How one download of Lost ended up costing €46,000

BROADBAND COSTS:New rules came into force recently to protect consumers from "bill shocks" associated with smart phones - such as can arise when downloading films or TV shows from the internet

DID YOU know that the mobile phone companies are willing to haggle over bills? Well, not every bill perhaps, but certainly some of them. A reader with the haggling skills of a Moroccan souk trader contacted us recently after she managed to knock more than 90 per cent of her O2 phone bill.

Earlier this year the canny reader received a text message from O2 telling her it had barred her from accessing the web through her iPhone because she had exceeded her data allowance as a result of an overzealous use of an internet tethering service. Sorry, what now? Confused, she rang the company and was told she had amassed “a substantial” bill in the previous week. How substantial? Very, in fact she had run up a bill of €1,443. In a week! Our poor (literally) reader nearly passed out.

She had hooked her iPhone up to her computer and had been using it as a modem – it’s called internet tethering – as she waited for broadband to be installed in her new house.

She had presumed it was part of her mobile phone bundle which allowed her download two gigabytes of data onto her phone each month. It wasn’t. As anyone who has ever paid even the slightest bit of attention to their phone bills will know, once you stray off reserve and start making calls or sending texts over and above your bundled monthly allowance, the companies really hammer you.

There was no way she could pay this bill, she told the operator. She said that if they made her pay up she’d take her business elsewhere. The operator went and talked to his supervisor and returned with good news. 02 would be prepared to meet her half way. Half way? She said there was no way she could afford to pay over €700 either so he said if she paid €500 they’d call it quits. She stood her ground and eventually it was agreed that she would pay €100 and sign up to an internet tethering package for 12 months at a cost of €12.99 a month.

If you think it is frightening that someone, unbeknown to themselves, can run up a massive phone bill in such a short space of time, welcome to the world of the smart phone. While there is a lot that is brilliant about the rapid march of phone technology, punters – and even the companies that bill those punters – are struggling to keep up with the pace of change.

This reader’s bill climbed so quickly because 02 – and all other operators – charge ridiculous amounts for data transfer unless people have signed up to specific packages. When she was caught out, 02 was charging one cent for every kilobyte downloaded above agreed limits. To put that charge into perspective, had she downloaded a single song from the internet it would have cost her around €40. In recent weeks 02 has reduced the costs associated with internet tethering and it now charges 99 cent a megabyte so downloading the same song today would cost €4.

The fact that 02 could knock more than €1,300 off a bill following a single phone call and reduce the charges across the board by 90 per cent – and still, presumably make money shows how wildly out of whack with reality mobile phone data charges can be.

While the company deserves to be commended for showing such flexibility when it was contacted by our reader, you would have to feel some sympathy for any unfortunate customer who has received a similar bill and paid up without complaint.

We got in touch with O2 and it accepted that the charges associated with data transfer can cause difficulties, particularly for people who are new to smart phones. A spokeswoman told Pricewatch that it tries to be flexible as possible with people in a state of “bill shock”.

“When we see abnormal data use, we look into it and we find reasons that explain it, such as a customer buying a prepay smartphone with data capability, putting their old SIM into it without adding a data add-on to their account. These cases are exceptional and we deal with them as proactively as possible,” she says. Usage patterns are a good indicator of whether or not a customer is aware of what costs they are incurring on data. “If we see unusual activity we contact the customer directly . . . reach an agreement that is manageable.”

Internet tethering charges are unlikely to affect too many of us but with the growth in popularity of the iPhone and other smart phones, the high charges associated with accessing the web and e-mails will. The European Consumer Centre (ECC) was contacted by a significant number of consumers last year after they had run up high bills for data roaming. One caller had used an iPhone as a satellite navigation system and incurred charges of more than €400, or the price of at least two sat navs.

He was left in the ha'penny place by the unfortunate German woman who downloaded an episode of Lostwhile on holidays in France and came home to a bill of €46,000 for the programme.

The high cost of downloading data has not escaped the attention of the European Commission. Over the past four years, legislation aimed at reducing mobile bills has been one of the highest-profile regulations from the commission. Aggressive action has seen the price of text messages and roaming calls while travelling in the EU fall by in excess of 60 per cent in less than two years.

The spotlight has now shifted to data charges. Last July the commission imposed a maximum wholesale roaming data charge that operators in the EU could impose, of €1 excluding VAT. That charge will fall to 80 cent from this July and to 50 cent from July 2011.

From March of this year new rules to protect consumers from “bill shocks” came into force. Mobile operators must have a cut-off mechanism which will cut mobile connection to the internet when the bill reaches a specified limit. Operators must offer their customers a monthly cut-off limit of €50. They can also offer customers any other limit but if the customers chooses a higher limit, at least they’ll know what they’re letting themselves in for. People who do not make a choice by the beginning of July will have the cut-off limit set at €50 by default.

“The cap put in place on roaming charges has the potential to offer consumers real peace of mind when they use their mobile phone abroad as it is in the area of data roaming that consumers have incurred the highest charges,” says Ann Neville of the ECC.

Consumers also have a role to play in ensuring they aren't left with enormous bills. First up, if you plan to access the web using your phone while on holidays it is essential you contact your phone company before you go. Tell them where you're off to and for how long and get them to work out the best price plan for you. And remember that the most effective way to reduce costs is to find free Wi-Fi hotspots. Although not accessing e-mail, twitter or downloading episodes of Lostmight also help.