Mobile phone calls three times more expensive than in Europe

POSTED: 08/7/13 11:37 AM

St. Maarten / By Jason Lista and Hilbert Haar – Mobile phone calls in St. Maarten are up to three times more expensive as the average charge in Europe. There is a huge price difference in calls to subscribers from the same subscriber and calls to subscribers from the only competitor in town. UTS CEO Glen Carty says that volume is key to the price differences.

The European commission published yesterday data about the cost of mobile phone calls in the union. It shows that the Netherlands is among the top three most expensive countries to be in this respect.

Converted to dollar-prices, Dutch mobile callers pay on average 19.4 dollar cents per minute, against the European average of 12 dollar cent. But these prices pale by the money callers in St. Maarten have to fork over for a one-minute chat.

UTS Chippie-users pay 25 dollar cent per minute or 28.9 percent more than the already expensive calls in the Netherlands. TelEm-subscribers pay a penny less per minute, still 23.7 percent more expensive than calls in the Netherlands.

But the price differences go through the roof once Chippie-subscribers place a call to somebody who is on the TelEm network; in that case, UTS charges suddenly 36 dollar cent per minute, 85.6 percent above the Dutch average rate.

The comparison with the European average of 12 dollar cent per minute is even starker. TelEm and Chippie are twice as expensive, and a Chippie to TelEm call is even three times as expensive.

The Netherlands is together with Belgium and Luxemburg among the three most expensive European countries for mobile phone calls. The top three cheapest countries are Lithuania (2.5 dollar cent), Romania (2.9) and Latvia (4.4).

The European commission says that these price differences cannot be explained from differences in quality, the costs of the service or the purchasing power of consumers. European Commissioner Neelie Kroes who is responsible for the digital agenda, called yesterday for a strengthening of the European internal market for the telecommunication sector. “These figures show clearly that the current 28 telecommunication markets in Europe are not giving the consumer the benefits that a unified market would offer.

The explanation for the telecom tariffs in St. Maarten has often been the small scale of the market. Data from the Bureau Telecommunication and Post show that there are just 67,124 mobile subscribers on the Dutch side of the island.

But the European data paint a different picture and defy the notion that size matters. The countries where mobile phone calls are the cheapest simply do not have the largest population. Lithuania has 3 million citizens, Romania 21.4 million and Letland 2 million.

Compare these three cheap telecom countries with the three most expensive ones: the Netherlands has a population of 17 million, Luxemburg just 519,000 and Belgium 11 million.

 

“You heard of the saying, location, location, location? In the communications industry it’s all about volume, volume, volume,” Glen Carty of UTS said yesterday when asked to comment on the differences in rates between here and Western Europe. On St. Maarten there are about 40 mobile towers, split evenly among UTS and Telcell providing service for about 70,000 people. The “expense per user are higher” on St. Maarten for a variety of factors, the director explained. Electricity and insurance costs, for one, are higher. “European companies are subsidized,” he went on, though this could not be confirmed by Today. He cited the example of the fiber optic cable laid for Statia and Saba which was covered by the Dutch government.

By contrast, St. Maarten’s telecommunications seek their funding in the private financial sector. “What we pay our regulator is also higher,” he added. St. Maarten, Carty says, pays twice the international average to its local telecommunications regulatory body. This, of course, reflects in the rates the consumer pays.

Carty also highlighted that because St. Maarten is an island, it has to “pipe in its bandwidth.” This means the cables under the sea have to be maintained by costly ships to ensure constant service in contrast to land based communication cables.

Another problem St. Maarten’s telecom providers face is French companies “beaming their signals to the Dutch side,” which is illegal according to roaming agreements and cuts into roaming charges that local providers should be receiving, the UTS director said. “Income is taken away not only from local telecom companies but also government because they can’t tax the lost revenue.”

With the rise in smartphones like the Samsung Galaxy, Apple iPhone, and BlackBerry more and more users are “moving away from voice to data use” through software like WhatsApp and BlackBerry Messenger which results in lower revenues while operating expenses like fuel keep rising, Carty explained.

“We have to be creative in finding new revenue streams,” he said. “Technology is always changing.” He said many laws are outdated regarding phones, since mobile devices are evolving and the definitions of what a phone is change as the technology changes.

 

 

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