Gregory Gundelfinger and Mathew Stein, a pair of South African cousins who bounce around their Toronto offices with nervous energy, are showing off their creation. Their company, KnowRoaming, is about to send thousands of slickly packaged kits to their first users, who've ponied up months in advance. Each box contains a tiny device that promises a cure for that phenomenon known and hated by anyone who's ever loitered outside a Starbucks in, say, Washington or Paris, looking for a WiFi signal: international roaming fees.
Gundelfinger and Stein (a lawyer and design engineer, respectively) have reason to be nervous. "You don't know what's going to happen when you put 10,000 people on your network until you put 10,000 people on your network," says Stein.
KnowRoaming's product is designed to make an end-run around sky-high roaming fees. The $35 device is a hair-thin microchip that fits over your SIM card (the small chip tucked into the back of your phone that identifies it as yours), hooking you up to a local network and allowing you to pay close-to-local rates. Effectively, it turns your Canadian mobile phone into a local one, no matter which country you're in. In a testament to how hungry consumers are for a fix, it took KnowRoaming all of 48 hours to raise $35,000 last year via a crowdfunding campaign it ran on its own site.
That's hardly a surprise, considering Canadians spent an estimated $800 million on international roaming fees last year—$450 million of that in the U.S. alone. An entire sub-genre of journalism has grown around reporting on horror stories from travellers who've come home to bills in the hundreds, and sometimes even tens of thousands, of dollars.
Yet, like so many charges faced by Canadian consumers, the roaming fees we've been paying aren't based on the actual costs incurred by providers. Last fall, The Globe and Mail reported that a CRTC fact-finding mission uncovered roaming markups that sometimes approached 1,000%.
Consider the contrast between upstart Wind Mobile and its Big Three competitors. Wind, owned by a European company and relegated to renting cellular infrastructure from its major rivals, has started offering customers an unlimited talk-and-data roaming plan to the U.S. for $15 a month. At the time the plan launched, the Big Three didn't even sell unlimited out-of-country plans; you could spend $300 on a Rogers roaming plan and still get less than Wind offers.
Canadians are so used to arbitrarily high bills, it's easy to forget that things are different elsewhere. Americans, for instance, typically enjoy unlimited calling within the U.S., instead of getting dinged with "long distance" charges as soon as they stray from home. International roaming fees are starting to fall, too, as governments crack down and carriers scramble to stay ahead. New European Union regulations aim to create a single telecom market across its member states—and, in the process, do away with roaming fees by 2016. Australia and New Zealand are hammering out a no-roaming agreement. In the United States, quite of its own volition, T-Mobile is trying to bust out of its fourth-place standing with the help of a new plan that does away with international roaming fees and offers unlimited data abroad.
In Canada, the federal Conservatives have made lowering cellular charges a bread-and-butter issue. Last fall, the CRTC released a "wireless code" that puts a cap of $100 on monthly roaming fees and requires carriers to unlock customers' phones so they can use them on other networks, though they're still allowed to charge a fee to do so.
That has opened the door for KnowRoaming (and a few other firms with similar technology). Gundelfinger and Stein have cut deals with wholesalers of data and airtime in dozens of countries. When users arrive in those countries, their supercharged SIM cards spring to life and join KnowRoaming's preferred local network, while still remaining reachable via their regular Canadian mobile number. (The company's servers forward each call.) Customers pay as they go, topping up their KnowRoaming account with their credit card via the company's app, which tracks exactly how much they've spent in real-time.
Telecom consultant Iain Grant, whose firm has worked with similar start-ups, says the KnowRoaming model works, but there is a catch. Since the providers inevitably end up dealing with smaller telecom resellers, rather than each country's major mobile providers, users might not get access to networks with the most comprehensive coverage. (Gundelfinger disagrees: KnowRoaming has access to more than one network in most countries. The issue is pricing: "Are our rates competitive in every single country? We're getting there.") Grant still recommends swapping SIM cards by hand. "The best advice is, get a local SIM card, if you're there for any time at all," he says. "You'll get the best coverage at the highest speeds."
KnowRoaming faces another hurdle: Despite the new CRTC regulations, most Canadian consumers don't realize they can ask their provider to unlock their mobile phone (likely due in large part to the telecoms' reluctance to do so). But KnowRoaming's play is for convenience, offering an alternative to prepaid plans and the hassle of tracking down a reliable SIM-card reseller. Here's Gundel-
finger's pitch: If your carrier is going to overcharge you each time you cross the border, then hand your business over to someone else. "Let us be your roaming provider," he says.