Opinion: Price not right for data roaming
- 28 October, 2012 22:00
Roaming is one of those issues that makes most people despair of the telco sector. It seems so unfair and unjust and penalises customers for simply using their phones the way the telcos seemingly should want them to.
The telcos — New Zealand telcos at any rate – seem to have finally understood just how outrageous roaming charges have become and have started to do something about it. Their Aussie counterparts, however, simply refuse to see the bigger picture and that’s going to have ramifications in the not too distant future.
Firstly, let’s clarify a few points. Telcos should want you to use their services. They want to sign you up; they want you to give them money. They’re in business to make money and they do that by building products and services that you want.
In the past couple of years we’ve seen a huge surge in the usage of telecommunications. First home broadband services, then the mobile phone became a smartphone and now we’re all at it. Statistics NZ says more than half of all New Zealanders are accessing the internet via a mobile device and I’m surprised it’s that low. We love to text and we seem to love using our phones for taking photos, accessing social media, and even checking in to flights.
The price for this is relatively low – the average 1GB offer for mobile devices in New Zealand is about $20-$30. I rang the Vodafone call centre and whined that my 1GB free add-on had disappeared and they reinstated it for me. That’s 1GB for free.
Travel to Sydney, however, and that all changes. That 1GB will set me back $500 and if that seems a bit steep for what is, after all, the same product. But take a moment to show your solidarity for Australians coming here. They’ll pay anything up to $20,000 for that 1GB of data.
The telcos will tell you it’s not the “same product” at all. A data connection in Australia has to first send all that data back to New Zealand and back before sending it on to its destination. This “tromboning effect” ratchets up the cost of service hugely and there’s just nothing that they can do about it, they say.
In addition, it’s not actually their network you’re using, so they have to pass on the costs that the host network charges and they’re huge. Astronomical. Outrageous. The telcos wish they could do something about it, but their hands are tied.
Yes, well. I’m not so sure about any of that. Tromboning, for instance, doesn’t have to happen. The likes of Ericsson have long had the ability to remove the need to bounce data back off the home network before delivering it. That’s so five years ago, they tell me, it’s just the telcos don’t want to spend the money on the gear.
In addition, when you look at the costings in the trans-Tasman ministerial review of all this, you’ll see that the price for data at a wholesale level is quite a bit less than you’d think. How much? Try about 35 cents/MB, which makes $20 seem a bit overly enthusiastic if you ask me.
The review has come up with a variety of options, ranging from that old “let’s keep a watching brief” chestnut right through to something the Europeans call “de-coupling” which, in effect, allows the roaming customer to keep their mobile number for voice and text but to buy data packs from a local provider. So, for example, you get off the plane in Sydney and stroll up to the telco booth of your choice and buy 1GB of Aussie data for the local price.
On the surface this sounds ideal. It gives customers the bits they like, it’s relatively straightforward and it allows the competitive nature of the market to come out and play.
Underneath the hood it’s a bit more difficult, to put it mildly. The billing system required to deliver de-coupling will cost a fortune and in Europe at least it’ll be a couple of years before they can get it introduced.
Personally, I’d like to see roaming disappear entirely. If I buy a data pack in New Zealand it should work in Australia as well. That’s the model the Europeans are hoping will be delivered over there – data bought in the UK works in Germany, Spain, France and so on. It’s clean, doesn’t require any technical solution to implement and is very easy for customers to understand.
2degrees tells me they argued against any form of intervention at this stage because they want time to shake up the market as best they can. I have some sympathy for that, but I suspect time has already run out on that clock. ICT Minister Amy Adams is taking a paper to cabinet on the chosen solution and we should hear just what the outcome of that will be in the not too distant future.
Paul Brislen is CEO of TUANZ