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Internet on mobile phones: The data swindle
Monday 13 September 2010 09:44:45 by Sebastien Lahtinen

Earlier this year, The Guardian reported on a student who received an £8,000 mobile broadband bill from Orange after taking their broadband dongle abroad, a story we have seen numerous times over the past few years. Following similar events and general concern with the mobile operator market, the European Commission introduced regulation that forced mobile operators to both limit the charges for using your phone in the EU, but also required operators to put in place an effective default credit limit on accounts.

As of this summer, anyone exceeding 50 euros (or equivalent limit in local currency; excluding VAT) whilst roaming, should find their service suspended, unless they agree with their mobile operator to remove this limit. A warning text message should also be sent when 80% of this limit is reached. This protection measure is designed to ensure that consumers in particular, do not find themselves with unexpected bills when they return home to the UK.

Whilst mobile phone companies have implemented this protection for customers roaming onto other networks whilst visiting EU countries, we have discovered that some network operators have been quite content in sending bills running into hundreds of pounds for browsing the Internet in the UK, something they could simply not do if you were abroad.

The problem

If you are a 'pay monthly' subscriber on a mobile phone contract, you receive a bill every month for your subscription, calls, text messages, data usage and any other charges you incur on your mobile phone, so you have to rely on common sense to make sure you don't end up with a large bill. When you're making phone calls, you tend to have a sense of how much you're using the phone and you can reasonably estimate how many text messages you've sent. However, using the Internet on your mobile phone is a bit more complicated, because the charges are in megabytes (MB) and you don't instinctively know how much data an individual application may be using.

Because of the delay of anything up to a month from using your phone to getting a bill, pay monthly subscribers could find a surprise in the post if they were using more services than they expected.

The sting

Whilst many subscribers will purchase or upgrade mobile phones in stores or on websites which bundle the sale of the mobile phone with a mobile contract (or renewal), it is possible to buy a mobile phone without a contract, for example if you're buying a second hand phone to save money, or indeed by walking into a retail store such as the Apple Store and buying an iPhone.

If you buy a new smartphone and use it with your existing SIM card, then you may well find yourself in a situation where your mobile service package doesn't include a 'data' (also often referred to as 'Web browsing') bundle. This means that you can be charged for any data you use at anything up to £4/MB. To put this into context, for around £5/month you can usually receive a data bundle of anything from 500MB to 1000MB (1GB) per month which equates to a maximum of £0.01/MB.

This disparity in pricing means that anyone who starts using a smartphone but without a data add-on on their contract, could easily be facing bills running into hundreds of pounds as the costs can be 400 times more expensive.

Smartphones like the Apple iPhone and the various Android phones are becoming very popular and there are significant numbers of users buying them in a retail store separate from mobile phone contracts, without being aware of the risks they incur if they don't also contact their network operator to get a data bundle added.

This problem applies to most of the major UK mobile networks and is most likely to affect users on an older ‘pay monthly’ mobile phone contract who buy a new smartphone mobile directly from a retail store or online, to replace an old phone which wasn’t used for accessing the Internet, without updating their mobile phone contract to include Internet browsing.

The confusion

Various charging schemes are in operation across the networks for mobile Internet usage, and various network operators offer multiple options depending on the bundle/package that you are on:

  1. Data bundle - where you pay a fixed monthly fee (typically between £5 and £10/month) and receive an inclusive allowance of between 500MB to 3000MB (3GB). If your usage exceeds this, then you may end up on a 'per MB' tariff, so you still need to be careful.
  2. Daily price cap - some network operators operate a 'pay as you use' plan which results in a charge being applied for every day you use your mobile phone to access the Internet. This typically ranges from £0.30 to £1 per day. It usually comes with a limit of up to 25MB/day either as a 'fair usage policy' limit (which means exceeding it may result in a letter being sent to you to ask you to consider your usage) or as a fixed cap after which you will be charged on a 'per MB' basis.
  3. Per megabyte (per MB) charging - with costs being anywhere from a few pence up to £4/MB. It is quite common to see costs in the £1 to £2/MB region.

The one notable exception: Virgin Mobile

We tried to speak to many mobile networks in an attempt to clarify the pricing where we couldn't get the information we needed from their website, and a number suggested that they would use their discretion when customers were using data excessively, or pointed out that there were plans designed for smartphones, however few would explain how they dealt with excessive use in detail, or define what this meant.

"If a customer exceeds their allowance we will monitor their activity on a case by case basis and notify them if we feel their usage is excessive."

Statement from a network operator

Out of all the major networks, only Virgin Mobile were able to confirm that their price cap applied to all customers, including those with older contracts which meant that reasonable use of mobile Internet access was only going to result in a bill of £9 for a month based on its 30p/day charge for up to 25MB of data usage. Further, when challenged on the pricing beyond 25MB, Virgin have also advised us that from the end of September, those exceeding 25MB/day will be charged £1.99/day (as opposed to 30 pence), which will protect even the heaviest of users.

