Watchdog sniffs at mobile excess usage fees

Smartphones make browsing the web on the mobile far more palatable, but beware excess usage fees.

The rise of fast web browsing on 3G mobiles such as the iPhone has prompted the competition regulator to investigate whether carriers are misleading consumers into a trap of high excess usage fees.

A new breed of smartphones has enabled mobile users to browse the web at blistering speeds with similar functionality to those of a regular PC, but web data allowances offered on most mobile plans haven't kept pace, leaving the user at risk of being slugged with high excess fees should they go over the limit.

As with home broadband plans, web data allowances apply to all mobile internet usage including visiting web pages and downloading content. Most plans come with a set allowance - for example 200 megabytes - but slug consumers huge fees for every megabyte of excess usage.

The Australian Competition and Consumer Commission issued a stern warning to consumers today, advising them to consider their likely data use - and carriers' excess fees and charges - before choosing a handset and plan.

It named the newly released iPhone 3G as one of the handsets capable of downloading huge volumes of data very quickly.

ACCC chairman Graeme Samuel said the regulator had written to telcos this month alerting them to concerns about the potential for consumers to be misled about mobile data usage charges.

"The ACCC is particularly concerned that consumers may be misled if they are not made sufficiently aware that their data allocations can be exceeded - at significant cost," he said.

"We have asked carriers to advise how they intend to deal with this issue and what information they will be providing to consumers."

Samuel noted that most carriers offer web-based and SMS services allowing users to monitor their data usage.

Choice spokesman Christopher Zinn said the carriers were not doing enough to inform people of the traps associated with going over their usage limits. He said overseas mobile users enjoyed much higher data allowances.

"There's no doubt there is a lot of emphasis on the bells and whistles but not on the dollars and cents, particularly in terms of the data charges," he said.

"Consumers need to be very aware of how the charging works and how ... even using YouTube can prove incredibly hungry in terms of the data charges it can rack up."

Chris Althaus, CEO of the mobile industry body, the Australian Mobile Telecommunications Association, could not say what response the individual carriers would give to the ACCC but pointed to their spending alerts, online bill checking tools and capped plans as ways the carriers were helping consumers avoid excess usage fees.

"Having people get into debt and difficulty with their data usage is in no one's interest," he said.

Optus, Telstra and Vodafone's iPhone pricing plans have attracted particularly harsh criticism for being too expensive and not offering a high enough web data quota for comfortable internet browsing.

3, the carrier long regarded as having the best value mobile data plans in Australia, was unable to convince Apple to let it sell the iPhone despite a spirited public begging campaign.

Like plans for most other mobiles in Australia, none of the iPhone plans provide unlimited web data. Apple's US carrier partner, AT&T, is offering iPhone 3G customers unlimited web browsing.

Some Telstra plans offer 3GB of data but the cheapest is $149 a month and the most expensive is $219 a month. The other carriers' plans max out at 1GB for Vodafone and 2GB for Optus, which isn't enough for intensive web browsing.

Telstra's cheapest iPhone plan - $35 a month with a $279 upfront cost or $85 with no upfront cost - includes a measly five megabytes of data, enough to visit one or two web pages.

The cheapest iPhone plans offered by Optus and Vodafone contain slightly higher data allowances but even then the user is limited to only casual web browsing.

In Canada, the country's only iPhone seller, Rogers, reduced its iPhone data prices from $C100 ($103) a month for six gigabytes to $C30 for the same amount after a widespread backlash and claims of price-gouging.