Business Spectator - 29 August 2012

Telecommunications companies already make mammoth profits from international roaming charges and these profits have only increased with the introduction of smart phones. Telcos now not only apply international roaming charges to phone calls, but to other popular services like SMS, email, web browsing and social media use as well.

Given this, and the fact that international roaming charges appear to change for every different country that you visit, it’s no wonder that communications minster Stephen Conroy labelled the whole situation around mobile roaming as “frankly obscene” and has moved to act on the issue - by tackling mobile roaming charges in New Zealand.

New Zealand and Australian have formed a committee to look into the problem of the international roaming charges for travellers between the two countries.

But it’s hard to see that there is an international roaming problem between Australia and New Zealand. If you think about it, it’s a bit like someone in Sydney being exponentially charged for making a call from Hobart.

It’s just two islands with a cable running between them – how expensive can it be?

What makes it more baffling is the fact that no US or European telcos are involved in the connection between Australia and New Zealand. Our telcos have argued for years that they are the cause of higher international roaming costs.

So with this in mind, here’s what Senator Conroy had to say about the government’s approach to our New Zealand mobile roaming crisis on ABC News 24's Breakfast program.

• “We're announcing two things today. We're releasing a discussion paper which we've worked on for the last couple of years with the New Zealand government which is saying we need to act now”
   
• “We've done a study and what we found was at the beginning of the study the mark-up, the margin for international cost calls between here and New Zealand was 1,000 per cent”
   
• “With the spotlight on, it's come down to 300 per cent but that is not good enough.”
   
• “I'm directing the ACMA to put in place a standard which will see mobile phone companies notifying their customers when they're overseas of the cost of a call, the cost of sending a text, the cost of going online, and giving them the option to opt out.”

Senator Conroy's announcement is a good small first step.

Unfortunately, telecommunication companies will pass on the cost of the new notification and opt-out system to customers and the announcement does not tackle the root cause of the problem.

It’s a meagre step compared to what The European Union legislated back in 2007 to curb international roaming charges They recently announced that from July 2012 there would be more regulation of roaming costs for EU citizens when travelling in EU countries.

The move is expected to save EU families over €200 each year and business travellers over €1000.

The European Union Commission Vice President Neelie Kross said that "by putting price caps on data we have created a roaming market for the smart phone generation. More than that, we have ended the rip-offs familiar to anyone who has used a mobile phone while travelling abroad. I am pleased that year after year the European Union is putting money back in the pockets of citizens".

What a sentiment. It’s one that we’re unlikely to experience anytime soon given the fact is that regulation of the trans-tasman international roaming charges is still years away.

The Association of South East Asian Nations (ASEAN) has, according to Ovum research director David Kennedy, expressed an interest to create an agreement similar to that in the EU.

Kennedy says "that's at a much earlier stage than these negotiations, but if that were to come to pass, the next step would be combining the agreement with one between Australia and New Zealand."

Senator Conroy should implement wholesale and retail prices caps with New Zealand immediately and give the Australian Competition and Consumer Commission (ACCC) the power to investigate and set prices in conjunction with the New Zealand government.

The EU prices set a benchmark that could be immediately implemented between Australia and New Zealand and could form the starting point for an agreement with ASEAN.

As for an agreement with US and EU telecommunication companies, well this is where we find out who our friends really are. There is no hope in the foreseeable future of an international roaming agreement with telecommunication companies in the US and EU unless their governments step in.

It’s time for Senator Conroy to start calling his counterparts in the US and Europe and tell them that the Australian public are sick of being ripped off.