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More effective competition and better regulation needed to cut high mobile data roaming costs, says OECD

 

08/06/2011 - Regulators and policy makers should boost competition among mobile telephone operators to cut the high prices being charged for international data roaming, according to a new OECD report. Analysis of pricing plans at 68 operators in the 34 OECD countries points to a strong case for new consumer protection and empowerment measures. “Current pricing levels indicate that there is, in general terms, either insufficient retail or wholesale competition,” says the report.

The OECD compared a variety of data roaming plans based on the amount of data users could send or receive when abroad. For 1Mb of data, for example, the equivalent of sending 10 photos, the average price by country across the OECD is USD 9.48 (based on purchasing power parity). Canadians travelling abroad pay the most (USD 24.61), followed by Americans (USD 22.06) and Mexicans (USD 19.85). Greeks abroad pay the least (USD 4.17), followed by people from Iceland (USD 4.42) and Luxembourg (USD 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 onto customers. Or it could reflect greater competition in the Greek retail roaming market than in Canada.

1. 1 MB in one session – average price by country of origin of the traveller – USD PPP

Click here to download the underlying data in Excel

 

More operators should put in place simple measures, such as sending an SMS to users when they travel abroad or setting up a “cut-off limit” based on price or amount of data used, says the OECD. In Europe, mobile operators have been obliged since March 2010, under the terms of the European Union Roaming Regulation, to give customers information on pricing when they connect to a data network for the first time.

“Opponents to this measure, especially from the mobile industry, have argued this obligation places an excessive burden and cost on operators,” the report says. “While the implementation of consumer protection measures is not cost free, the data roaming cut-off limit has been successful in providing protection against bill-shock. It will certainly assist in avoiding situations in which users incur a several-thousand dollar bill when returning from foreign travel.”

Wholesale data roaming charges have been regulated in the European Union but retail roaming services have, so far, been exempt from price regulation. And while retail and wholesale prices have fallen over the past few years in Europe, the gap between retail and wholesale prices has widened, highlighting “a possible lack of effective competition in this market.”

For comment or further information, journalists should contact Agustin Diaz-Pines at Agustin Diaz-Pines (tel. + 33 1 45 24 19 62) or Sam Paltridge at Sam Paltridge (tel. + 33 1 45 24 93 79) of the OECD’s Information, Communications and Consumer Policy division.

 

 

 

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