Dom Robinson, CEO of Global-MIX. "I had a PDA that was capable of packet billed data access. In the UK it was expensive, something like £1/MB. However I took it on holiday, ensuring I turned off the auto connect, and only checked my email twice. At the end of the month I got a bill including over £300 of data charges. Apparently it was, on that particular interconnect, £21/MB."

Under the new rules, UK mobile users should see their text message fees, when roaming abroad on the Continent, drop by almost two-thirds, from €0.28 to €0.11 per message. And mobile data charges are capped at a cost of €1/MB instead of the astronomical rates charged before.

Unfortunately, even with the new rules in place, and in part due to the complexity of roaming agreements, the €1/MB rate cap might not be as advertised. Take, for instance, the basic instructions on a data roaming package recently introduced by Orange Romania.

"Travel Data Start is a new option that includes 2MB for data traffic in the European Union and Switzerland," the company's press release noted back on 30 June, noting that a €2 activation fee was required. "The customers’ advantage continues even after they finish the included traffic, as the data traffic outside the bundle is €2/MB, half the value of the standard data tariff in roaming. The option is available both for subscription and for Orange PrePay customers."

Let's dissect the marketing speak: Buy a bundle for a €2 activation fee, and pay €2/MB, a 50 per cent discount from the €4/MB rate. Wait, what about the €1/MB noted in the European Commission's proposal? Turns out the €1/MB is a wholesale rate, and Orange customers who frequently travel have to buy higher data rate plans to get to or below the €1/MB rate.

"Customers who travel to the European Union and access roaming internet frequently have a 25% discount on the activation fee for Orange Travel Data Monthly options," the release further states, "with the tariffs being this way discounted up to €0.75/MB. Thus, subscription Orange customers can choose the Travel Data Monthly plan with 10 MB, 25 MB or 60 MB for €15, €30 and €45 per month, respectively."

So even with these drops in data roaming prices, customers are expected to think ahead and buy packages for use outside their home country. An article that appeared in the "Sur In English" paper in Malaga, Spain, tells the story of surprised local mobile phone customers returning from August holidays in England and France, only to find a "souvenir" of their travel abroad, in the form of massive data billing. One customer, a school teacher, left his phone on "automatic connect" and found that mistake cost him more than €400 over a 16-day holiday.

At these types of rates, what will be the likelihood that, for instance, of a UK mobile smartphone user traveling within the EU will access streaming to watch football or rubgy matches whilst abroad?

The initial consensus is very little impact will be felt until all-inclusive data packages begin to be expanded to cover data roaming.

""By charging exorbitant rates for mobile broadband, mobile operators are effectively blocking innovative mobile service business cases," says Stef van der Ziel, CEO of Jet Stream BV and StreamZilla. "As an example, if a traveling European mobile subscriber would watch just the 8 o' clock news video on his mobile phone every night, the data roaming bill will be a whopping €3000 per month. To get mobile broadband services accepted by consumers, the consumer mobile traffic price should drop far below 1 cent per MB."

"I only manage to pull streams for a few minutes before they become unreachable for 24 hours," says Robinson. "This gives me an indication that while some streaming is allowed, long-standing sessions (long in minutes or 'long' GB transfers) are time limited by the network operators so that the interconnects between the mobile networks IP and the 'rest of the internet' don't become too expensive for them too quickly. After all experts in roaming billing are not going to 'give the internet away' if they can charge for it."

In the United States, the move to drop below 1 cent per MB is fully under way. AT&T Wireless, the exclusive provider of the iPhone, has required iPhone users to purchase an unlimited data device plan for $30 per month, and has just announced that all new smartphone users on the AT&T network must also purchase a data plan, based on the company's intent to wipe out billing "surprises" for its data customers.

Even on a government level, innovation in mobile broadband is being taken to new levels. The newly-appointed Chairman of the Federal Communications Commission (FCC), is tackling the issue of mobile broadband penetration and mobile device computing.

"At times the Commission has gotten it right, and at times it has gotten it wrong," said FCC Chairman Julius Genachowski, last Friday, when announcing a Notice of Inquiry (NOI) into mobile broadband innovation, competition and investment.

"The purpose of initiating today’s inquiry is to make sure that we get it right as we move into the brave new world of wireless broadband. . . . Our digital era allows for greater collaboration, rapid iteration, and faster times to market. These trends have affected innovation at large companies, some of which are responsible for truly impressive recent innovations. And these trends have also created a new generation of innovators, working with new tools, on new platforms, and having an extraordinary impact on our economy and society. This is great news for the communications marketplace and for communications consumers. It is essential that the Commission come to grips with this new world, take seriously the new opportunities and the new challenges, and be relentless about developing policies that maximize and accelerate innovation and investment."

With the US FCC's Chairman actively stating his joint goals of innovation and investment as critical to the US becoming the leader in broadband mobile innovation, what is the next step for Reding's EU Telecoms group to assure the EU's lead in mobile broadband not be squandered?

While Reding's approach is highly commendable, as it has forced the European Union's communications closer toward a one-entity model that the United States has enjoyed for years, the next step may come as upcoming analog television transmission termination frees up much-needed low-frequency spectrum. The US FCC is moving to accelerate spectrum re-allocation as a way to foster true mobile broadband innovation at an affordable price, and Reding will get her chance to do the same in about two years' time. With the added bonus of influencing the move to 4G, including Long Term Evolution and WiMAX, as a way to bring data service pricing in line with phone and text pricing, we may yet get to the point where mobile streaming innovation will flourish in Europe.