What’s the greatest rip-off going? Maybe so many come to mind that you’re reaching for a pen.
Your list might look something like this:
- bottled water
- sports drinks
- petrol price rises just before a long weekend or public holiday
- credit card interest rates and surcharges.
And let’s not forget international companies that prevent Australians from buying products directly from their US website, forcing them to purchase goods through a local website where products are much more expensive.
Apple’s iTunes is a good current example of the online price discrimination practices facing Australian consumers.
Of course, this discrimination is not limited to goods purchased online.
An OECD report published in May this year states that Australia is the third most expensive country in 34 OECD countries studied.
But back to our list.
If you have made a trip overseas recently your tally of rip-offs may include international data roaming charges. And for good reason.
Forgetting to turn off the data connection to your phone before you hop on a plane can mean your next mobile phone bill will contain a nasty, and very expensive, shock.
In May this year, the Australian and New Zealand governments announced they would investigate the high cost of using a mobile phone when travelling across the Tasman.
A review by The Australian Business Traveller highlighted a problem which – rightly – is causing outrage.
Depending on which network your phone belongs to, the cost can be as much as $AUD20/MB for international data roaming and $AUD4.40 per minute to call home to Australia from New Zealand.
Is this good value? To put it in perspective, the cost of transferring data over the internet is now available at $AUD0.10/MB or less.
Take, take, take
So is international data roaming the greatest rip-off in history? Possibly not, but it must be near the top given the mark-up on data charges is sitting at around 200 times the actual cost.
Representatives from Australian telecommunication companies will argue they have costs associated with providing their service, contract charges with the partnering telecommunication companies overseas; they’ll also point to the high cost of undersea cables to Australia.
But there are strong incentives for governments to look at ways of reducing unwanted costs and barriers.
Successive Australian governments have been tardy in dealing with this matter. There is a strong and compelling argument for the Australian Consumer and Competition Commission (ACCC) to be given greater powers to force Australian telecommunication companies to significantly reduce international roaming charges.
Australians are encouraged to travel and do business overseas, yet the issue of excessive international data roaming charges persists.
Over the past decade, government committees have looked at this issue many times and produced numerous reports – the 2009 House of Representatives Standing Committee investigation being a case in point.
Sadly, the outcome of this review – a recommendation that travellers be made aware of alternatives to mobile roaming – was of little consequence.
As a starting point, the Australian and New Zealand governments should immediately regulate to force down the cost of international mobile phone and data roaming between both countries. There doesn’t appear to be technical or economic reasons why this can’t occur.
The cost of using an Australian mobile phone for calls or data while in Wellington, New Zealand, should be no more expensive than the cost of using an Australian mobile phone for calls or data while in Hobart.
What should we do in the short term?
Australians travelling overseas need to ensure they turn their mobile phone’s data connection off before leaving. The best solution is still to purchase a cheap pre-paid mobile phone and SIM card on landing and to use this for data connections.
Is this ideal? No, it’s not. Do we have a choice? Sadly, no, unless we want to continue being charged through the nose at literally hundreds of times the going rate for data transfer.
Join the conversation
Comments (13)
Terry Mills
lawyer retired (logged in via email @skymesh.com.au)
We have a son in Timor Leste and to call him from Oz is $11.99 per minute but they can call us for $1.27 per minute WTF ?
Benjamin Shepherd
(Researcher in the Food Security Program at the Centre for International Security Studies at University of Sydney)
Oh, and to add to Mark's list after credit card fees: ATM fees! Westpac charges a $5 foreign ATM fee PLUS a 3.5%ish charge on the forex transaction. Was costing me in the order of $12 - $15 a pop to withdraw cash. I looked into Western Union as an alternative and its costs are even higher and that's sad because it is the unbanked--the poor--in developing countries who rely most on its services.
Thanks for the opportunity to vent about this stuff!
Bruce Moon
Bystander! (logged in via email @imap.cc)
Benjamin
There is a simple solution - a credit card that neither charges an annual fee, nor any amount for withdrawal of YOUR money, nor takes a percentage for themselves to 'process' YOUR money.
