How Canadian Mobile Phone Customers Can Avoid Exorbitant Data Roaming Fees – the Plan

Wednesday, June 22, 2011

In my last post, I described my recent experience and resultant frustration with a data roaming bill incurred while using my iPhone during a trip to Mexico.  I was a dedicated Fido customer for over 12 years, but due to the way in which they handled my complaint, I vowed to do whatever I could to reduce the amount of future revenue I sent their way.

The solution I discovered entails taking advantage of cheap iPad-specific data-only plans, activating the account with an iPad, then using the activated SIM card in an unlocked iPhone.  This process is necessary because the iPhone’s OS lacks the data carrier account setup structure that exists in the iPad 3G line, and you don’t really want to carry a bulky iPad out to a nightclub.  At the moment you also cannot use an iPad 2 as a Personal Hotspot (to act as an Internet bridge or tether for other WiFi devices) the way you can use an iPhone.

This article also presumes the user has an iPhone that is not carrier-locked.  Factory-unlocked iPhones have been available in Canada and other countries for some time, but are not the norm in all markets.  I’ll talk a little bit about SIM-unlocking in a future post.  I also presume you’ll spend $650+ to buy an iPad with 3G if you don’t already have one.  This may seem like a silly request, but not only is it easy to make a financial case for buying a seemingly expensive handheld computer to access cheaper data plans, but they’re pretty damned cool devices.  (You can also borrow one off of one of your friends simply for the purpose of activating a foreign data account, or buy one and sell it on eBay when the account is set up)

The first step was to investigate the possibility of obtaining a domestic data plan in the foreign countries I travel to.  There is a huge gap in data rates between domestic and foreign/roaming users, and the only reason this exists is clearly because roaming users have no choice but to use a local network as a foreign roaming client, and pay whatever their home carrier feels like charging them.   My $10/mo U.S. Data Roaming Add-On plan through Fido gives me a lower roaming rate of $1/mb when traveling in the U.S., but this is still a very significant premium over what domestic US users pay.  It’s also crazy to consider that even after going through that, I would still have to potentially pay several dollars to do a single benign action, like post a picture to Facebook.

When I investigated the possibility of signing on as a local customer of a foreign carrier in the past, I was always presented with insurmountable obstacles.  North American carriers, with few exceptions, highly subsidize the sale of mobile phones in order to tie users in to longer-term contracts.  To sign a contract, you typically have to be a resident of that country with an active credit history in that country, along with local ID.

The introduction of the iPad changed the landscape.  Since the iPad (with 3G) was sold without a carrier SIM lock, and was primarily sold through channels other than mobile phone carriers (i.e. Apple Retail Stores), the mobile phone carriers are all on a level playing field and don’t have to worry about recovering their subsidy investment.  As a result they have made it much easier to establish a relationship with them.

Since Mexico is where I experienced the highest charge for data on a per-MB basis, I began researching the options for foreigners there.  Telcel seems to be one of the primary carriers, and they have a special plan called Amigo, which is data-only.  (Other carriers offering iPad plans are Iusacell and Movistar.  Telcel’s least expensive plan provides 15MB of data with 1 day of validity, for 15 pesos (about $1.25 in US or Canadian) and their most expensive provides 3GB of data, valid for 30 days, for 499 pesos (about $42 US or Canadian).  Based on the research I have done so far though, and even though Apple Mexico’s iPad 2 web site states that you can get an iPad 3G data plan without a contract, it seems as though this plan and others are only available to residents of Mexico.  If anyone has any experience obtaining an Amigo plan, or any other iPad 3G plan in Mexico as a foreigner, I’d love to hear your experience so I might share that (and take advantage of it myself).  As an aside, you can see the huge disparity between the $900 that Fido charged me for my 30MB of data usage while roaming on Telcel’s network, when a local customer would have paid roughly $2.50 for the same amount of data.

AT&T MicroSIM Card

AT&T MicroSIM Card

In the US, buying an iPad-specific data plan is as simple as buying a $15 Micro-SIM card at your local AT&T store or online, popping it in to your iPad and punching in your particulars + credit card info.  You don’t have to set up an “account” while you are in the AT&T store as that is done through the device.  Currently there are two data plan options – 250MB for $14.99 per month or 2GB for $25.00 per month.  This is charged automatically to your credit card each month, and when you hit your usage quota, data access is shut off until the next 30 day period commences.  Unused data does not roll over.  The math is fairly obvious, but even at my highly-discounted $1/mb rate, Fido would charge me $250 for what AT&T would charge $14.99.  The regular roaming rate would be $750 for that $14.99 of data.

