The great mobile roaming rip-off - TechCentral

The great mobile roaming rip-off

hilton-tarrant-180It is borderline criminal for mobile operators to be charging as much as R500/MB¹ for data use while roaming in certain countries. It’s 2016!

The overarching problem with roaming, of course, is that there is a literal spider web of bilateral agreements between operators. There’s no central “clearing house” and there’s certainly no regional regulator anywhere else in the world like the European Commission (EC), which has successfully intervened in that market.

In a world where data access is now arguably significantly more important than SMS and voice, it’s these data tariffs that are the most meaningful. Regulation works. Data roaming is now 96% cheaper than it was in 2012, when the EC instituted its first retail price cap. And, the commission says, data volumes have soared by more than 100 times between 2008 and 2015.

The issue in Europe was particularly perverse as the same operator with networks across a number of countries would charge a distorted roaming fee as this was effectively the price the market would bear (not dissimilar to situations in other regions globally).

From June next year, roaming consumption in the EU will be deducted from a customer’s “domestic” allocation with no additional surcharge. In other words, if a customer from Germany with a 1GB balance uses 100MB while roaming in Spain, their balance will be 900MB (with zero additional fees – currently, operators deplete “domestic” bundles and are allowed to add a maximum of €0,05/MB in roaming charges).

In recent years, both Vodacom and MTN have reduced roaming fees across their African (or partner or Middle East) operations. But these remain higher than they should be.

MTN’s promotional rates on its networks in Nigeria, Ghana and Uganda (and Iran, for example) are currently R1/MB (to end-November), but its standard rate for these networks is R5/MB.

Given the quantum of overall service revenues enjoyed by operators, the amounts earned from roaming are hardly material. Yet they persist with what amounts to punitive pricing

MTN’s HelloWorld roaming offer, which has promotional rates until 30 November, shows just how “normal” roaming rates can be. On networks it owns (like MTN Nigeria or MTN Botswana), that R1/MB rate is very compelling.

And even on partner networks in countries where MTN does not have a presence, rates are substantially reduced. In the UK and US, data roaming is billed at R1,25/MB (on Three, O2 or EE in the UK and AT&T or T-Mobile in the US).

A rate of R1 or R1,25/MB makes data usage effectively frictionless for customers travelling to these countries. What’s “lost” on pricing will surely be made up on volume. Ironically, this is equivalent to (or sometimes cheaper than!) current out-of-bundle pricing on MTN in South Africa.

Vodacom has packages made possible by parent Vodafone’s global scale that offer reduced rates in countries where Vodafone operates (or has a broader partnership). But one gets the sense that it’s not leveraging this relationship to the extent it could.

On its Africa Roaming family rates, which effectively cover countries where Vodacom operates (the Democratic Republic of Congo, Mozambique, Lesotho) as well as Safaricom (in Kenya) and Vodafone Ghana, data is billed at R5/MB. This is cheaper than the rate on its so-called Super-Saver networks (R17,50) but it is still absurdly expensive, given that these are all Vodacom/Vodafone networks in the region.

It also offers Travel Saver, at a cost of R30/day, where data rates are just R2/MB or R7,50/MB, depending on the zone you’re travelling to. But this is an opt-in service for contract subscribers only and the subscription rate means you’re effectively locked into that daily spend of R30, regardless of how much data you use or calls you make/receive.

Out of the four local mobile operators, Cell C and Telkom Mobile are the most disadvantaged because of scale. On Cell C, rates on certain networks are as low as R3,40/MB (AT&T in the US) and R3,50/MB on Zain networks in Africa. But, there’s precious little in the middle with rates of upwards of R100, R200 and R300/MB very common (its cheapest rate in the UK is on Three, at R69,70/MB – the four other networks are at R300-plus).

It’s no wonder that Cell C is aggressively promoting its Wi-Fi Calling service, given its position. For Telkom, the picture is arguably worse with “preferential” rates on partner networks like Vodafone in the UK running at R26,59/MB.

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So, although the broader market has shifted along fairly rapidly from the days of R200/MB for data use being the standard while roaming, tariffs remain stubbornly high.

But is data roaming even necessary in an age where Wi-Fi is pervasive and largely free (or very inexpensive), especially in the developed world? Comprehensive public Wi-Fi coverage (more often than not, free) is a reality in many major cities globally. And hotels and resorts have started to realise that free (or cheap) Wi-Fi engenders loyalty and guest satisfaction.

If access to Wi-Fi is likely to be problematic, roaming tariffs mean travellers are (strongly) incentivised to buy local Sim cards in the countries they’re visiting. This is especially true if they’re going to be consuming a fair amount of data and are staying more than a few days.

Voice calls are increasingly being offloaded to over-the-top services like WhatsApp, Skype, Facetime, Facebook Messenger and Allo. This means the need to be contactable on a circuit-switched telephone number is effectively a non-issue. But, these services or a local Sim don’t solve the SMS conundrum.

Both Vodacom (SMS Roamer) and MTN have opt-in services which disable voice and data services, but allows you to receive SMSs for free while roaming on partner networks. But why can’t this be the de facto standard on all roaming plans?

The market is slowly forcing prices lower as customers look elsewhere to solve their connectivity needs while travelling. But it’s nowhere near fast enough. Given the quantum of overall service revenues enjoyed by operators, the amounts earned from roaming are hardly material. Yet they persist with what amounts to punitive pricing.

Then again, perhaps there are more consequential tariffs that need some attention… Starting with that cause of widespread indignation: R149 for a 1GB bundle.

  • ¹The price for MTN customers to roam on Unitel in Angola
  • Hilton Tarrant works at immedia. This column was first published on Moneyweb and is used here with permission

1 Comment

  1. Now you know why Vodacom and MTN are so against OTT players. No way I would use their rip-off roaming services with the availability of WhatsApp and free WiFi internationally.