Time to cut roaming costs

A European Commission report says that firms may be paying too much for mobile calls across borders. But Bill Pechey says companies can take steps to cut costs

Anyone using a mobile phone when travelling abroad enjoys the convenience and simplicity of roaming, but that delight often vanishes when the bill arrives. Mobile phone calls across international borders can cost over £1 per minute, and that can double or treble when calling the UK.

It may be easy to obtain volume discounts for domestic calls, but it's usually a different story for the roaming charges incurred by corporate staff. After many complaints about the high costs associated with roaming, the European Commission (EC) competition directorate set up an investigation into the charges. Initial findings have just been published, with the directorate finding that while home network tariffs had fallen significantly between 1997 and 2000, roaming rates had risen fast, and almost quadrupled in some cases.

During 1999, the method by which wholesale roaming charges were calculated was changed. Revised agreements called inter-operator tariffs (IOTs) were drawn up by the GSM operators' trade association. These IOTs were supposed to promote fairness by requiring network operators to offer the same roaming tariffs to all other operators, but have actually had the effect of reducing competition and raising prices.

The EC is now planning a review of the IOTs to see whether different clauses could further promote competition and drive prices down.

During its investigation the EC has also discovered that it is not easy to find out what the roaming tariffs are. It is likely to insist that tariffs are more widely publicised and are made easier to understand. In terms of the differences in tariffs, the investigation found that some operators' rates are more than double the average of the five cheapest, which suggests that the higher rates are excessive because the associated costs will be similar.

The report concludes that there has been almost no competitive pressure on tariffs, despite offers of fixed-rate roaming deals that may simplify charges but result in no significant reduction. One company, Mint Telecom, has introduced a unified discounted roaming deal, charging about £1 per minute for outgoing calls and 51p for incoming calls.

So what should firms do to cut costs? First, they should monitor the work of the EC and offer evidence based on their own experiences. Second, they should divert traffic away from expensive services, and use services such as Mint Telecom for incoming calls, as well as discount calling-card services from firms such as Telco, which can greatly reduce outgoing call charges.

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