Wireless roaming charges are “outrageous,” to hear travelers like Karen Pliskin talk about them. And she ought to know.
On a weekend visit to Vancouver, B.C., the San Francisco-based anthropologist did everything she could to avoid international roaming charges, declining to make calls or send text messages. The following month, she found an extra $30 on her Verizon wireless bill. It turned out that the apps on her phone had quietly drained expensive roaming bandwidth. After that experience, she started turning her phone off when she crossed the border.
“What can we do about these charges?” she asks.
A lot, actually. The National Consumers League (NCL) recently asked the Federal Communications Commission (FCC) to investigate roaming fees charged by American phone companies. An NCL analysis of the market for roaming services found that a “significant” portion of the more than 73 million Americans who travel abroad annually may be at risk of incurring higher-than-expected charges on their wireless phone bills, thanks to these fees.
“Even consumers who are careful and try to limit their mobile-data use can come home to a surprise bill,” says John Breyault, an NCL vice president of public policy.
The Cellular Telecommunications Industry Association (CTIA), a trade group for the wireless industry, says it has already taken significant steps to end bill shock. “The wireless industry provides consumers with a host of consumer-friendly protections and service offerings to ensure that they can travel abroad without unexpected international roaming charges,” says Brian Josef, a vice president of regulatory affairs for CTIA. “The marketplace is working for consumers.”
It’s hard to know how much American travelers pay annually in roaming fees. But we know what wireless carriers are earning, and it’s a lot. Revenue from global roaming services is expected to reach $90 billion a year by 2018, according to a recent estimate by Juniper Research, a research and analytical services company based in Britain. A study by the IT consultancy firm Ovum predicts that by 2019, mobile data, the same kind that ensnared Pliskin, will account for more than half of all global roaming revenue.
Roaming fees are a rich source of profit for wireless carriers. A study by professional-services company KPMG, cited by the NCL in its petition, noted that international mobile roaming fees should be only 10 to 20 percent higher than non-roaming fees, based on the actual cost of providing the service. In fact, they cost more than five times as much, on average.
Lewis Ramsden, a lifestyle photographer based in Wakefield, England, recently experienced this gross overpricing when he needed to call a client while he was on assignment in Marrakesh, Morocco. He couldn’t find a WiFi hotspot, so he turned on his phone to make a brief call.
“I paid almost $16 for a three-minute call,” he says. “How can that be legal?”
I’ll answer that in a minute. But first, a word or two about what you can do now to avoid these fees. The only certain method: Don’t bring your phone. Your cellular carrier can’t ding your phone if it doesn’t make the trip with you.
For most travelers, that’s an impractical solution. But you have two other choices: buying a SIM card — or a smart card that allows you to use a local carrier — or skipping the expensive cellular plan and relying on local hotspots. Both require a little technical know-how.
On an iPhone like Pliskin’s, you must switch to “Airplane mode” and turn on WiFi. But a few careless swipes can mean your phone will start roaming, incurring fees. Buying and installing a SIM card isn’t difficult, but some smartphones don’t accept outside cards (in geek-speak, they’re “locked”). The NCL study suggested that wireless companies would rather keep their customers in the dark about SIM card options, noting that it found no instances where U.S. carriers attempted to educate their subscribers about those alternatives.
There are numerous other options for communicating while abroad. They include using WiFi-based calling and messaging apps such as Facebook, WhatsApp, Google Hangouts or Viber for calls and texting or Apple’s iMessage for messaging. Of all the major carriers, T-Mobile has the most roaming friendly pricing, with no roaming fees on some of its plans.
Andy Abramson, a frequent traveler who runs a Los Angeles communications agency, favors Skype as well as voice-over-IP services such as Dialpad, Telzio and Vonage. And there’s Google-Fi, a service I use, as does Abramson. For $20 a month, it offers flat-rate coverage in more than 135 countries with no roaming fees.
The preferred solution for wireless carriers is that customers sign up for one of their international plans, which used to be prohibitively expensive but now are becoming more affordable.
“In the old days the rates and plans were so expensive, it made no sense to even turn on the phone when you left the U.S.A.,” Abramson says. “That’s changing.”
But that doesn’t necessarily mean they’re getting more reasonable. I ran into Louis Altman, a longtime reader who runs a satellite communications company, at Toronto Pearson International Airport, where he was mulling the options AT&T had offered him to connect — either a pay-as-you-go choice for $2.05 per megabyte and $.59 per minute for calls, or spending $40 on a 200-megabyte data plan, including “free” texting and $.99 per minute for calls.
“Wait,” he told me. “The pay-as-I-go rate for data is 10 times higher than the $40 plan? And calls cost more on the plan? Who thought of that formula?”
One reason prices are falling is that other countries are taking a hard look at high roaming rates and acting to reduce them. The European Union is effectively eliminating roaming charges for calls in Europe to member countries by next June, and the Gulf Cooperation Council countries are cutting data roaming rates by two-thirds by 2020. The Asia-Pacific Economic Cooperation and Organization for Economic Co-operation and Development have also pushed their member countries to take action to address high roaming rates.
Will regulation work in the United States, too? The last time the FCC tried to implement consumer regulations, the telecommunications industry voluntarily agreed to implement changes that include better fee disclosures and “clear and conspicuous” disclosure of tools or services that enable customers to track, monitor and set limits on voice, messaging and data usage.
This time, regulators need to either require that wireless carriers offer information on cheaper alternatives or follow Europe’s lead and require that they lower their roaming fees.