An Israeli startup is trying to combat a common fear for international travelers: getting socked with hundreds or thousands of dollars in unexpected roaming charges for using cellphones away from home.
Cell Buddy aims to turn any smartphone into a local one. Travelers can choose from an array of calling and data plans with carriers in dozens of countries. As a result, they pay local rates — not the pricey fees charged by their wireless carriers at home.
Here's how it will work once the service starts next year: Customers use a universal SIM card provided by Cell Buddy. Travelers turn on their phones and launch a Cell Buddy app once they reach their destination. The app finds local carriers and lets travelers compare prices, data packages, download speeds and other factors. Travelers are assigned a local phone number and can continue to use their regular phone number back home, at regular prices, using the same SIM card.
One major caveat: Cell Buddy's SIM works only with unlocked phones, making it difficult for American travelers who have phones still tied to two-year service contracts. Those phones are locked and won't accept other SIM cards. In addition, Verizon and Sprint use the CDMA cellular standard, and some phones won't work with the more common GSM networks elsewhere.
Cell Buddy's service eliminates the need to order a roaming plan ahead of time, stand in line at the airport to buy a local SIM card or physically switch the cards. Most importantly, it eliminates roaming charges to the home carrier.
Profit margins on roaming charges are immense. Avi Weiss, editor of Israel-based Telecom News, estimated the global roaming market at $50 billion a year. Although many companies are beginning to offer ways to avoid that, Weiss said few customers are aware of their options.
"When they come back to their homeland, they get a bill shock," Weiss said.
Cell Buddy is not the first company to take aim at roaming charges. In October, U.S. carrier T-Mobile eliminated texting and data fees in more than 100 countries and capped charges for many international voice calls at 20 cents a minute. British carrier 3 has also begun to cap roaming charges.
Several companies sell global SIM cards with pre-paid service, and Canadian company Roamly makes a pay-as-you go SIM card "overlay" that promises savings of up to 80 percent through partnerships with carriers in some 200 countries.
Unlike the others, Cell Buddy makes no money from actual phone usage. Cell Buddy's founder and chairman, Ofir Paz, said he is simply a middleman who connects users with the carrier best suited to their needs — much the way services such as eBay connect customers with merchants.
"I think the big idea over here is that for the first time we created a marketplace," he said. "We let customers and operators meet, and from one hand, these operators can publish their plans and on the other hand, the customers can purchase plans in a very simple and straightforward way."
To use the service, Cell Buddy charges $60 a year or $5 per day. Although travelers can avoid that by shopping for plans themselves, Paz believes the convenience and low rates make the fees reasonable.
"We're giving everyone ... the freedom to choose a carrier easily," he said.