Go look at www.28degreescard.com.au/
We (my wife & I) have two. I have one for purchases, we use my wife's as a preloaded card for ATM cash withdrawals.
Cheers
Bruce Moon
Bystander! (logged in via email @imap.cc)
Mark
Yes, buying a local sim card is OK in SE Asia, but can be more expensive than roaming in some EU nations (esp. Germany).
We've gone over to Skype. The costs aspect of telephone is just not worth the hassle.
Most smartphones can be adapted to use Skype. And, a conversation in a Macca's over a cuppa to get use of their wifi isn't too much of a drag.
- - -
What gets me more annoyed is the massive mark up on SMS charging in Australia.
Believe it or not, telco's in Malaysia charge their customers…
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Paul Regis
Business Analyst (logged in via email @live.com)
Like many things, the cost you pay and the cost price are totally different. This is an interesting topic - should retailers charge what the local market will support (e.g. Ikea) or just mark up by a percentage?
Fortunately we don't spend a large proportion of our incomes on text & roaming. But what should we say about more staple items, like bread? Why does bread in Australia cost 200% to 300% more than in the UK?
Benjamin Shepherd
(Researcher in the Food Security Program at the Centre for International Security Studies at University of Sydney)
Prior to a recent trip, Virgin Mobile warned me that they even charge roaming fees on the welcome texts from other carriers when you turn your phone on in a different country. Like $4 or something. So not even using your phone you get hit. I didn't even take my Virgin Mobile SIM card with me - just the phone. Get greedy and miss out altogether.
Dennis Alexander
(logged in via LinkedIn)
And it is not as if the services of, say, SofTel are all that much less expensive than the roaming charges. Often the service charges like a wounded bull for data (especially maps not directly from GPS satellites) and isn't terribly cheap on calls. Overall, $500 total for 3 weeks was only just cheaper than roaming would have been, if at all.
John Browne
Surveyor (logged in via email @hotmail.com)
Thanks for highlighting this Mark.
On a recent trip to Christchurch I've just been charged over $4/min not only to make calls back to Australia but to receive them as well.
They get us because it is so convenient to use the same phone.
ACCC please take note.
nik dow
(logged in via Twitter)
The suggestion to buy a "cheap phone and sim card" is good, but I generally just get the pre-paid sim card and use it in my Australian phone. That way I can continue to synch my calendar, get email etc. Just make sure you have +61 in front of all your australian contacts.
Simon Chapman
(Professor of Public Health at University of Sydney)
Add rock salt to the list. If you go to a delicatessen & buy a small packet of rock salt - 200gr etc -- to put in your salt grinder, you can pay $7 or so bucks, more of its some crap like "Dead Sea salt". But if you go to Bunnings, you can buy 25kg!!!! of rock salt to put in your swimming pool. It's the same stuff -- sodium chloride -- for $5. I've been using it for years
John Holmes
Agronomist - semi retired consultant (logged in via email @iprimus.com.au)
Add inkjet printer ink to the list. What something sourced at $5-8.00/L packaged at just how much??
Re roaming, been caught, now when OS calls are from local sims at 10% or less of same call from here.
Time for a summons from the office of the PM and a please explain. It will get votes!
Michael Jones
(logged in via Twitter)
Getting a local SIM is fine if you are staying in one country, but in Europe you have to get one for every country or get hit with international roaming charges every time you cross or even approach a border.
Paul Regis
Business Analyst (logged in via email @live.com)
It changed in Europe. The EU regulated a few years back and using your phone within another EU member is largely comparable to using it at home.
The point about undersea cables etc is somewhat false, as I may also use such cables if I checked a website from my desk, without paying $20/MB.
When I worked for a Telco a few years back, I discovered that roaming calls were 3% of volume but 20% of revenue. As such activities weren't regulated, it was an easy way to make money. There is a little bit of credit risk associated with it, but apart from that, the internal costs are low and have become lower with some of the new telephony signalling systems deployed over the last decade (mainly CAMEL).
The question is whether the roaming revenue keeps domestic prices low. I would say that in Australia, the answer is no. Prices here for domestic calls are about double to triple what you would pay in Europe. And I'm not sure that geography can explain that.