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Friday, May 14, 2010

An open letter to Vodafone on data roaming pricing

Dear Marketing and Pricing Executives at Vodafone,

In the past, I've been pretty complimentary about you guys, especially with regard to things like Passport and innovations around third-party paid mobile broadband.

My attitude has just changed polarity.

In February, I switched my main personal mobile account to an iPhone on Vodafone UK. My main criterion for choosing Voda over iPhones supplied by O2, Orange or Tesco was specifically about international roaming charges. All the other pricing was much the same, and I thought that perhaps Vodafone's network might be less congested than O2's, without a million other iPhone users sharing it.

So I went to my local Carphone Warehouse, asked about the different international fees, checked online - and picked the Reds on the basis of a simple and intelligent charging structure, which seemed to be much less of a rip-off than the others.

We all know that most international data roaming is ludicrously-priced, and that it needed heavy regulation from Brussels to get European tariffs into the vague realm of sanity, with notification-of-charge and so forth. The whole industry privately agrees that data roaming pricing is a joke, even if few people at operators want to be seen killing the golden goose by acknowledging it in public.

But I thought that the costs on Vodafone - basically a flat fee of £5 per day for up to 25MB - were not too unreasonable. It's about half the price of a day of hotel WiFi, or perhaps 2 hours in an Internet cafe. Or 10x the price of Vodafone's UK prepaid daily tariff, which gives 25MB for 50p.

Expensive but acceptable, especially as I'm checking my business email. 25MB is ample for non-heavy use of an iPhone: email, catching up on blogs, a quick bit of Google maps and Facebook. Most importantly, I can be pretty confident that I can just use my phone normally, without double-checking the amount of data usage on the settings menu once an hour.

I know that the current EU-mandated wholesale price cap in Europe is €1 per MB, falling to €0.80 from July. I also know that Vodafone has its own footprint across Europe, so it's not as though it's getting stung for lots of wholesale data fees, as generally you're on-net anyway - so any disparities wash out on inter-country transfer pricing.

So, given that the only reason I'd chosen Vodafone in the first place was because of this tariff - and I'd recommended it to other people as well - I wasn't best-pleased to receive an SMS announcing:

"On June 15 data roaming prices are changing plus some countries will be moved into a different travel zone"

The new prices are £1 per MB, up to £5, then £5 for every 5MB after.

In other words, for 10MB the price has doubled, and for 25MB it has quintupled. For 25MB, that's 50x the cost of the domestic daily price. Apparently you get SMS alerts when close to 5MB and 10MB thresholds.

I see that the press release somehow manages to pitch the change as being positive for customers. I'm impressed that you seem to have managed to hire Alastair Campbell and Peter Mandelson so soon after the general election, to spin bad news for you.

I guess I'm back to using WiFi only on the iPhone when I'm travelling, and I'll go back to taking an unlocked Nokia and buying local data SIMs again.

I've double-checked this with customer service (your IVR system is broken, by the way) and asked to get transferred to someone whose job it is to deal with what I described as "high nuisance value" customers like me. Double-checked with her too, that this applies across the board, including iPhone tariffs.

So. My main (only!) reason for choosing Vodafone against its competitors has just been removed at a month's notice. Three months into an 18-month contract, so I can't just churn immediately as I'd like.

Honestly guys - I've heard Vodafone talk at various events and conference about customer loyalty, stickiness and so forth. Have you not worked out that if you show *contempt* for your own customers, that might work against you? You even got a plaudit the other day for smartphone customer loyalty - and up until 3pm this afternoon I would have given the survey a thumbs-up as well. Let's see what the next one looks like, eh?

[Edit: Note to all mobile operators: as long as you pull stunts like this, do you *really* think you can convince your customers to sign up for mobile payments/wallet service, or managed identity & authentication, or similar? How do I know you're not going to change the rules mid-contract to permit spam or charge extra? This whole idea of massive price changes to live contracts illustrates a huge amount of bad faith and a lack of business professionalism]

It's not as though you're increasing per-GB price for mass mobile broadband downloads either, where perhaps there's an argument that costs and prices are out of kilter. This is a per-MB roaming price - quite probably the single most overpriced, unjustifiable and most-hated item on operators' tariffs in the entire industry.

Now it's vaguely possible that this cost somehow reflects increased signalling through VLRs and RNCs, rather than actual data downloads, because of regular international data connection setups from smartphones. But if that's the case, you should say so - and frankly I can't believe anyone uses $20 worth of VLR resources per day. It would be cheaper for you to give users a local Vodafone SIM to switch to.

Overall, it's fair to say I'm furious about this. Oh, and I wasn't going to mention this before today - but your network in central London sucks too - the number of times I've been with friends with O2 iPhones who have coverage when I don't is amazing. As are the number of dropped data connections, mysterious "403" errors that need me to switch off & re-register and any number of other glitches.

