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Bill shock

Bill shock is what happens when you go abroad, let your phone download some emails, then return home to an enormous bill. It has happened to me and at least one other frequently traveling samizdatista. The BBC is reporting that the European Parliament’s Industry, Telecommunications, Research, and Energy Committee has just voted to cap the price of mobile data in order to prevent bill shock.

Which does not quite make sense. The problem of bill shock is not that the bill is too high, though it is surprising and arguably silly that the price of a gigabyte can vary by a factor of 1000 or more depending on where you are, but you are told the price in advance. The problem is that the bill is unexpected. If phone companies are guilty of something, it is that they make it difficult or impossible to detect that you are running up an enormous bill before it is too late.

A simple solution would be to use SMS to warn customers what is happening or to allow them to set a limit after which data stops working. And although the BBC article does not say so, this is exactly what was regulated in July 2010. This bit of regulation regulates a sensible solution to a real problem, even it it is not sensible that regulation was used to achieve it.

The rest of it, the arbitrary caps on prices of this and that, is just price fixing.

10 comments to Bill shock

  • Couldn’t agree more….

    Contains everything I wanted to say on this topic.

  • LOL CountingCats. I should explain that I acidentally posted a completely blank post after IE swallowed the contents of the form.

    I’m tempted to go back and change the contents of the post to something far more controversial.

  • Noise

    Having worked in the vague arena of Telecomms and a vague understanding of politics..

    Most of the costs were setup costs. Those are mostly reduced now for basic consumption. You’re then in a market where no company really wants to cut costs to the consumer when the consumer is used to paying for it. More data bandwidth will be available when analogue TV signals die out making further economies of scale.

    On top of that, if we are to become the United States of Europe, going abroad has to become ‘less foreign’. Plus the costs are not particularly higher now, imagine the situation where someone on the South Coast rings North France compared to Scotland. Maybe twice as expensive, nowhere near 1000 x

  • I have no idea what you guys are talking about. I’m with Orange, and whenever I go abroad the first thing that happens when my phone attaches to a foreign cell tower is I get a text saying: “Hi Orange customer, welcome to , texts cost p, calls cost p/min and data costs /MB.”

  • Rob,

    You should have left it blank. I dare say the comment thread would have been fascinating….

  • Schrodinger's Dog

    Here in the US, the market seems to have solved the problem by itself.

    I had a mobile phone back in the mid-90s and once I was out of eastern Massachusetts (I lived in Boston at the time) I was hit with roaming charges as high as $1.50/min. So I made sure to keep my calls short. Now I pay one flat rate whether it’s a local call, long distance or I’m roaming.

    I wonder why the same thing hasn’t happened in Europe. After all, one of the benefits which used to be touted by the advocates of European integration is that product standardisation would bring about economies of scale, resulting in cheaper goods and services, as already happens in the US. Curiously, I’ve not heard it for a while.

  • I have a data contract that I use for my iPad. At home, I get 1Gb of data a month for £5. When I travel outtside the EU, I am charged £8 a megabyte, which (assuming I use my full allowance every month, which I don’t, but I often use a substantial portion of it) is 1400 times as much as I am charged at home. A data only device is not always capable of displaying text messages, and will use data doing various things without being asked by the user. These roaming data charges are so high that it is possible to rack up enormous bills without even realising you are doing anything at all, and in a very short amount of time. In the case off calls or SMS messages, yes, you generally know that you are doing something that will be charged for. With data, not always.

  • Andrew

    It’s pretty blatant competition isn’t working wrt roaming charges, since there simply isn’t any cheap way to do it (other than buying local sim cards).

    On some networks I’ve seen as high as £15 a megabyte. Or to put it more practically, watching a tv episode for an hour would cost more than the typical farmily car.

  • Daran

    Telecomms is very much a government approved monopoly/cartel so some form of consumer protection is welcome. The irony is of course that government sells spectrum in an auction and then acts suprised when those costs are passed on to consumers (while larger businesses are of course in a better position to negotiate rates).

  • TDK

    The Telecoms sector is heavily regulated and each operator has to justify their call termination charges. This is the situation where a person X on Network A calls someone X on Network B. The bill is sent to Y but in order to make the call, resources of both Networks (and possible a third) are used. Termination charges are the inter network charges that cover this cost. The justification for legislation is that incumbents can price new entrants out of the market because the majority of calls will be to or from an incumbent.

    In the case of data the legislation is far less developed, and consequently there is a habit of Networks deliberately charging a lot more than cost for “foreign” users.

    There was some talk of legislation in recent years but I can’t recall how it worked out.