Why is data roaming so expensive?

To understand why data roaming is so expensive, we first need to answer: what is data roaming? We have the official definition below, but believe an infographic is easier to understand. So we’ve prepared one:

Infographic: What is data roaming? by Onavo

Now, the Wikipedia definition:

Roaming is a general term referring to the extension of connectivity service in a location that is different from the home location where the service was registered. Roaming ensures that the wireless device is kept connected to the network, without losing the connection.

There are two types of roaming:

  • National – to the ability to move from one mobile operator to another in the same country, such as from T-Mobile to O2 (in the UK). National roaming is more dependent on regulatory actions than business partnerships or market demand.
  • International -the ability to move to a foreign (country) service provider’s network. International roaming is easiest using the GSM standard, as it is used by over 80% of the world’s mobile operators.

From this point onwards, by ‘roaming’ we mean ‘International Roaming’.

So, now that we’ve nailed the definition, WHY is data roaming so expensive?

Roaming is expensive because, simply put – it involves two carriers, located in different countries, without any regulatory acts nor provisions. The hassle of making your smartphone work abroad falls on the visited carrier, which unlike the home carrier, couldn’t care less about you. You are not their subscriber – don’t want to pay the premium of roaming? Don’t use your phone. The story of data roaming is expensive because the entire roaming cost is incurred by the subscriber instead of being covered by the carrier.

Roaming is made possible due to a vast maze of contracts negotiated on a carrier-by-carrier basis. If you’re with AT&T traveling to Europe, AT&T has signed contracts with almost every European carrier (at least one per country), to ensure its subscribers will be able to use mobile services while abroad – voice, text and data. And those contracts are not governed by a centralized regulator, because there isn’t one: US works under FCC, EU under DG Infso, Australia under ACMA, and so forth.

Will it get better?

Maybe. Depends where you live. The EU was the first authority to legislate Regulation on roaming on public mobile telephone networks within the Community (Regulation (EC) No 717/2007, PDF), which aimed on reducing roaming prices for subscribers travelling within the European Union. However, when it comes to internet services and data, 717/2007 only regulates at the operator’s level, not the subscriber’s (retail). Meaning – the EU has determined a maximum price the visited operator can charge the home operator, but not a maximum price for the consumer.

And the lack of global regulation (among others) is what’s causing bill shock stories like Nilofer‘s one:

Nilofer Merchant on AT&T, $15 per MB, data roaming

A solution!

That’s where Onavo comes to the rescue, and why we’ve decided to develop the technology that will change the way subscribers and carriers alike perceive data roaming.