Advice for consumers

  1. If your mobile phone connects to the Internet, make sure you have an inclusive 'data' bundle or a package with a capped rate for Internet access. Most current mobile phones can connect to the Internet, whether it’s just to update the weather forecast or download apps—you don’t have to browse the web to be using up data.
  2. Watch your usage. You can download applications which help to track your data usage, or you may be able to log on to your network operator’s website to find out how much data you are using.
  3. If you’re worried, switch off data. Turn off data on your mobile phone if you are concerned, especially if you’re going abroad; although the European regulation means that you will be better protected than before when travelling within the EU.

Advice for businesses

Business users are affected in the same way, if not more so, as some mobile operators don't apply the same caps to daily usage on business packages as consumer ones. Often, the person paying the phone bill is also not the same as the mobile phone user, increasing the risks that the user will continue to be unaware of the charges incurred.

  1. Ensure all your employees are aware of the costs related to use of their mobile phone, especially abroad.
  2. Check that any smartphones in the business have an appropriate data or 'Internet browsing' bundle.
  3. Encourage staff to monitor their own usage using software available from most app stores.
  4. Ensure the person within the organisation responsible for paying mobile bills keeps track of increasing trends of data usage and contacts the employees concerned.
  5. Consider instructing staff not to use SIM cards provided by the company in any personal mobile phones.

Our view

The EU regulation was designed to protect mobile users from receiving unexpected bills, but it does not address the overarching issue of ensuring the mobile user can make an informed decision when they incur charges. It's time for the mobile operators to accept responsibility for looking after their customers and ensuring that it's not possible to unintentionally run up large bills. It's hardly rocket science to send customers a text message when their usage exceeds some pre-determined limit, unless the customer has specifically asked them not to do so.

What makes this worse is that some network operators will allow you to 'opt in' to a daily price cap, and all you have to do is ask. We cannot understand why these caps can't be applied automatically to every contract, when there are no costs involved in doing so and it is clearly in the consumers' interest.

We would also add that whilst researching this story, we found the mobile phone contracts incredibly difficult to follow due to the enormous number of price plans and options many of which had separate contract terms, and charges on out-of-bundle usage were often unclear and located in small print. We would like to see Ofcom as the regulator, look to engage with mobile operators in an attempt to simplify contracts and make sure that all costs were accessible in a clear format. We certainly welcome the approach taken by 3, which has published a price guide document.

For some years, we have been considering the idea of standard labelling of broadband services, similar to the way 'energy labels' tell you how energy efficient your fridge or television set is. We suspect a similar approach would be of benefit to mobile phone services, and we hope to work to achieve this.

Important note

We would like to note in particular that the issue we have highlighted applies to using the Internet from your mobile phone without an appropriate data bundle. All the mobile networks offer bundles which are designed for smartphone users which can ensure or minimise the chances that you would incur any "per MB" charges. Also, by definition mobile broadband packages are data packages, and most include a usage bundle as part of the subscription.


Posted by cyberdoyle over 6 years ago
I think mobile charges are terribly confusing. I don't use mobile much, and only had a pAyGo tariff on my 'smart' phone. Each time I put a tenner on it uses it up itself doing windows upgrades. I have reverted to an ordinary phone cos I don't have time to study all the contracts. The more complicated it gets the more I go off it. I think my generation is getting seriously ripped off, especially as you point out if they go abroad.
Posted by whatever2 over 6 years ago
i'd like the confusion cleared up between data and tethered data as well. I simply could not get a straight answer out of Vodafone if they would charge me more if i used my phone as a mobile modem instead of their overly priced and same speed cards...
Posted by awoodland over 6 years ago
@whatever2: depending on how your phone does the tethering they can't always tell you're using it like that anyway!
Posted by Scubaholic over 6 years ago
This is a classic case of the regulator not doing its job. The mobile companies make the contracts long & confusing & difficult to compare to prevent comsumer choice. They aren't voluntarilly going to put in default data caps because they would loose money by not being able to fleece the ignorant i.e. most users.
Yet another reason not to get a smartphone & stick to the PC.
VM seem to be the exception which doesn't reflect well on the others.
Posted by tekkie2 over 6 years ago
Hi, I kept my requirements simple: 1)How much spend per month? £30 max 2)Do I need internet access? Yes for email on the move.3)How long will I keep phone? A year tops, but will see what the options are.I settled for a £25/mth mobile & data bundle. A 2 yr contract wasnt ideal but kept the cost down and the phone free (hate paying for phones). My worry with a long contract was that phones start having issues after 12 months, but my fears were tempered by the new warranties that come with new phones. Important was Wifi funtionality so I dont use up my data bundle when at home.
Posted by tekkie2 over 6 years ago
My last post was aimed at cyberdole. I would like to know however if mobile phones with Wifi capability prioritise Wifi connectivity for internet access above the data network
Posted by whatever2 over 6 years ago
you can choose with my n97...

