MobileBlog

News and views on the Canadian telecom industry, and tips and tricks for saving on your cell phone bill.

Wednesday, June 15, 2011

Roaming Charges: Should We Really Be This Worried?

If you picked up a newspaper, tuned into the news on TV, or listened to the radio in the past week or so, chances are you've encountered some sort of story related to cellular data roaming, and the exorbitant fees that Canadians pay for it. According to a recent report, Canada's wireless providers charge some of the highest fees for international data roaming in the entire OECD (Organization for Economic Cooperation and Development). When Canadians travel abroad they pay an average of $24.61 to use just one megabyte of data. The average for the OECD's 34 nations is $9.48, with Greece having the lowest at $4.17. All figures are in US Dollars, based on Purchasing Power Parity  (http://en.wikipedia.org/wiki/Purchasing_power_parity).

A chart compares average roaming fees, in U.S. dollars, for one megabyte of data usage charged by top two wireless providers in each of the 34 OECD countries.
(Source: http://www.cbc.ca/news/technology/story/2011/06/08/technology-mobile-roaming-wireless-oecd.html?ref=rss)

Seems kind of unfair, no? News stories about these astronomical fees are all the rage at the moment, and Canadians are understandably pissed off about what they're reading. But the question I want to address in this post is whether or not us Canadians really have it that bad with regards to roaming charges. I mean, the articles seem pretty convincing, and the angle has been pushed by damn near every major media outlet in Canada. Stories on Canadian roaming charges have been flogged by the Toronto Star, Moneyville, the CBC, the Globe and Mail, Canada.com, all those crappy newspapers they hand out for free in the Subway, the Financial Post, and so on. All these articles harp on the disastrous consequences this could have for Canadians traveling abroad ("Woe is me! I took an all expenses-paid trip to the Maldives, checked my twitter feed between all the massages and scuba diving, and came back home with a $2,000 cell-phone bill!"...our hearts break for you, really), and provide several ways in which jet-setters and ordinary travel-schmoes alike can mitigate them. On an unrelated note, "jet-setter" is not a term I'm wont to use. But I just checked out Jay-Z's blog lifeandtimes.com last night, and I think the overwhelming use of this word got into my head. Seriously, I checked out the site for maybe 20 minutes and must have seen or heard "jet-setter" at least 47 and a half times. But I digress. The tips these articles mentioned were on the whole quite useful, and included turning off data-roaming on your device and only using wi-fi, not using mobile internet (i.e. logging onto a computer at your hotel or an internet cafe, rather than using your BlackBerry), get a prepaid data roaming package (call your provider and get it set up ahead of time), or even buy a cheap travel phone. Buying a cheap travel phone is actually a favourite practice of ours here at MobileVantage. The phones and minutes are generally dirt cheap, and it makes for yet another cool souvenir from your trip. In fact, we have cheap "burner" phones from the Dominican Republic, Thailand, India, Mexico, and Nicaragua kicking around the office. When you do what we do, that's about the best conversation piece one can have.


So while these tips are all very useful, I'd like to get back to the original question of whether Canadians really have it that bad. Do we actually pay more than anywhere else in the world for data roaming, or is this just another case of reporters blindly pursuing a 'hot' news story without a careful examination of the facts? In order to answer this question I checked out the initial OECD report that is causing all the fuss, and practically laughed out loud; I lol'd, if you will. Firstly, the above graph that I found on the CBC (without appropriate legend) was included in the OECD report, along with a nice title that explained it depicted the average price for one megabyte of data in ONE SESSION. This sounds a bit screwy, right? Who travels, picks up their phone, and in one go eats up a whole megabyte of data, then doesn't use data again. Here's what the start of the OECD press release said: 


"For one megabyte of data, for example, the equivalent of sending 10 photos … Canadians travelling abroad pay the most (US$24.61), followed by Americans ($22.06) and Mexicans ($19.85). Greeks abroad pay the least ($4.17), followed by people from Iceland ($4.42) and Luxembourg ($4.46). The wide difference in prices, according to the report, can be explained by Greek mobile phone companies being charged less by wholesale operators than Canadian operators and passing those savings on to customers. Or it could reflect greater competition in the Greek retail roaming market than in Canada."