I've written before about "Resentment Base Pricing" and "Active Customer Disloyalty". Looks like I've got a good case study.

So Vodafone people: any excuses? Is it genuine customer contempt, or just accidental?

Responses welcome either on this blog or via email.

Dean

(Note 1: journalists - feel free to quote me)
(Note 2: Google, you should probably work out a way to get the Maps app to send a GPS look-up via SMS when the user has data roaming switched off, returning with the nearest free WiFi cafe and a voucher for a discount espresso)




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13 comments:

John Davies said...

If you have used the roaming in the three months you might be able to end your contract early as they have moved prices up by more than x%. (I think x~=5 but not sure. The whatmobile forum is a good place to check.)

I agree that this is bad and stupid, but my experience with network quality is the opposite of yours. I was on O2 for 18 months then churned to a Vodafone SIM only 30 day rolling contract. Much better for me, in terms of speed and coverage - also in central London

Anonymous said...

I feel sorry for you - you have been well and truly done over!! Shame you wanted an iphone. HTC desire is superior and then you could have got it from T-Mobile withy their phenomenal data roaming rates...

http://www.t-mobile.co.uk/euroboosters

Fazal Majid said...

I am not sure what the laws are in your jurisdiction, but European laws are usually less one-sided in favor of corporations as US ones. In France, certainly, jurisprudence has severely limited the ability of carriers to alter contract terms unilaterally. The options left to them are to freeze your terms for the duration of your contract, or allow you to leave without penalty.

Anonymous said...

john davies.. I think anyone can cancel due to this change, most people dont go on holiday three months in a row.

Zahid Ghadialy said...

Dean, good to hear someone making this point. I certainly agree with all your points. As an ex-3 and ex-O2 user, Voda has dissapointed me big time.

One more point I want to make is Voda's 3G coverage seems to be in shambles. I seem to be getting put to GPRS and EDGE as soon as I start browsing. I have this problem on the dongle as well as the phone.

They need to get their act back on track.

John Daviies said...

PS Google didn't do the Maps app, it is an Apple one, albeit using Google data and maps.

Guy Rosen said...

Data roaming is priced the way it is due to the very strange structure of GSM and the carrier relationships. But really, when it comes down to it, they charge as much as they do simply because they can. It's like business class.

My company, Vircado, is taking a different approach to making data roaming easier - we simply reduce, drastically, the amount of data you actually need to use on your smartphone. (Sorry for the plug, but it really is useful...)

Anonymous said...

Vodafone really seem to be stepping backwards - they had a unique offer for pay as you go data only sim. 1GB for £15 (which is reasnoble) but crucially didnt expire! This made it fantastic for occasional travellers etc. - my GB lasted me nearly a year but probably saved me more than £100 on hotel/airport wifi. Obviously this was too handy for people so they changed to 3GB for £15 but it expires in 30 days! So you have to pay £15 every month...

00tony said...

I work in the industry and agree with you. The price of data roaming is totally outrageous. By the way, the VLR is part of the circuit switched network not the packet switched so is not used (much) during data usage.

Anonymous said...

there's alway some fanboid trying to latch himself onto the comments.

killerspam said...

You are legally allowed to cancel your contract if the company changes it terms in a way that adversely affects you.

In your case, as your roaming charges are going up, and you anticipate a large increase in costs, that is justification for cancellation.

Dean Bubley said...

Yes, I could probably get out of the contract legally.

On the other hand, do I really want to port my number *again*, lose service *again*, re-do my handset settings *again* etc etc.... ?

Or perhaps I'll just get better ROI by using this as a case study - and input to advice I give operators about their chances for generating loyalty & new service revenues.

Dean

V. Dimitroff said...

I actually did try to churn, as my contract has expired and I haven't upgraded to a new phone. Tough luck: they don't give you a chance!

Long ago I had noticed a very cunning plan by Vodafone to reduce Customer Care workload and raise Satisfaction Index scores: their IVR menu doesn't offer a 'Complain' option (!?!). Even if you try to file a complaint with a live CSR, they won't take it. The Call Centre does not accept complaints. At all. (!??) You can only complain in writing, on paper - but who, in the 21st century will bother to type a letter, print it out, find envelope and stamp and go out to post it? Relying on people's inertia and lazyness, Voda made great cost savings in complaint answwering personnel. Also, since there are 0 (zero) complaints registered on the call centre stats, they can report 'happy' customers!

Now this apparently also works with the extremely unhappy. The IVR option "Press 2 if you want to leave us" puts you on hold, listening to endless music loops and periodic recorded promises to put you through. My patience 'only' lasted 11 minutes, but I have reason to believe this is just a closed door. To churn, you probably have to write a letter - and deliver it in person, accompanied by your lawyers. Which I may actually do, thinking of it...