Reykjavík Grapevine - 10.08.2007, Page 9

16_RVK_GV_1_007_ARTICLE/CHARITY
A colleague and dear friend of mine, who has worked
for many years as a tour guide in Iceland, mentioned to
me that every so often a curious tourist would ask her
about ‘poor people’ in Iceland. She would usually just
reply with the stock answer – that poverty is not much
of an issue in modern Iceland. But she admitted that
she didn’t know what to tell these tourists now. This
stock answer – the belief that poverty is non-existent
in Iceland – is partially the result of a carefully managed
image of Iceland that is presented to outsiders.
In a way it is part of the usual kind of simulacra that
one finds in the tourist literature in general and not just
in Iceland. Yet this is no mere construct of the tourist
industry, but a widely held belief in contemporary Iceland
and forms a key part of the national identity. The reason
for my friend’s crisis of faith was that we had the above
mentioned discussion while sorting through bags of
clothes that were donated to the charity Mæðrastyrk-
snefnd (Mothers’ Support Committee), located here in
Reykjavík.
Mæðrastyrksnefnd has been helping those struggling
to make ends meet since 1928 and continues to do so
today. I volunteered at this organisation for two years
as part of my field research for my doctorate in anthro-
pology, and spent another two years as an occasional
volunteer while further researching, thinking and writing
about the issues connected to charity in Iceland and in
wealthy countries in general. My friend also volunteered
at Mæðrastyrksnefnd and described to me feelings of
shock, disbelief and bouts of sleeplessness when she first
started working there, similar to what some other staff
members reported to me as well. If many native-born
Icelanders have little appreciation of the daily struggles
faced by low-income workers, pensioners and social
assistance recipients, it is really not surprising that these
idealistic views of Icelandic society continue to circulate
and are exported abroad as well.
There is of course much to celebrate about Icelandic
society and, yes, even the social welfare system – es-
pecially so when you consider the standards of living
elsewhere. But the notion that a society based upon the
free market system can exist without certain patterned
inequalities is questionable to say the least.
During the course of my research I grew tired, so
very tired, of constantly being told ‘there are really no
poor people in Iceland’ when the subject of my research
came up in conversation. One pattern I noticed was that
these comments tended to be made by people with little
or no connection to these issues either personally or
professionally. Charity workers, nurses, critical scholars,
the staff and officials of the municipal social services,
the police and so forth may not agree as to the causes
of and solutions to these issues, but the people I spoke
to with experience in these areas certainly never denied
there were problems. I was also warned by some of my
Icelandic colleagues that I may be denigrated as a ‘for-
eigner who doesn’t know any better’ if I ever discussed
my research outside of the cloistered halls of academia.
So be it. Some of my Icelandic colleagues are accused of
being ‘politically motivated’ by the critics of their work.
Anyone who challenges the status quo will be trashed
in one way or another.
I am certainly not the first to note the pervasive
discourses that present Iceland in the best possible light
in a number of regards. I have often referred to this,
somewhat cynically perhaps, as the ‘Iceland is wonder-
ful’ discourse – in reference to, among other things,
the prosperity of modern Iceland as found in its high
standards of living, low levels of unemployment, and
the general lack of easily visible socio-economic dispari-
ties. In many ways this is true. But it has also been well
documented in the social science literature that Iceland
spends proportionately less of its GDP on social welfare
programs than the other Nordic states and even some
states in Western Europe. The Icelandic social welfare
system developed somewhat later than other comparable
systems and which, once in place, offers comparatively
meagre benefits in a more restrictive manner, to the point
where the term ‘Icelandic exceptionalism’ has even been
coined. In all fairness, Canada, my former home, is cer-
tainly no beacon of enlightenment either – the appalling
conditions that many First Nations and Inuit people have
been forced to live under is but one shameful example
among many. But the routine way in which structural
inequality in Iceland is denied or trivialised at first mildly
amused me, then annoyed me, and then, especially after
some of the clients of Mæðrastyrksnefnd shared aspects
of their lives with me, it began to frustrate me.
I have long pondered why these discourses have such
an appeal and are often accepted without much rigorous
questioning. Multiple sources, including the UN, The
Nordic Social-Statistical Committee, Statistics Iceland,
and the work of certain Icelandic scholars, have pegged
the poverty rate in Iceland at about 10% – that is, 10%
of the population subsists at income levels considered
to be below the poverty line for the nation as a whole.
There are 300,000 people in this country, so do the
math. Yet such numbers seem to fail to impress. Upon
learning the nature of my research, people from all walks
of life have routinely asked me ‘how many people go
to Mæðrastyrksnefnd?’ My reply that on average it was
approximately 120 people a week (147 a week so far
in 2007) – a figure which fails to take into account the
number of children and other family members behind
each individual client – resulted in expressions of disbelief
but which often turned into tirades that questioned the
need and motives of the clients. I won’t even include
some of the less kind things I have heard. “Oh they are
not really poor, they are only going to Mæðrastyrksnefnd
to get something for free,” was the most common reac-
tion. Similar sentiments were also expressed by a former
Prime Minister a few years back. When I asked for the
supporting evidence of their knowledge, the reply was
usually something along the lines of “Oh, my cousin’s
best friend’s neighbour knows such-and-such who goes
to Mæðrastyrksnefnd.” The smallness of Iceland does
not mean the gossip network is necessarily any more
accurate.
