Telcos beware: ACCC wins new powers to crack down on international roaming charges

Sick of paying too much for roaming charges? You’re in luck – Prime Minister Julia Gillard has announced a push to crack down on telcos which are charging too much for allowing the use of your own smartphone overseas.

The move to reduce roaming charges has been ongoing for some time, with users charged a huge amount of money for accessing local telco networks while overseas. Some travellers report bills costing as much as several thousand dollars for excessive usage.

Gillard, along with New Zealand Prime Minister John Key, has announced the action to reduce roaming charges following the result of a joint report – but the announcement forms more of a warning than any sort of plan.

“Ultimately, if we don’t see reductions in these kinds of charges, we will empower our competition regulators to act and to intervene in the market to get people a better deal,” Gillard said.

Both Australia and New Zealand will introduce legislation to enable respective competition regulators to probe and even take action against excessive roaming charges.

Roaming charges are the result of a number of factors, telco experts say. The first is limited consumer understanding – people simply go to another country, use the local mobile networks and assume their bills will stay the same.

But this isn’t the case because telecommunications networks have agreements between each other for users who are travelling internationally. These agreements tend to be quite expensive.

However, experts point out just because a local user may be charged excessively high rates for global roaming doesn’t mean the local telco is price gouging. The agreements are formed between telcos in two or more countries, so more than one party is responsible.

Independent telecommunications analyst Chris Coughlan told SmartCompany this morning such an announcement would be welcome news for travellers, but warns any further development in reducing global roaming charges in other countries could take a while.

“You’ve got lots of parties involved here, you’ve got clearing houses, you’ve got telcos, and other companies as well,” he says.

“It’s not an easy thing to regulate because there are so many parties involved.”

However, there are mounting signs the telecommunications industry is working to reduce global roaming charges, which have become so far removed from the usual price a user would pay for a contract. While an Australian user might purchase a 2GB pack of data for as low as $10 or $15 a month, global roaming might charge many times that amount – as much as $20 per megabyte.

In fact, a report conducted by both the Australian and New Zealand governments, the Trans-Tasman Roaming report, found wholesale margins were 300% and retail margins are more than 90%. It also found global roaming charges could be as high as $8.50 per minute for voice, and 75 cents for a text message.

A draft report released by Communications Minister Stephen Conroy recommended changes to global roaming rules, and Conroy called for an industry standard.

At the time, experts also told SmartCompany changes across the world wouldn’t be likely to occur for some time. Coughlan agrees – multiple nations need to enter the types of agreements used by Australia and New Zealand.

“You would need to have something with more than the two countries to really have an impact internationally,” he says.