Mallinson: The perils of £10-per-second high-speed data

Keith Mallinson

The high data speeds achieved by the latest smartphones running on LTE networks worldwide make a mockery of the 2G-era alerts operators employ, supposedly to enable users to control mobile data usage, while roaming internationally.

At a total cost of £105 (€145), my 17-year-old daughter, Helen, inadvertently spent nearly double per second on mobile data roaming in Abu Dhabi (United Arab Emirates) what she earned per hour in her UK summer job. This is unfair on Helen and it is bad business for her mobile operator, Vodafone, and for its roaming partners, including Etisalat. As I have complained before, "mobile operators should stop profiteering by ensnaring those who inadvertently rack up disproportionately high roaming charges because they misunderstand tariffs, miscalculate data allocations or neglect to adjust their settings through ignorance or oversight."

When not in Rome

According to the European Union's Digital Agenda website: "[t]hanks to EU roaming rules, the cost of making and receiving calls when abroad in the EU is now substantially cheaper than in 2007, when the EU first started to tackle excessive roaming charges."  EU rules set maximum tariffs (excluding VAT) for calls, texts and when downloading data and "[o]perators have to send users a warning when they reach 80% of their data-roaming bill limit and cut off the mobile internet connection once the limit has been reached, unless the customer has indicated they want to continue data roaming that particular month. Maximum end-user price cap for data roaming have been introduced at 20 cents per megabyte."

Data roaming charges can be a lot higher when travelling outside the EU. For example, it costs 15 times more, at £3 per MB, for up to 5 MB, then £15 for every 5 MB after that for Vodafone UK customers travelling in the United Arab Emirates, where my daughter got caught out this summer.

In preparation for a work-study placement in India, also this summer, I ensured my daughter was enrolled on Vodafone's World Traveller tariff, which provides some control over roaming costs. With this, Helen could take her monthly allocations of UK minutes, texts and data with her and use them in certain nations, including India, for a payment of £5 for each and every day she uses her phone. The only snag was that her round trip was via connecting flights in Abu Dhabi, which is not in Vodafone's World Traveller zone. Wary of a nasty bill shock, I explained the pitfalls to Helen and asked her to switch off data roaming upon departure from London, and not turn it on again until arriving in India.

Everything worked out fine on the outbound journey and in India. We exchanged a few texts during her several-hour outbound stop-over. A charge of £5.25 for 15 texts in Abu Dhabi was not cheap, but it felt justified with this being her first time so far away from home without her parents. Free airport Wi-Fi enabled her to message for free to friends via social networking apps. Similarly, £5 charges on all bar two of her days in India was acceptable to us given the problematic Wi-Fi access at her hotel.

On her return journey, tired and excited upon arriving back in Abu Dhabi, Helen had initially forgotten to switch off her data roaming. All the unacceptable financial damage was quickly done and before she knew it. With various apps hungry for data exchanges on this teenager's iPhone, she tore through to the default 20 MB international data roaming limit before receiving a series of alerts warning her of her successive increases in data consumption and expenditure along the way. As the following screen shots indicate, my daughter was supposedly notified when she had spent £9 (3 MB), £30 (8 MB), £60(18 MB), £75 and £105 (33 MB). However, all except the last of these messages were within one minute. She simply had insufficient time to receive these alerts, let alone react to them by switching off her data roaming.

4G speeds with 2G-era data pricing

A press report has it that Etisalat's LTE service downloads at "24,740 kilobytes per second."  Even allowing for the fact that the reporting journalist probably should have written 24,740 kilobits per second (i.e. 24.7 Mbps), that is nevertheless pretty quick. At that speed, assuming 10 bits per byte to allow for overhead, Helen's smartphone apps, working the background, could tear through 20 MB of data usage in less than 10 seconds. While roaming on that network as a Vodafone UK customer, that data rate is billed at more than £10 per second -- equivalent to £36,000 per hour. Even mobile communications consultants are fortunate if they can charge for their time at one hundredth that rate!

These alerts are worse than useless in the world of LTE data. The pretence that they provide consumers with control only lulls them into a false sense of security. I called Vodafone's customer service line and asked for my daughter's data charge to be waived. I was told that the disputed charge was consistent with Vodafone's terms and conditions and that all Vodafone could do in response to my complaint was provide a £5 "goodwill" credit.

Really agreeing to spend

My beef here is about mobile operator charging practices and how they can catch people out rather than the level of prices while roaming abroad. The EC implemented price controls on excessive roaming charges in the EU on the basis that there was market failure, with prices not being eroded by competition among operators. And, it is now also possible to avoid excessive charges when travelling to certain nations outside the EU, if one is well prepared and careful, as illustrated by Vodafone's World Traveller.

But significant expenditures should be appropriately confirmed in advance, for example, as when one clicks to buy online. Even excessive and compulsive gamblers are usually aware of how much they are spending as they wilfully place each and every bet. We demand that products and services are made safe so people are protected from harmful mistakes that might, for example, cause poisoning, cuts, burns or fires. Merchants cannot absolve themselves from responsibility by citing fine print when bodily harm is avoidable. Similarly, it is simply not acceptable for financial traps to be laid, or not be removed, which prompt significant unintended and unwanted expenditures, particularly when they appear as a result of faster services and more complex usage patterns such as those we are developing with our LTE smartphones.

Smartphones are still too much like blank cheques, or loaded guns, with regard to international data roaming charges. Usage alerts were introduced in an attempt to increase transparency and control for consumers. They are failing to do that. Regulated measures often fail to keep up with market developments. Postpaid calling plans are popular and convenient for operators and customers alike, but they lack even the rather basic control, on total spending, that prepaid calling has always afforded consumers. Much better spending safeguards for LTE-era data usage are required.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. Find WiseHarbor on Twitter @WiseHarbor.