Exorbitant global roaming charges are the main reason why mobile workers rack up such huge cell phone bills during business-related overseas trips, a recent survey reveals.
International roaming charges can add up to much as $693.50 per trip for every globe trekking employee, according to a study by Harris Interactive Inc.
Taking into account that at least 15 per cent of employees make an international trip each year, fees can translate to more than $950,000 in yearly roaming expenses for a Fortune 1000-type company with an estimated workforce of 10,000 employees.
“Surprisingly, few businesses appear to be looking for alternatives,” said Joe Porus, vice-president and chief architect, technology research at the Rochester, New York-based polling firm.
Harris Interactive queried 1,183 business travelers, corporate telecom decision makers and leisure travelers on their mobile phone usage.
The survey, conducted last November and December, was commissioned by Brightroam, a New York-based global cellular service aggregator.
More than 89 per cent of the respondents agreed roaming fees were overpriced, but 61 per cent said they had no plans of switching cellular service providers within the next year.
North American cell phone roaming charges are out of control, according to Mark Tauschek, senior research analyst for Info-Tech Research Group Inc. in London, Ont.
For instance, he said, AT&T’s roaming fees are as much as $1.99 per minute for calls made in China and around $2.99/minute in India.
T-Mobile charges $2.99/minute for calls in China and $2.99 in India.
With the accompanying long distance fees that both companies charge, calls can be worth more than $4 a minute, Tauschek said.
The ballooning cost of roaming charges can be attributed to three main factors, said Jeff Wilson, general manager for Brightroam.
“It all boils down to the proliferation of cell phone devices and usage, increasing demand for international business trips and the telecom industry’s roaming fee structures,” Wilson said.
He said while cell usage by employees can be controlled, roaming fee structures are often beyond a company’s influence.
For one thing there are no regulations that motivate cell phone service providers to reduce rates.
A complex billing structure also layers on additional costs to the user. When travelers are in another country, they have to use the cellular services of the local provider which in turn charges – at a premium –
the user’s original provider. These charges are then tagged on to the user’s bill.
“While cell phone carriers reap the benefits from roaming frees, these costs are bad news for both large and small companies,” Wilson said.
Tauschek agrees: “A lot of people think it is extortion.”
The European Union (EU) only recently initiated moves to regulate the market, he said.
Last year, the EU ruled that carriers of member countries can only charge roaming fees of up to 49 cents/minute for outbound calls. That price will be reduced to 46 cents/minute this year and 43 cents/minute in 2009.
Unfortunately, Tauschek said, there appears to be no relief from the government sector in Canada or the U.S.
The Harris survey also found that: more than 38 per cent of international roaming charges are expensed by employees and reimbursed by the company, around 33 per cent are centrally billed with the firm, and some 19 per cent of companies do not cover roaming expenses.
The remaining nine per cent of respondents did not answer.
More than 62 per cent of the calls are business related compared to 38 per cent personal calls. Nearly half of the callers use cell phones, some 23 per cent use smart phones and PDAs while 29 use landline phones. The average traveler makes nine calls per day.
Brightroam’s Wilson said a global cellular communications aggregator – such as his company – could help businesses reduce roaming expenses.
Through its various agreements with major North American and international carriers, Brightroam is able to get discounted roaming fees, which the company passes on to customers, Wilson said.
The company claims to be able to provide anywhere from 50 to 80 per cent savings over standard prices. It sells SIM and cell phones (subscriber identity module) card packages.
A SIM card is a tiny encoded circuit board fitted into a cell phone at the time of signing on as a subscriber. The cards holds information about the subscriber, security data and the phone’s number. The SIM helps the network service provider recognize the caller.
Some cell phones can be “unlocked” to accept SIM cards from other service provider. Some cell phone users load a SIM card of a local carrier in the country they are traveling to in order to avoid long distance and roaming charges.
Wilson said his company’s service can work on various networks such as cellular, WiFi, WiMax and Voice over Internet Protocol (VoIP) in more than 160 countries.
A Toronto-based IT and management consultancy firm said Brightroam was able to shave as much as 75 per cent from its executives’ overseas roaming expenditures.
Atticus Interim Management’s team of principals frequently travel to India, China and Europe.
“Our international call expenses amounted to an average of $800 per traveler per trip. With Brightroam we were able to bring that down to $200,” said Greg Petkovich, president of Atticus.
He said his organization was able to gain additional savings by employing a VoIP-enabled call forwarding system.
When executives traveling abroad receive a call, that call is forwarded to Atticus’ VoIP system. The system then forwards that call to the Brightroam phone of the executive.
“The VoIP system allows us to bypass Bell Canada billing because the call goes over the Internet and Brightroam only charges for outgoing calls,” said Petkovich.
Info-Tech’s Tauschek, who wrote a report on mobile phone best practices, has the following advice to help business users roam the world cost effectively:
Businesses should investigate using unlocked cell phones that can personnel with greater flexibility in cutting mobile expenses when traveling abroad. If workers appear to be traveling to one country frequently consider purchasing or renting SIM cards or phone and SIM packages appropriate for that destination.
Compare the long distance and roaming charges of various service providers. Look for special plans. Pick out the best service and price combo that fit your needs. If you don’t want to switch carrier, find out if you could negotiate a plan.
Less talk is cheap
Encourage traveling personnel to be circumspect with the use of long distance calls. Perhaps e-mail or text messages would do for some transmissions. Would using landline phones cost less?
Move ahead with call forwarding
Use VoIP-enabled call forwarding services or hardware. By having calls transmitted over the Internet, companies can avoid costly long distance fees charged by carriers.
Get stake holder buy in
Educate mobile workers about the financial drain caused by roaming and long distance fees. Set up best practice policies designed to bolster smart mobile device usage.