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April 25th, 2009

Here’s a story that makes me feel like a genius to put our iPhones on Airplane mode (Wi-Fi re-activated afterward) while traveling: a man was visiting Mexico from the U.S. and his nephew wanted to watch “Wall•E,” so he put in his data card for his wireless carrier and downloaded the movie. When he got back to the U.S., his carrier billed him for $62,000. When he contested the charge, the carrier cut it by more than 70%, but it was still $17,000–the claim being that was what it cost the carrier.

The core question is, why is global roaming so expensive? When I checked out prices for Sachi and I to use our iPhones in America, it came to $2 a minute–even when we just received calls. Carriers usually claim that the costs are the foreign carriers’ fault, but these carriers charge just as much themselves. They will say that the charges are necessary for “capturing the information and rebilling across multiple countries, combined with exchange rate considerations,” but the $62,000 charge belies that. First, the $17,000 reduction shows that the home carrier adds about 70% on top of what the foreign carrier charges, and second, I seriously doubt that a single data transaction like downloading a movie costs $17,000 to track the exchange and rebill, not to mention that exchange rates would have a miniscule effect relative to the whole transaction. Rebilling happens all the time in many industries and should not cost that much, and the data tracking should not be so expensive either.

In short, carriers simply see an opportunity to bilk people and all carriers cooperate to do so in cartel fashion. The EU is working on legislation to prevent this, and frankly, all countries should be doing so.

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