But consider what it implies when the clients of chari-
ties are dismissed as only ‘wanting something for free.’
The argument, as I see it, is thus: ‘Rain or shine, snow
or sleet, 130 or 140 or so people each week throughout
most of the year turn to Mæðrastyrksnefnd to wait in
line, provide identification to an interviewer and face
questions about their income and personal lives, in order
to receive two bags of groceries and access to donated
clothing for themselves and their children, all because
they have nothing better to do or only want something
for free.’ It sounded more and more preposterous with
each passing week that I spent observing the daily prac-
tices of this organisation and getting to know some of
the people who went there. As one staff member from
Mæðrastyrksnefnd put it to me, “No one comes here
for fun.” Indeed. It is most certainly not fun to have to
ask for help from a private organisation run by private
citizens. It is not fun to have to turn to the state for
assistance either, even though this is a publicly funded
entitlement of citizenship or residency. But people have to
do what they have to do for the sake of themselves and
their families in certain situations. Denying or trivialising
the situation will certainly not contribute to a productive
dialogue about the issues.
Charity in the Land of Plenty
Text by Jim Rice
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If many native-born Icelanders
have little appreciation of the
daily struggles faced by low-in-
come workers, pensioners and
social assistance recipients, it is
really not surprising that these
idealistic views of Icelandic so-
ciety continue to circulate and
are exported abroad as well.
WWW.GRAPEVINE.IS
REYKJAVÍK_GRAPEVINE_ISSUE 1_007_ARTICLE/CONSUMERISM_17
On May 23, the European Parliament passed
the Eurotariff law, which caps the cost of
mobile telephone calls made and received in
another European Union country. The law was
a last resort, after years of mobile operators
failing to react to charges of excessive and
anticompetitive pricing for roaming calls.
Receiving a call in another EU country can-
not now cost more than €0.24 (about 20 ISK),
plus VAT. Making a call from one EU country to
another cannot cost more than €0.49 (about
41 ISK), plus VAT. These caps will decrease in
2008 and again in 2009, when they will reach
€0.19 and €0.43.
While Eurotariff does not extend to Iceland,
Norway, or Switzerland, it probably will soon.
The EEA Joint Committee is currently working
on extending Eurotariff to the EFTA countries.
Iceland would then have to formally adopt it
into Icelandic law. This process will take at least
until the beginning of 2008.
Though EU operators have until September
to fully implement the new tariffs, a few al-
ready have, such as Germany’s largest operator,
T-Mobile. When roaming in Europe, German
T-Mobile customers now pay the equivalent of
24 ISK per minute to receive a call, and 49 ISK
per minute to place a call (including VAT).
High Prices Persist in Iceland
In contrast, Síminn customers roaming in Ger-
many currently pay 39 ISK to receive a call and
most commonly 99 ISK (actually 79–169 ISK)
to place calls to European countries. Vodafone
customers pay 40 ISK to receive a call and
59–128 ISK to place a call. (Vodafone offers a
“Passport” plan which can reduce these rates,
but only under very particular circumstances.)
Sko customers pay 40 ISK to receive a call and
90–160 ISK to place a call.
It is of historic significance that the roam-
ing situation got so bad that the European
Parliament had to pass special legislation to
stop it.
And even if the Eurotariff doesn’t formally
apply to Iceland yet, one might think it would
be a signal to Icelandic mobile operators that
their game is up. After all, it is hard to defend
charging Icelandic customers almost double
the roaming rates that other Nordic customers
pay.
Instead, Icelandic telephone companies
seem to be trying to pretend for as long as
possible that the Eurotariff doesn’t exist. Both
Síminn’s spokesperson, Linda Waage, and
Vodafone’s spokesperson, Hrannar Péturs-
son, explained to me that they would not be
lowering their roaming prices.
This is no surprise to anyone familiar with
the behaviour of other European telephone
operators. They fought bitterly against the
Eurotariff and most, out of raw financial self-
interest, are waiting until the last possible
moment to implement it.
Dubious Justifications from
Síminn and Vodafone
Both Waage and Pétursson gave the same
justification of why Síminn and Vodafone are
unable to lower rates. As well as regulating
the per-minute retail rate to the customer, an-
other provision of Eurotariff caps the wholesale
“settlement rate” that mobile operators pay
to foreign operators to terminate a call in an-
other country – for example, the price Síminn
would pay to a German phone company for
processing a telephone call to an Icelander on
a visit to Berlin. This cap has been set at €0.30,
or 26 ISK (due to drop to €0.26 by 2009). Ac-
cording to both spokespersons, the problem
is that until the Eurotariff is formally extended
to cover Iceland, Síminn and Vodafone’s roam-
ing partners in Europe are not yet required to
offer Síminn lower rates for terminating calls
to Icelandic customers in Europe.
