Rupert Goodwins' Diary

Monday 20/3/2006

When in Rome, it would be nice to pay as the Romans do. Instead, we get stiffed with international roaming charges on our mobile phones that would make Nero blush. The EU is looking into this, and the GSM Association is making vaguely encouraging noises — but the rumour today is that there is considerable disagreement among the operators over what should be done.

The split, as so often, seems to be north-south, with the northern European operators prepared to consider turning down the wick and the southern lot determined to hold on regardless. This isn't because roaming costs any more in the sunny parts of the world, but because roaming fees make up a much greater chunk of revenue for those in tourist areas with weak local economies. Indeed, there are places in the Caribbean where the local network operator barely bothers to charge subscribers, prospering instead on the people on the yachts making endless calls back home.

As a form of rough yet progressive taxation, this has a lot to recommend it. However, it won't survive. A basic rule of world commerce is that it's a lot cheaper to be rich than poor, and with the rich countries' operators having a lot more clout than the poor, you don't need a switchboard operator to tell you which way the call's going to be connected.

Roaming revenue works through termination charges, where operators accept calls from each other and charge each other a fee for so doing. These fees are rather peculiar beasts: they bear no relation to the actual cost of providing the service, they are very hard to tease out of the companies, and they are huge. If networks set each other sky-high termination charges, then each network can say "We'd love to cut the price, but that's what we're being charged by the other chap". And like any secret addiction, they're hell to sort out.

But they'll have to be. The world is no longer sympathetic to telcos charging what they like in secret: quite the opposite. The myth that long-distance communication is intrinsically expensive has been busted, and "Why does it cost me a quid a minute to call home from France on my mobile when I can talk to Australia all day for nothing on VoIP?" is unanswerable. If we can find a way to fix it without stiffing the people who usually end up being stiffed, that'd be something of a bonus.