The outrageous markup on wireless roaming costs.

roaming charges

mkoudis/ Bigstock

The wholesale cost of roaming is a closely guarded secret, but recent revelations by Wind have shed light on shockingly high margins.

Roaming is a huge concern for consumers and businesses, but a closely guarded secret is how little it actually cost your phone company. However, with a recent revelation by Wind Mobile we’ve got a hint.

Wind mobile recently pointed out that the CRTC’s regulated wholesale rate, the roaming rate that incumbent providers can charge the small carriers, at $1000/GB is much higher than what they are charged by their US roaming partners. The quote that sticks out the most is one by Wind Mobile’s Chief Regulatory Officer, Simon Lockie:

The rate that we were successful in getting from this U.S. carrier, to whom we mean nothing, is 3.5 times less than what these legislated caps will provide

Initially this was thought to be in reference to the wholesale roaming rate charged by the carriers, but it turns out that this was in reference the the retail rates that the incumbents would be capped at charging Wind. A further clarification on the rate that was charged to Wind by foreign carriers came out later:

“The rate they offered us was a thousand times less than what we were able to get from the domestic incumbent,” 

Full quote can be found here at Cartt.ca

If this is taken at face value, we’d be looking at a wholesale cost of $1/GB when roaming in the US.

To add fuel to the fire, Wind Mobile is likely paying a higher rate than the large carriers owing to the fact that they are a small carrier. The markups of the larger carriers are probably even higher than this.

So let’s put some numbers in perspective here comparing the rates that carriers charge vs. their cost when consuming, something that would be comparable to 2-3 days of moderate usage on a high end smartphone. roamingshare2

 This represents an up to 50,000 percent markup!

This isn’t to say that there aren’t other ancillary costs including admin, and let’s not forget the huge overhead of running a wireless, but it is absolutely insane that they can get away with charging this much.

In a functioning market the carriers would be undercutting each other to capture more market share. The reality is that they don’t have to since roaming costs are often of secondary importance to consumers.

Obviously when working with businesses roaming rates is often one of my top priorities since it is the most challenging cost to control.

Still, you can’t help but be angry about this.

Edit: Correct roaming rate is now referenced.

The following two tabs change content below.

Andrew Seipp

Principal Consultant at Telclarity
Andrew Seipp is the principal consultant for Telclarity. His company helps small to enterprise clients navigate the world of telecom and find significant savings. Having worked in the telecom industry for nearly a decade he brings unparalleled insider knowledge to the table.

Related Posts

  • Pingback: Ripoff: The outrageous markup on wireless roami...

  • Pingback: Canada: The outrageously high markups on roamin...

  • Pingback: TelClarity on US Data Roaming with Canada’s Big Three | acurrie.me

  • http://about.me/acurrie Andrew Currie

    Hi Andrew,

    Great post! And for anyone without the deep pockets for a paid subscription to CARTT, I obtained a transcript of Simon Lockie’s presentation to the Senate and posted it to the Howard Forums:

    http://www.howardforums.com/showthread.php/1835020

    Cheers!

    • http://telclarity.com/ Andrew Seipp

      Thanks for link to the transcript. Interesting stuff especially the part about being charged for incoming texts. It’s astonishing that Rogers was is allowed to charge Wind $1000/GB though.

  • @Rogers_Chris

    Hi there, this is Chris from the social media team at Rogers. We thought we’d clear up some confusion on the information presented here about our roaming rates.

    Wholesale roaming rates are determined through negotiations between carriers. If one carrier isn’t happy with the negotiations, government rules say they can ask an arbitrator to set a domestic wholesale roaming rate that’s fair for both sides.

    There’s no evidence that consumers will get any benefit from lowering wholesale rates or that these small savings will be passed on to consumers.

    As for the issue of whether roaming rates charged to Canadian wireless carriers are unfair versus the rates charged to our American counterparts when their customers roam on our networks – It’s important our customers have access to the best networks while they’re travelling. That’s why we have reciprocal agreements with U.S carriers where our customers can roam on their networks and their customers can use ours. These agreements also allow us to keep costs down for customers who roam in the U.S.; meanwhile, Canada is a different story. We have invested tens of billions of dollars over the last few decades to build our wireless network so that our customers have coverage they need from coast to coast. Other carriers have chosen not to invest and improve wireless coverage in Canada, but instead piggyback on the networks of others.

    • BSB

      @ Chris

      If its good business practice to offer Americans lower rates then the same model should apply to other providers INSIDE Canada. Using your argument that you charge more to smaller companies inside Canada because of infrastructure costs makes no sense at all as you would and should be using that same argument for American providers too.

      Also there are the LARGE sums of money that the incumbents receive from government towards infrastructure that you failed to mention. Hence the cost of infrastructure is often less than the actual figures often quoted by the incumbents who have a marked tendency to inflate actual VS real costs.

      You also state that there is no evidence of cost savings being passed on to consumers yet WIND have done just that which negates your other point about lower rates being passed to consumers. The only time most people don’t see cost benefits is with the big three so I can only assume you are speaking of those and not other providers. If that’s the case then yes looking for real price reductions from the big three is like looking for “rocking horse skat”.