Considering that I currently pay Fido $10/mo just for the “privilege” of paying $1/mb for US data roaming, these plans look pretty attractive.  Even if I only visit the US two or three times each year, keeping the plan active on an ongoing basis still pays for itself.  Plus I don’t have to worry about being a data miser, I don’t have to run between WiFi hotspots, and I don’t have to worry about whether the hotel’s network connection has enough bandwidth for me to do my work.  (Have you ever attended a technology conference?  The hotels are filled with bandwidth-sucking nerds, often bringing a hotel’s Internet connection to its knees and therefore unusable.  Having the AT&T option even as a backup adds greatly to one’s productivity.)

Activating a Micro-SIM through the iPad interface is dead-easy.  Apple has created a simple interface, integrated into iOS, to allow the carrier to collect your billing info and activate the account.  You are typically up and running within minutes of starting the process.  AT&T is only targeting US residents with their service however, so there are some challenges associated with setting up an account if you are a non-US resident.

iPad AT&T Signup Screen

iPad AT&T Signup Screen

When the form appears to activate the account, non-US residents are faced with a number of obstacles.  The interface is rigid, and requires a US-based mailing and billing address.  The billing address also needs to match that which your credit card issuer has on file.  There is no way to spoof a foreign address in to the fields (Zip Code forces a 5 digit numeric and won’t accept alphanumeric postal codes, for example).  There are ways to overcome these controls however.

Credit card fraud is, and always has been, a widespread problem.  Internet-based merchants combat the problem by performing a billing address verification, which confirms whether a user-provided address (generally where goods are being shipped) is the same as that which is on file with the credit card issuer.  For many merchants, if a billing address cannot be reconciled to a credit card, the transaction is not approved.  This check is typically done in real-time, presenting a physical obstacle to the customer.

What a lot of credit card customers do not know, however, is that multiple “authorized alternate billing addresses” can be put on file with your credit card issuer.  These are addresses to which the cardholder authorizes goods to be shipped to.  My personal experience is with American Express, so my experience cannot necessarily be duplicated with each card or issuer.

So, I used my Canadian American Express card, and provided the US street address (as the billing address) of my package-receiving depot in the US (on file with AmEx).  Voilà, this was accepted by AT&T’s system and my AmEx was successfully charged for the first month of service, and subsequent months thereafter.

Since few people have the need for a US-based package-receiving service, how would someone else get around the US street address requirement?  It’s a lot easier than you might think!  Since this is really just a placeholder address on file with your credit card issuer, and since they would never have any need to send physical mail to that address, just pick an address out of thin air.  It could be a friend or relative who lives in the US, a vacation property, or it could be a package receiving depot with which you have no relationship (The UPS Store has hundreds of locations all over the US).  Or you could even just pick any address at random.  AT&T does all of its billing-related communication via email, and anything they might send to the mailing address will be junk anyway, so just pick any address and use it!  Provide “your” US-based street address to your credit card issuer as an “alternate authorized billing address” then key that same address in to the Payment & Billing Information section of the Cellular Data Account setup screen of your iPad.  It worked for me, and hopefully it works for you.  (One aside though – some online billing address verification systems only cross-reference to the primary billing address and not to additional “alternate” billing addresses.  While the “alternate” addresses can be verified by the merchant (a human) manually phoning in for verification, AT&T’s signup system is fully automated, so this is not a possible remedy).

The other thing you can try – talk to a rep at an AT&T store and see if they can manually set up and activate your account in the store using a non-US billing address.  One of the companies I own is a dealer for a Canadian mobile phone carrier, and their system does allow us to set up a non-Canadian as an iPad data plan user manually – this process may work at an AT&T dealer for setting up non-US customers as well.  If someone has encountered this, I’d love to hear about it.  This would also negate the need for using an iPad w/3G for setting up the account if you don’t already have one, since you can pop the activated Micro-SIM into your unlocked iPhone 4 and just start using it.

My next blog post will discuss ways to avoid high long distance and roaming charges for voice calls, using your new, cheap, 3G data plan in a foreign country.

*UPDATE July 15, 2011*  After some additional legwork, I have discovered that if you can’t get around the US billing address verification problem when signing up for an AT&T iPad Data Plan, a workaround is to buy a reloadable prepaid Visa, MasterCard, or American Express card in the US.  When using one of these cards online, a billing address verification is not performed and thus you don’t have to spoof the address.  I haven’t found out yet whether this is a valid workaround on AT&T’s network, but US residents have successfully used the same process to sign up for a Canadian iPad Data Plan in Canada, so odds are it will work.