It's time for AT&T and Verizon to revisit international data roaming costs

Sue Marek

A new study from broadband connectivity provider iPass bemoans the unpredictability of data costs for workers when they are traveling. The study delves into the various costs most road warriors incur by using a combination of cellular data (both domestic and international data plans) and Wi-Fi day passes to cover their mobile data needs for multiple devices such as smartphones and tablets.

The iPass report breaks out costs for two hypothetical travelers--a U.S.-based executive who travels both domestically and internationally and a European-based traveler who travels within and outside the European Union. Both hypothetical users use their 3G/4G connection when in their home country and use a combination of Wi-Fi and 3G/4G when outside their home country.

The U.S.-based traveler spends about $180 on data over a four-day business trip while the European executive's costs exceed $200 for his four-day business trip.

Of course, iPass is hoping to convince companies that by signing up for iPass' service they can make their broadband connectivity costs cheaper and more predictable. However, I thought the report might be insightful to mobile operators--particularly those that are in the midst of formulating LTE roaming deals.

The iPass report notes that the growth in tiered data pricing plans in the U.S. and Europe has made users more cautious about using their cellular data when traveling overseas because many have experienced "sticker shock" after exceeding their cellphone data caps on trips abroad.

Some U.S. operators have made an effort to improve their international data roaming fees. Most notable is T-Mobile US, which decided to end global data roaming rates in more than 100 countries for customers on its Simple Choice rate plans starting Oct. 31. By comparison, Verizon Wireless (NYSE:VZ) charges $25 for 100 MB of data when roaming globally. AT&T (NYSE:T) charges about $30 for 135 MB.

At the time of its announcement, T-Mobile CEO John Legere said the company's competition (AT&T and Verizon) make upwards of a 90 percent margin on their data roaming rates and therefore T-Mobile would not hurt its bottom line by putting an end to international data fees.

If Legere's claim of a 90 percent margin being made on international data is true, then operators really need to rethink their global data roaming business models. Not only are Wi-Fi providers such as iPass increasing their footprints in hotels and airports where international travelers congregate, they are also making it easier and more affordable for travelers to connect to their services. Why should I purchase a global data bucket for my smartphone when I can just roam on Wi-Fi instead?

Another initiative that is gaining ground and could help operators manage global data roaming is the Wireless Broadband Association's Next Generation Hotspot (NGH) program, which is expected to become more prevalent in 2014. The initiative has the backing of carriers such as AT&T Mobility, China Mobile, KT, NTT DoCoMo and Orange.

The NGH program is designed to do several things, both for end users and for carriers. For customers, their phones will be able to jump onto the best network available, whether it's Wi-Fi or the cellular macro network, without having to actively switch networks. For operators, this is supposed to help them reduce roaming costs.

The key here is not only to make it easier for business travelers to connect seamlessly but also more economically. And any cost savings from switching to Wi-Fi instead of cellular should be passed on to customers. After all, business travelers have always been high ARPU customers--why not cater to their needs? --Sue

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