Roaming across the same network in different countries
November 12, 2009 1:02 AM Subscribe
Why does it cost extra to roam in another countries when I am using the same operator in all of the countries?
If I am, say, a T-Mobile customer in England, and I visit Germany and use my T-Mobile phone there, on a T-Mobile network, why does it cost so much more?
Also, why do international calls cost more? Isn't everything routed over the internet these days?
(btw, am looking for more than "because they *can*" answers!)
If I am, say, a T-Mobile customer in England, and I visit Germany and use my T-Mobile phone there, on a T-Mobile network, why does it cost so much more?
Also, why do international calls cost more? Isn't everything routed over the internet these days?
(btw, am looking for more than "because they *can*" answers!)
Essentially, they are separate companies. Ok, they have a holding company, but the two are basically separate entities. It isn't always the case - Vodafone attempted to introduce a scheme whereby you paid a bit more and could roam onto their partner networks with a single set-up fee for each call and then just paying standard "national" rates on top of that. However, the way Vodafone organised it ( Vodafone Passport link ) meant that it was a complete rip-off. Do not even think about using this tariff unless every phonecall you make whilst abroad is over 5 minutes long!!! Most of the reason why roaming costs a lot is because roaming has always cost a lot. It's simply entrenchment of ideas, not a big global conspiracy to make you pay more for roaming calls.
Also, why do international calls cost more? Isn't everything routed over the internet these days?
How do you think the internet works? Do you think there's dedicated phone cables and dedicated internet cables? No. Ultimately, they're both the same wire, ultimately controlled by the telecoms companies. Most phonecalls go via a phonecall route, using SS7 switching (I believe this can be transferred to the "internet", but at the end of the day, it's the same cable, you'd just get less QoS by switching it to "internet" traffic).
Additionally, the reason why international calls generally cost more is because foreign governments levy a tax on the incoming call (which is most of the reason why tin-pot dictatorships always have a very high incoming rate - it's a cash-cow for them to line their own pockets, and doesn't hurt their own population in any way).
posted by BigCalm at 3:36 AM on November 12, 2009
Also, why do international calls cost more? Isn't everything routed over the internet these days?
How do you think the internet works? Do you think there's dedicated phone cables and dedicated internet cables? No. Ultimately, they're both the same wire, ultimately controlled by the telecoms companies. Most phonecalls go via a phonecall route, using SS7 switching (I believe this can be transferred to the "internet", but at the end of the day, it's the same cable, you'd just get less QoS by switching it to "internet" traffic).
Additionally, the reason why international calls generally cost more is because foreign governments levy a tax on the incoming call (which is most of the reason why tin-pot dictatorships always have a very high incoming rate - it's a cash-cow for them to line their own pockets, and doesn't hurt their own population in any way).
posted by BigCalm at 3:36 AM on November 12, 2009
The "because they can" aspect is price discrimination. Roamers have less elastic demand curves. Perhaps UK to Germany there is some currency risk. But I doubt that there any border tax issues and probably almost no administration costs at the margin either.
posted by hawthorne at 4:43 AM on November 12, 2009
posted by hawthorne at 4:43 AM on November 12, 2009
Why does it cost extra to roam in another countries when I am using the same operator in all of the countries?
Because the operator thinks they will make more money by charging you high rates. They know that their competitors are not lowering rates, so there is no reason for them to lose your business altogether. They also know that very few people look at the cost of roaming as one of the main reasons to pick a mobile carrier, so they would not pick up much extra business if they lowered their prices either. They have also considered that lowering prices might induce you to make more calls, but have decided that profits would be lower that way.
There is not a necessary relationship between cost and price. A merchant will charge whatever the market will bear. The fact that their cost is incredibly low only means that they can lower prices but there is no reason for them to since the market will bear a higher price.
If I am, say, a T-Mobile customer in England, and I visit Germany and use my T-Mobile phone there, on a T-Mobile network, why does it cost so much more?
Because this is the policy that maximizes T-Mobile's profit.
Also, why do international calls cost more? Isn't everything routed over the internet these days?
Internet traffic sent internationally costs more as well, especially if it is sent across an expensive transoceanic link. In the end, someone has to pay more per bit to send your traffic across the ocean. But the extra cost is not being passed on to you. It's interesting that you do not ask why this is. In any case, the reason is the same—there's not a necessary relationship between cost and price, and the market will not bear charging end-users more to use the Internet to send international traffic. If your service provider tried, you would probably switch providers to one that did not.
posted by grouse at 6:27 AM on November 12, 2009
Because the operator thinks they will make more money by charging you high rates. They know that their competitors are not lowering rates, so there is no reason for them to lose your business altogether. They also know that very few people look at the cost of roaming as one of the main reasons to pick a mobile carrier, so they would not pick up much extra business if they lowered their prices either. They have also considered that lowering prices might induce you to make more calls, but have decided that profits would be lower that way.
