Data roaming: don't let your smartphone run off with your wallet

If you're lost in a foreign city, a smartphone can be a lifesaver. Flick open the map icon, tap in the address and the internet sends you on your way. On a week-long trip to Istanbul in early May, Alexandra Xanthaki used her iPhone all the time to navigate the notoriously congested, confusing streets looking for restaurants. But on returning to London, the magic wore off when T-Mobile sent her a bill for £2,318 – and warned that another £300 would be added to her next bill, too.

"I'll admit I'm not that clever when it comes to mobile phones," says Xanthaki, a reader in law at Brunel University's Law School. "I've used the iPhone abroad before, but the bill hasn't been much more than €10 or so. I did get a message when I arrived in Istanbul that there would be charges, but in the past I've always had to send a message asking T-Mobile to activate such charges. Apparently, while I was in Turkey, they started automatically as soon as I pressed on an icon."

Back in London she laughed at what she thought was a simple error: "I just thought they had mistakenly added an additional zero. So I rang them, but the guy said, 'I can understand you are upset, but you did activate roaming', even though he acknowledged I hadn't even sent any messages on my phone."

T-Mobile refused to budge on the bill, so Xanthaki wrote to Money. "I am distraught and cannot think how on earth I will pay this amount of money for seven days in Istanbul," she said.

We put her concerns to T-Mobile. It said: "While most customers enjoy our services when abroad and are aware of the cost involved in using mobile data, we do recognise that a small number receive unexpectedly high bills after returning from holiday. This year we plan to introduce a new system which prevents customers from running up unexpected data bills while travelling anywhere abroad."

As a gesture of goodwill, T-Mobile has now slashed Xanthaki's bill to £350: "When we are made aware of unusual activity on a customer's account, we will notify them immediately and suspend the account. While we appreciate this bill was unexpectedly high, we do feel we have been fair in offering a large reduction."

With the Jubilee bank holiday weekend looming and summer having finally begun, millions will soon be heading off to sunnier climes. Could you be among those returning to find a shockingly high mobile phone bill?

It is possible to run up a huge bill without consciously using your smartphone, because many have applications that automatically search for online updates whenever the device is on, says Ofcom. In other words, the phone "could be inadvertently downloading in the background throughout your stay", to quote the regulator – and racking up a monster bill in the process. That's the nightmare scenario many people fear, and one that will prompt some nervous holidaymakers to leave their phone at home. But you can take simple measures to avoid so-called bill shock – the most obvious being that you can switch off "data roaming" before you leave the UK.

And the good news is that new price caps for mobile data roaming within the EU take effect on 1 July, just in time for this summer's getaway.

• What is data roaming? When you use another mobile network to access the internet on your phone while still being billed by your normal provider. It can be pricey, so many experts advise people to turn data roaming off while they are abroad. On an iPhone, for example, this can be done by going to settings and selecting general and then network. You can then switch data roaming on and off.

• Can my phone "unswitch" itself? In June 2011, Guardian Money told how someO2 customers were claiming they had experienced "phantom roaming" charges, despite turning off the function before they left the UK. But the phone companies say that if data roaming is turned off, there should be no reason for data charges to be incurred.

• What if I want to access the web? Use free Wi-Fi in places such as hotels, cafes, restaurants etc whenever you can. "If you're unsure how to do this, refer to your handset manual or speak to your provider," says Ofcom.

• How pricey can roaming get? Costs can vary hugely depending on which mobile phone company you are with and where you go. For example, 3 charges £1.28 per megabyte (MB) for data if you are on holiday in Hungary – but £10 per MB if you're in neighbouring Croatia (which isn't yet an EU member). As looking at a map can swallow up 1MB, in some cases you could spend more on checking where the cafe is, than on your meal when you get there.

• So what's the best advice? Talk to your network, says Ernest Doku atuSwitch.com. Many offer bolt-on deals and bundles that can make it much cheaper to use the web abroad – but you'll often have to ask for them.

This month, O2 launched O2 Travel. Available from July, it offers 25 MB of data per day for £1.99 a day, and applies to 38 countries in O2's European zone.

Vodafone offers Data Traveller, where you pay £2 a day for 25MB if you are travelling within its Europe zone (with some price plans it's free). For the rest of the world it's £5 a day for 25MB. Frequent travellers can get the European version for £10 a month.

• But aren't there measures in place to prevent huge bills? Yes, the EU roaming regulations already require mobile operators to apply a cut-off once a mobile internet bill reaches €50 (around £40) a month while travelling in the EU. Operators must send a text or email to consumers when they reach 80% and 100% of the agreed limit, and must cut off the mobile internet service once the limit has been reached, unless the customer has indicated they want to continue roaming.

From 1 July, people travelling outside the EU will also get a warning when they are nearing €50 of data downloads or their pre-agreed level. You will then have to confirm you are happy to go over this level.

• What about the price caps you mentioned? EU price caps for data also come in on 1 July. From that date, the maximum operators will be able to charge is 70 cents per MB, plus VAT (ie, 84 cents, which is around 68p). This will then fall to 45 cents plus VAT (around 43p) in July 2013 and 20 cents plus VAT (around 19p) in July 2014.

This will massively reduce the amounts some people pay. But, of course, these caps won't benefit anyone travelling outside the EU.

• Any other tips for keeping my costs down? Think about buying a local pay-as-you-go sim card in the country that you visit, so you pay local prices. Alternatively, regular travellers may want to consider buying an international sim card from a specialist provider, which may offer lower prices abroad. For example, Truphone's Tru sim card (truphone.com/en-GB/) is said to work in 220 countries. You need to have an "unlocked" handset, which works with any network's sim card in it. A sim pack, which comes with £10 credit, costs £19.99.

• What else should I know? When a customer enters a different EU country, the operator must send a text message with basic price information on roaming services, a freephone number for more detailed price information, and the 112 emergency number, says Ofcom. Operators must also send a reminder of data roaming prices when the customer first connects to that service in a different EU country.