STAND on the south side of the Peace Arch in Blaine, Washington, an old-fashioned monument to American-Canadian comity, and a mobile call placed within the United States costs nothing (with a monthly calling plan) to 10 cents per minute. Pass through border control and place that same call on the arch's north end, out of range of American antennas, and you pay through the nose. Try loading a web page and your eyes will bulge from their sockets.
As regular international travellers know all too well, foreign mobile operators maintain a precious fiction that their costs of placing calls, relaying text messages and other data are as much as a thousand times higher when they must collect the fees through a caller's home operator. Forget the fact that such charges are handled automatically by electronic clearing houses, and that mobile subscribers that qualify for such roaming already have established credit with the home carriers and thus reduce operators' credit risk. One European Union report put the actual costs to operators of routing international voice call at a piffling 25 euro cents or so, and often much less: double that of carrying a call domestically plus a few cents to cover carriers' settlement of fees among each other. Data, however, incurs no additional cost over domestic operations except for settlement fees.
The high cost of roaming was brought home to your correspondent before a brief family trip to Vancouver, a few hours from Seattle. In planning the trip, he and Mrs Babbage found excellent lodgings and charted out piles of potential activities for the kids, yet failed to consider connectivity until a day or so before departure. The hotel would have free Wi-Fi, but we had forgotten how much we rely on our smartphones as a walkie-talkie when we head off in different directions. The prices to keep the mobiles switched on proved appalling.
Our carrier, AT&T, offers pay-as-you-go calling for $0.79 per minute in Canada, and plain text messages (SMS) cost $0.50 to send and $0.20 to receive. One Canadian carrier, Rogers, charges a bit less than half that in a prepaid-plan. While high, these rates are not usurious. Still, AT&T pays substantially less wholesale (likely close to its own per-minute domestic rate), and has reciprocal agreements with Rogers and other Canadian carriers whose customers visit the United States. (AT&T does have a variety of subscription plans for frequent travellers that slash fees substantially, especially to Canada.)
Then there are the data rates. AT&T's standard rate for Canadian data roaming is 1.5 cents per kilobyte, or $15,000 per gigabyte. It is 25% higher ($19,500 per gigabyte) in the 130 or so other countries with which AT&T has roaming agreements. Those rates are a stark contrast to what AT&T and other American carriers charge domestically: $10-50 per gigabyte depending on the usage plan. (Even that is a large mark-up.) AT&T will slash the price considerably, to $150-250 per gigabyte for an extra $30-120 month subscription.
These voice, text and data rates seem particularly egredious since in most countries it is easy to buy a prepaid SIM card or rental phone, and pay something close to domestic rates for intra-country calling and data use. However, American carriers routinely lock phones so that SIMs from other carriers, foreign or domestic, cannot be used in the devices. This is pitched as insurance that the subsidised cost of a phone is recouped through subscription, even though subscribers remain on the hook for cancellation fees that cover the subsidy if a service plan is cut short.
The EU stepped in and capped roaming fees European operators may charge their customers. The latest tariffs went into effect in July, setting low rates for calls, texts and, for the first time, data fees. Data charges may not exceed €0.70 ($0.88) per MB, a quarter of what one would have expected to pay in 2007, though still a whopping €700 per gigabyte. (Some firms do offer cheaper flat roaming rates.) The cap is set to fall to 40 euro cents per megabyte in 2014. Whether such top-down price-setting is wise in the long run remains moot, but most European holiday-makers no doubt approve.
Your correspondent and his wife dutifully flipped switched their phones to "airplane mode" to disable the mobile radios before reaching the Canadian border, left the hotel's office number with relatives and basked in the luxury of not being able to reach for a phone while away from the hotel. Perhaps the extortionate fees are not all bad.
via Babbage http://www.economist.com/blogs/babbage/2012/08/mobile-roaming?fsrc=gn_ep