god knows if they can tell or not if it's tethered... problem is the out of data charges are so high for a few mb that i'd burn through it in no time without knowing... i dont use it often, but if i was tethered then a few mb is nothing.
Posted by MarkHampshire over 6 years ago
@Scubaholic - spot on; the provider is happy to allow bills of potentially thousands to be racked up at punitive rates for exceeding allowances, for instance. Since the profit margin is so high, it's better to permit that, even if the account ends up in default (customer churn is more important than retention these days), on the basis that the provider should get *some* of the money, if not all. Same with banks and unauthorised overdrafts which the banks *could* prevent if they wanted to, but they would rather customers got themselves stung with charges - the penalty culture.
Posted by RomanP over 6 years ago
There are applications which allows you to prevent possible bill shock. For example Roaming Guard for Symbian smartphones, No Data for Windows Mobile... A bird in the hand is worth two in the bush...
Posted by cyberdoyle over 6 years ago
Thanks tekkei2, I use my smartphone on wifi to get emails on the move with phone element turned off. I use a cheap nokia just to make phone calls on. It was easier than trying to sort out the tariffs and the phone itself. Yes I have to carry two phones, but would rather do that than get stung for charges or use up all my credit. Life is too short to try to understand the different contracts/packages/offers. They change them often to keep the confusion going...
Posted by kamelion over 6 years ago
@Tekkie re:wi-fi prioritisation:

When I first got my xperia X1 from vodafone their software forced the phone to use the data network to connect to services such as windows live. People kicked up a stink about it and a lot just flashed the phone to use the generic rom from SE.
Posted by kamelion over 6 years ago
Fortunately at the time I was on an unlimted data package nevertheless, I was annoyed at the fact that I couldn't choose connectivity on my "smart phone" and that VF had been surrepticiously been making money out of people by using this method. My new android smartphone prioritises wi-fi over data network for everything.
Posted by otester over 6 years ago
Lot easier to just buy a sim abroad...

-Spain I got 200Mb for €10 with Orange.
-Netherlands I got 1GB for €4.99 (offer of the month, usually €10) with Voda NL.

Support for English wasn't as good in Spain as it was in the Netherlands, but the trip to Spain was a few years ago so that might have changed or I just didn't look hard enough...

Reason why it costs more is because the data is routed back to your home provider, that's why it costs others same rate/credit to contact you.
Posted by mitchja over 6 years ago
All well and good but when are we going to see data caps when traveling OUTSIDE the EU?

Mobile networks are still stinging users for data charge outside the EU.
Posted by seb (Favicon staff member) over 6 years ago
@mitchja: There is an issue of using phones outside the EU but the problem is the EU has no power to regulate the roaming partners' charges. I suspect even the caps need the co-operation of both mobile companies as the data on billing may not flow in real time.
Posted by seb (Favicon staff member) over 6 years ago
@otester: it shouldn't be that expensive to route the data back really.. and they could offer the option of not doing so (and connecting you to the local node) as an option
Posted by otester over 6 years ago

Current system is a cash cow unfortunately.

Be nice if international operators stopped dividing by country.

I heard 3 does this in Asia.
Posted by Michael_Chare over 6 years ago
I am very glad that Thinkbroadband have taken an interest in this subject.

Virgin are going to set their max daily charge for internet access at £1.99 for Direct Debit PAYG Customers, if you don't prebuy a bundle.

However if you purchase a 1 month 1GB bundle for £5 and then exceed the 1GB limit you may be charged at £2/MB. (According to a recent email I received from them)

Another issue that is often unclear is whether tethering is permitted.

Posted by Michael_Chare over 6 years ago
Vodafone are introducing charges for users who exceed the FUP. This is giving some people the opportunity to terminate their contracts early.

See the Vodafone eform:
Posted by audioslim over 6 years ago
Mobile operators are conmen pure and simple.

File alongside car salesman and insurance companies!

Posted by chrysalis over 6 years ago
PAYG dongle best idea, if you run out of data you not completely cutoff so in an emergency can still topup online.
Posted by NetGuy over 6 years ago
I find mention of 5 pounds for 1 GB astonishingly costly (even though in the current scheme of charging, it is still much better than 2 pounds per MB.

Have had a mobile dongle on contract. First 18 months cost 7.50 for 5 GB, now 15 GB for 7.50 (!!) - that's 50p per GB.
Posted by MarkHampshire over 6 years ago
Is it still ridiculously expensive to travel abroad? I used to go to Amsterdam 4 x a year and used GPRS on a local Dutch SIM to connect, because using my own Vodafone one was about £2/Mb or something silly. When they brought out their 3G data card I looked at this, it was going to be something like £99 per month for UK use, but still £2 per MB even when connected to Vodafone NL.
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