Global data roaming costs sink iPhone 3G use for enterprises

One company holds off on purchases in hopes that AT&T roaming costs go down

Apple Inc.'s iPhone 3G has a powerful browser and faster wireless connections to all kinds of data and multimedia, but those features may be too much of a good thing for international business travelers paying data roaming rates.

One U.S.-based manufacturing company with global operations would like to deploy hundreds of iPhone 3Gs but has found that international data roaming costs are too high, said an IT worker at the company who asked not to be named, citing company policies.

The manufacturer's finance department has put a ban on company purchases of the iPhone 3G because the international data roaming plan for the phone's exclusive carrier in the U.S., AT&T Inc., is too expensive, he said. The company is in talks with AT&T to get a better price for the service.

"Until we have an international data rate plan that isn't extortion, we're holding off deployment of iPhone 3G," said the IT manager. "IPhone sucks down data like no tomorrow."

With the first-generation iPhone, the IT manager said, several executives traveled abroad and encountered "psycho-expensive" data rate costs. One executive spent three days in Canada and incurred an $800 data roaming cost, while another spent two weeks in Italy and racked up $5,000 in costs.

The IT manager said he is asking AT&T to cut its international data roaming fee to one-tenth of its current rate, from about 2 cents per kilobyte to 0.2 cents per kilobyte.

"I realize that's an order-of-magnitude reduction, but that's what's necessary to make this device succeed for any kind of international uptick," he said. So far, however, AT&T has told the manufacturer to "lump it or leave it," the IT manager said.

An AT&T spokesman said he could not discuss an individual company's plan, although he said AT&T enters into contracts with large customers based on negotiated rates. However, AT&T has implemented some special international data plans for iPhone customers, recognizing "that the iPhone consumes data and that it is worse outside the U.S.," said the spokesman, Mark Siegel.

Siegel said he could not say whether many customers have complained about international data roaming costs with the iPhone 3G. However, he warned customers traveling abroad with iPhone 3G devices to be prepared for the high data usage and the cost of using a network in a foreign country under a roaming agreement.

"If customers have not thought about data use abroad, we have a whole array of tips on how to avoid added costs," he said, referring to the AT&T Web page on international calling.

Analysts said the manufacturer seeking lower roaming rates could be somewhat unusual because its sales personnel travel extensively to many countries. In many companies, however, sales personnel will stay in a single country, which would lower their data roaming costs, analysts noted.

Siegel said that, in general, it would be less expensive to work in a single country than to travel and pay roaming fees.

Analysts noted that international roaming costs are onerous no matter what kind of wireless device a user carries. But because the iPhone 3G is designed to rely on using data over 3G networks, it might be an even greater concern than with some other devices, especially cell phones that rely primarily on voice connections.

Data roaming can be turned off by the iPhone user, but that doesn't give IT managers much comfort. One blogger noted the problem, and said that with Windows Mobile 6 settings, an IT manager could automatically shut off the data roaming feature to prevent a traveler near a country's border from accidentally roaming into another country, incurring added costs.

Copyright © 2008 IDG Communications, Inc.

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