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Page last updated at 02:00 GMT, Saturday, 2 April 2011 03:00 UK

Could roaming rates be about to fall?

By Dan Simmons
BBC Click

An english tourist uses his mobile phone on a beach in Ibiza, Spain (file photo)
Standard European roaming rates vary between 1 and 3.07 per megabyte

Travelling abroad can be a great time to relax, enjoy the view, and switch off. But many people want to use their smartphones, tablets and laptops overseas to stay connected - and the price of doing so is still very high.

Matthew Bath is the technology editor for Which? magazine and says many consumers are shocked to receive huge phone bills when returning from holiday or business abroad.

"One woman was trapped by last year's ash cloud in Canada. She used her mobile phone to check flight times, to see if she could get home, and when she did eventually get home it had cost her nearly £2,000 ($3,210)."

The online tech site ZD Net has just started a campaign to bring roaming prices down. It surveyed 1,300 of its readers worldwide, and they weren't happy either.

"We have to stand up for our readership on this one, it seems to us it's a very clear cut case of people being charged over the odds for something that is becoming crucial to all of us," said David Meyer from ZDNet.

Making use of voicemail while you're away may seem sensible - but those doing so may have to pay double or even triple the international rate.

T-Mobile for example, charges UK customers overseas once for someone to connect to their voicemail per minute, once for the length of the message, and once for when they dial in to hear it while abroad - all at about £1.40 ($2.25) a minute in some cases.

For many countries visited that could mean a total charge of more than £4 ($6.4) per minute to pick up voice messages.

Threat of regulation

Last year the European Commission slapped a new cap on what it described as "abusive" charges. For example, a call from Spain to the UK used to cost up to £1 ($1.6) a minute but is now less than 40 pence, and the cap will fall again this year further lowering prices.

But increasingly people want to use data when abroad too - for local maps, to catch up on e-mails, or update social networks.

In June the commission may decide to regulate charges on that too. Last year it capped the total amount operators can bill customers to €50 ($71). It's now up to the customer to opt out of that cash limit if they want more data.

Kate Russell gives her guide to the apps helping you beat roaming charges

A similar total bill cap is currently being considered by operators in Singapore and in Australia.

Kevin Russell, the CEO of Three Mobile, said when the cap was introduced he thought the €50 limit didn't go far enough.

"The core issue is that the prices consumers are charged when they use data in the EU is far, far too high. Hence the cap has been introduced - to prevent bill shock."

"But the reality of data pricing is you can buy data in the High Street in the UK for less than a penny for a megabyte, but when you travel to Europe you'll be charged something closer to £1 for a megabyte," he added.

The threat of fresh regulation appears to have spurred operators to offer lower deals, but for the most part just within Europe.

In the UK, Vodafone offers its data traveller service, T-Mobile is introducing Travel and Surf, and Orange is offering 2MB for €2.

Businesswoman using a mobile phone
Some businesses now ask employees to try and use wi-fi when abroad

Go on holiday to North Cyprus and you won't get any of that protection at all - as it isn't part of the EU.

And both data and call prices seem to take an even bigger hike when you take a long haul flight.

In the United States a call that would cost 10 pence a minute in the UK will cost £1.40 ($2.25) a minute, which soon mounts up to £10 ($16) for a seven minute chat.

"People feel that the charges are unjust, that they're not actually merited, they feel that they're paying for something that doesn't actually cost anything to the people who are charging them," ZDNet's David Meyer said.

But Tom Phillips from the Mobile Operators Trade Body GSMA doesn't agree.

"There are some very legitimate costs associated with providing a roaming service and they have to be recovered. Some countries are very sparsely populated, some are very hard to cover with the ubiquitous network coverage, some have different tax or licensing regimes, and so on."

'Smoke and mirrors'

Lee Suk-Chae
If other telecoms lower their roaming service fee then we will - it's reciprocal
Lee Suk-Chae
Chairman of Korea Telecom

The exact amount of what each operator charges the visitor's operator is called the wholesale termination rate, and is commercially sensitive information.

Each operator negotiates its own deals individually. Networks in the US are charging UK firms up to £1 ($1.60) per minute. The UK firms then add their own margin before billing the customer - typically around £1.40 ($2.25) per minute. UK firms offer similar terms for US visitors.

Matthew Bath from Which? Magazine says the cost of actually transferring the information is very low, but hidden from consumers.

"There's a lot of smoke and mirrors when it comes to these costs.

Some companies are in a stronger position than others. So there are actually worldwide around 2,000 different types of mobile phone tariffs when it comes to roaming."

Stumbling block

Woman at airport
Travellers can now rent local Sim phones at their destination

For years the industry has relied on business travellers getting high bills paid off on expenses but many are now insisting their employees give up this convenience and get a local Sim card, or only use wi-fi.

A traveller in South Korea could use one megabyte just by checking three or four e-mails - at a cost of £7.50 ($12.00).

Lee Suk-Chae, the Chairman of Korea Telecom, says he wants to bring roaming prices down but that his hands are tied as operators around the world want to keep prices high.

"The agreements signed by telecoms operators are too complicated for any company to change. But eventually I think roaming service fees will be lowered tremendously, that is necessary. If other telecoms lower their roaming service fee then we will - it's reciprocal."

Avoiding charges

Some networks have managed to strike a deal and create mini regional areas offering lower charges - like the Bridge Alliance in Asia or Australia, or have begun to offer deals to those roaming within a few countries where their network has a strong presence, like South Africa based network operator MTN.

Meanwhile firms are taking advantage of the problems of roaming to offer innovative services.

Fonmigo rents handsets with a local Sim inside at UK airports and says demand is roughly doubling on a monthly basis. A quarter of its clients travel from an EU country to the UK.

Starhome co-ordinates much of the world's mobile traffic on behalf of more than 160 operators. As a high tech global switchboard it estimates almost half of us switch our handsets off when we go abroad.

It has just launched a new service for operators, which Starhome vice president Amit Daniel says will deliver cheaper data roaming to travellers.

"You get a landing page from the visited network, say from Telefonica or Vodafone Spain, that says 'Welcome to Spain, you're no longer required to use roaming charges, you can buy a package for a day, 48 hours, a week'...

"Once you pick a package you keep on using your device like you did before, but without the burden of roaming charges."

International mobile specialists Mach offer operators the ability to restrict customers to certain services - like Facebook or the use of e-mail for a set price.

This solution would see users buy credits to be spent using those apps. In this way operators could steer users away from data hungry applications and consumers would get a better idea of exactly how far their money will go.

But until more options become available the best advice is to check with your operator for any deals before you travel and if it's not good enough - just switch off.

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