OR, it could just be that this whole "1MB in one session" price comparison is a completely flawed way to assess the situation, and basically amounts to a statistical screwup. Reporters love eye-popping figures like these, and with all the telecom-hating going on in Canada at the moment, the start of this OECD paper makes for the perfect news story. Unfortunately it seems that most reporters didn't read the fine print, and/or didn't read past the report's first paragraph. So what's the deal? Well first of all, who the heck downloads 1 MB in one shot on their phone? When people use data while traveling they open emails, update twitter feeds, check facebook, update their linkedin profile, or view a few websites. None of these functions use even close to 1MB at one time, and unless you download several pictures (tough to do in one shot), a video, or a song file, it's pretty difficult to hit this "1 MB in one session" mark. The ridiculousness of downloading JUST 1MB in one session while traveling aside, these figures fail to take into account how Canadians actually travel. Certainly you will get those people who go to Asia or Europe or wherever, use data, and see a horrifying cell bill upon their return. The OECD refers to this as "bill shock". And if these people spend 5 minutes on the phone with their providers, Rogers, Bell, Telus, etc. will retroactively put a roaming package on your account to reduce the charge significantly. Then, next time this person travels you can bet they will get a prepaid roaming package before their trip. 

So "bill shock" is a one-time occurrence, and the high fee anecdotes discussed in the news articles you've been reading are easily removed by providers. That certainly makes the outlook on data roaming a little less bleak, right? Well if we read on in the OECD paper we come to the next set of figures, that looks at a far more realistic 5MB downloaded over 5 different sessions in the course of a week. Sure, the same illogical "1MB:1 session" ratio holds, but it's far more reasonable to assume that someone who travels will use data 5 times rather than 1 time. When we look at the corresponding figures we see that Canadians no longer sit at the top, and begin moving towards the middle of the list. When we look at this scenario from the perspective of a Canadian traveling to the States (where most Canadian "travellers" tend to go I might add), we pay around $12 per MB in this scenario. In comparison, our mates in Australia and amigos in Chile would pay a whopping $42 and $69 per MB respectively in their LEAST EXPENSIVE travel location. Note: in this context, "least expensive" is in reference to the travel destination where they'd incur the cheapest roaming fees. Then take another scenario, where a Canadian travels to the States for a month, and downloads 20MB over 20 sessions. When we look at these figures we see that the cost per MB for Canadians is almost the lowest of any OECD nation! 



(Chart from the OECD report...Notice us on the left, sandwiched between Iceland and Austria)

As you can see, the figures that these Canadian news articles have been using don't take into account a) HOW Canadians use data when they travel, b) WHERE they travel (statistically the US and Mexico predominantly), and c) the effect that repeat, prolonged travel would have on the data. What makes these figures seem even more ridiculous is that they are out of date. Rogers, Telus, and Bell are currently in a bit of a roaming rate war, driving rates down and causing them to be lower than the figures OECD presents. In fact, Telus just lowered their roaming rates, a strategic move which will surely be repeated by Rogers and Bell in the near future to ensure they aren't undercut by their competitor. 

The fact is that when Canadians travel to the places we often travel to, and use data the way we often use it, we pay some of the lowest rates worldwide. In short, we all shouldn't be that worried about data roaming fees or get too caught up in what these news stories are saying. That's not to say these articles are entirely useless, and that the quoted figures are erroneous. Sure the data is misleading, but the saving tips these stories provide are very worthwhile. It's a fantastic idea to get a prepaid roaming plan before your next trip, which is something that MobileVantage can help you with (give us a call at 416-561-1143, or visit www.mobilevantage.ca). We also really like the fact that these articles are helping to bring Canadian telecom to the forefront of consumers' minds. There are many other areas in which Canadians get the fuzzy end of the lollipop in terms of our cell phones, and hopefully these articles on data roaming charges will help open the floodgates for more discussions in this area. And if you're still interested in the discussion of roaming fees, I encourage you to check out the actual OECD report itself: http://www.oecd.org/dataoecd/57/62/48127892.pdf 

-Grif


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