The flaw in this story is that it assumes that
high settlement rates form a price bottleneck
for Síminn and Vodafone. In fact, European
Commission research suggests that high re-
tail mark-ups have been the most substantial
factor in keeping roaming rates high. Carriers
whose customers receive a call while roaming
in the EU pay an average settlement rate of
approximately 8 ISK per minute, and charge
the customer an average retail price of about
46 ISK.
These figures suggest Síminn, Vodafone,
and Sko make a gross profit of 31–32 ISK per
minute when their customers receive a call
in Germany. The Icelandic companies’ lavish
advertising, as well as their use of vanity prices
(just below a round number and always end-
ing in 9), is further evidence that their retail
rates include a fat margin. The Commission’s
report concludes that “the price for receiving
a call is clearly an area where operators could
act immediately without the need for any
movement on wholesale rates.”
I asked both companies for sample costs
breakdowns on roaming calls, and while Síminn
originally promised to provide one, neither
company ultimately responded. This was no
surprise. Settlement rate agreements typically
include a confidentiality clause. And publicising
information about high retail mark-ups would
be embarrassing.
The Beginning of the End
But the salad days are almost over for Síminn
and Vodafone. Consumer displeasure is mount-
ing, and Eurotariff shows what fair pricing
would look like. It’s just a matter of how fast
the end game will be. The companies will likely
stall up to the very last minute.
Meanwhile, I had to laugh at Vodafone’s
recent gesture towards mobile customers:
a reminder to turn off their voice mail box
when they are roaming. (My voice mail has
been permanently turned off for several years,
since pressing the “no” button on my phone
to reject an incoming call in Slovenia cost me
600 ISK). More helpful and honest would be
a default (or optional) setting in which voice
mail would automatically turn on in Iceland
and off when abroad.
A quirk of Icelandic culture is that it’s widely
accepted for customers not to find out the price
of a good until they pay for it. So, for Icelandic
consumers, an especially positive feature of
Eurotariff is that it requires mobile operators
to actively inform customers about the cost of
making phone calls in each country they roam
to. After all, it is normal to know how much
something costs before you buy it.
Eurotariff doesn’t yet cover SMS or data
transfer costs, but these areas are under study.
(Síminn currently charges me 49 ISK for SMSs
while roaming in Europe, a substantial increase
from several years ago when the average price
was in the low- to mid-thirties.)
A Law Was the Only Way
Cynical and manipulative marketing, pric-
ing, and calling plan design are typical of tele-
phone companies all over the world. Calling
plans have such intricate rules that it is often
impossible to compare them. Offers like “Make
six calls after six o’clock and get 60% off” are
virtually impossible to manage in the practice
of everyday life. Websites frequently spread
information over many different pages, so that
customers have trouble getting a full overview
of what they have signed up for. Finding price
information typically involves multiple clicks,
which suggests that companies don’t want you
to know the price before you decide. Getting
an itemised telephone bill is often costly or
complicated, which makes it hard for custom-
ers to evaluate their usage. Columbia University
law professor Timothy Wu, in a recent paper
called “Wireless Net Neutrality,” argues that
American mobile companies have even delib-
erately crippled the technical development of
the mobile phone system in order to protect
their own revenue stream.
Similarly, once it became customary in the
European mobile phone industry to give roam-
ing users no notice of calling rates, telephone
companies had no incentive to change the
custom. After all, it’s in a company’s short-term
interest to not bother informing customers
about high costs, especially if it can argue that
such notice would be an annoyance.
These smoke-in-the-customer’s-face strate-
gies look like innocent oversights on the com-
pany’s part, but I highly doubt they are that,
and they are probably carefully calculated to
fall just short of what would give cause for
legal action by regulators or consumer groups.
And they are highly profitable. A recent article
in Harvard Business Review by Gail McGovern
and Youngmee Moon, called “Companies and
the Customers Who Hate Them,” claims that
50% of American mobile operators’ revenue
derives from penalty fees from customers who
“break” the rules of their service contracts. But
it suggests that such practices have gone too
far, and recommends that companies move
away from “corporate practices that prompt
customers to make mistakes that financially
benefit the company.”
In the European mobile phone industry, it
is pretty clear that competition has brought
many benefits, but that self-regulation is not
enough. Discerning consumers saw through
the roaming costs racket, but could do little on
their own to change it. Some degree of outside
supervision, through legislation if necessary, is
the only way to bring about a truly competitive
telephone market and to transform the morally
obvious into the legally binding.
In the next issue, Ian will review prices for
international calls and home Internet service.
Lower Phone Bills – by Law
Text by Ian Watson Photo by Gulli
But the salad days are
almost over for Síminn
and Vodafone. Consum-
er displeasure is mount-
ing, and Eurotariff shows
what fair pricing would
look like. It’s just a matter
of how fast the end game
will be.
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