There is not a necessary relationship between cost and price. A merchant will charge whatever the market will bear. The fact that their cost is incredibly low only means that they can lower prices but there is no reason for them to since the market will bear a higher price.
If I am, say, a T-Mobile customer in England, and I visit Germany and use my T-Mobile phone there, on a T-Mobile network, why does it cost so much more?
Because this is the policy that maximizes T-Mobile's profit.
Also, why do international calls cost more? Isn't everything routed over the internet these days?
Internet traffic sent internationally costs more as well, especially if it is sent across an expensive transoceanic link. In the end, someone has to pay more per bit to send your traffic across the ocean. But the extra cost is not being passed on to you. It's interesting that you do not ask why this is. In any case, the reason is the same—there's not a necessary relationship between cost and price, and the market will not bear charging end-users more to use the Internet to send international traffic. If your service provider tried, you would probably switch providers to one that did not.
posted by grouse at 6:27 AM on November 12, 2009
Best answer: I'll go against the flow here. It's not because they can. Not directly.
A large chunk of the cost of calling abroad (and, for that matter, cross network inside a country) is the termination cost.
The way the operators look at it is this - if a call is from one of their handsets, they get a chunk of money from the bill. All is good. Now, if the call is coming from somewhere else and ending up on their handset, they have to handle the traffic, but get nothing out of the user's bill. So they charge some money to the originating operator. So, when you (on NetworkA) call your friend (on NetworkB), NetworkB charge NetworkA a handling charge. NetworkA then stick something on top and hand the cost on to you.
The idea of using someone else's network abroad is effectively the same thing. NetworkDE isn't going to get any of NetworkUK's bill, so they stick on a big fat charge for their trouble.
Now, the T-mobile UK to T-mobile Germany thing is because the branches are actually different companies. Yes, they could be nice to each other, but that assumes that the T-mobile network in Germany knows (or cares) that you are an T-Mobile Uk customer. It's easier just to hand the call over to an international connection and be done with it.
It's also worth noting that just because you have the same brand name, it doesn't mean you are owned by the same people. T-Mobile Montenegro (for example) "is fully owned by T-Crnogorski Telekom, which is itself owned by Magyar Telekom, a subsidiary of Deutsche Telekom"[wiki]. Locally branded Vodafone operations aren't always 100% owned by Vodafone [wiki].
Strangely, the whole thing could be sorted out (inside Europe at least) by doing as the insurance companies did a long time ago and presume that there are roughly the same number of outbound claims as inbound ones, and not worry too much about passing monies back and forth ('knock for knock'). The difference is that in insurance the repairs money is going between insurers and in telephony the money is going to be handed on to an end user. If the money is going to come from someone who isn't even a customer (better still, someone in a different country) then gouge away...
posted by twine42 at 9:50 AM on November 12, 2009
A large chunk of the cost of calling abroad (and, for that matter, cross network inside a country) is the termination cost.
The way the operators look at it is this - if a call is from one of their handsets, they get a chunk of money from the bill. All is good. Now, if the call is coming from somewhere else and ending up on their handset, they have to handle the traffic, but get nothing out of the user's bill. So they charge some money to the originating operator. So, when you (on NetworkA) call your friend (on NetworkB), NetworkB charge NetworkA a handling charge. NetworkA then stick something on top and hand the cost on to you.
The idea of using someone else's network abroad is effectively the same thing. NetworkDE isn't going to get any of NetworkUK's bill, so they stick on a big fat charge for their trouble.
Now, the T-mobile UK to T-mobile Germany thing is because the branches are actually different companies. Yes, they could be nice to each other, but that assumes that the T-mobile network in Germany knows (or cares) that you are an T-Mobile Uk customer. It's easier just to hand the call over to an international connection and be done with it.
It's also worth noting that just because you have the same brand name, it doesn't mean you are owned by the same people. T-Mobile Montenegro (for example) "is fully owned by T-Crnogorski Telekom, which is itself owned by Magyar Telekom, a subsidiary of Deutsche Telekom"[wiki]. Locally branded Vodafone operations aren't always 100% owned by Vodafone [wiki].
Strangely, the whole thing could be sorted out (inside Europe at least) by doing as the insurance companies did a long time ago and presume that there are roughly the same number of outbound claims as inbound ones, and not worry too much about passing monies back and forth ('knock for knock'). The difference is that in insurance the repairs money is going between insurers and in telephony the money is going to be handed on to an end user. If the money is going to come from someone who isn't even a customer (better still, someone in a different country) then gouge away...
posted by twine42 at 9:50 AM on November 12, 2009
This thread is closed to new comments.
This is their information portal. Which contains this quote from the EU Commisioner, emphasis mine:
"From today, all Europeans making calls or sending texts with their mobiles can experience the EU's single market without borders. The roaming-rip off is now coming to an end thanks to the determined action of the European Commission, the European Parliament and all 27 EU Member States"
posted by vacapinta at 1:18 AM on November 12, 2009