Five Lessons To Learn From The Collapse Of ispONE And Kogan Mobile

Maybe you're a Kogan Mobile customer annoyed that the service has gone under after its supplying wholesaler went into administration. Maybe you're an ALDI Mobile customer wondering what the future holds. Maybe you're looking for a new plan. Whatever your current situation, there are some things everyone can learn from the current prepaid dramas.

Blunder picture from Shutterstock

If you're not across what's happened, here's the short version: wholesaler ispONE has gone into administration, having already been in a court battle with its network supplier Telstra. Its two most visible clients were Kogan Mobile and ALDI Mobile, both of whom sold prepaid services. ALDI Mobile has negotiated a separate deal with Telstra, but Kogan Mobile customers now have no choice but to switch to another provider.

MORE What To Do When Your Prepaid Mobile Operator Shuts Up Shop Kogan Comes Clean On Mobile Customer Dumping, Optus Offers Deal To Jump Ship Kogan Mobile Customers To Be Dumped In 30 Days

What can we learn from this saga?

1. People want Telstra's network

We've had cheap prepaid deals on the Optus network from the likes of Amaysim, Live Connected and Vaya for many years, which proves that a prepaid model can be sustained at these prices. Nonetheless, there was a definite wave of enthusiasm for Kogan Mobile, ALDI Mobile and Telstra-owned Boost, all of which launched this year using Telstra's older 3G network. If you're in a regional area or a city blackspot, Telstra clearly still seems the safest bet to many customers.

2. People think Telstra charges too much

With that said, clearly people don't want to pay Telstra's higher prepaid rates. Telstra doesn't offer a no-contract, unlimited calls deal under its own name or on its newer network; that creates a potential gap in the market. Right now, ALDI Mobile continues and Boost remains an option, but there's not the range of choice available that there is in the Optus-powered space. (To be fair, Vodafone is even slimmer pickings; the only choices there we know of are Just Mobile and Lebara.)

3. People like to buy brand names

Telstra network aside, one of the advantages both ALDI and Kogan enjoyed was the connection to a well-known brand name. I'd suggest that if ispONE had launched services under its own name, there would have been far less traction no matter what the prices were.

4. Long-term pre-paid contracts can be risky

The biggest inconvenience to subscribers migrating off Kogan Mobile is for people who signed up for a long-term (365 day) prepaid deal. That reinforces a point we often make at Lifehacker; long-term contracts often aren't a wise move.

5. People don't appreciate the flexibility of prepaid

While I can understand the annoyance factor of porting your number, especially as there's a slight risk you'll be without service, part of the benefit of a prepaid plan is its flexibility. People unhappy with losing their Kogan service are sometimes losing sight of that. Our detailed guide on how to change prepaid providers covers the best way to go about it.


Comments

    not sure point 4 is that big of a deal.
    in the Kogan example i did the 365 plan which cost me $299 or <$25 a month for unlimited calls, text and 6gb data.

    Ive had the service for 3 months (or there abouts) and when compared to my old Telstra plan of $60 a month ive saved almost $100 (vs telstra) or $30 ($25 vs $35 @ aldi), if the deal had lasted the whole 12 months i would have saved considerably more.

    Am i bummed its no longer an option - of course i didnt get to maximise my savings by switching.
    Am I in a bad situation now? not really. Just the 10 minutes to fill out a request form with another provider online, another 10 minutes to fill out the activate my sim form online when it comes and (from my experience) another 10-30 minute outage as i swap sims.

    Its bit of a hassle but in retrospect i would not consider this an unwise move on my part.

    EDIT: Kogan has agreed to pro-rata refunds

    Last edited 20/08/13 3:35 pm

      Did Kogan charge you the 365 cost of $299 upfront? Or monthly?

      If you've paid the $299, I hope they are refunding customers

        Yes, it's $299 upfront.

        And yes, they are refunding customers on a pro-rata basis.

    " I’d suggest that if ispONE had launched services under its own name, there would have been far less traction no matter what the prices were."

    I can't dispute this, but are there any stats to back this up?

    For example, do you know the success rate of lesser known mobile service providers? If not, the suggestion seems a little futile, even if correct.

    I'd be thinking that Kogan did at least some marketing, and I'd be thinking that Kogan itself isn't the best brand in anycase - in terms of awareness and reputation.

    3. People like to buy brand names
    Kogan has a pretty bad rep, I'm doubtful if their brand helped them that much. Aldi has one HUGE advantage - physical exposure, brand or no brand.

    4. Long-term pre-paid contracts can be risky
    I think the author needs to do his research. Kogan is offering pro-rata refunds.

    5. People don’t appreciate the flexibility of prepaid
    I'm not sure how the author inferred this. People are upset that their ultra-cheap pre-paid provider is closing down. Sure they can change but would you want to if you could avoid it? No! And the competition is more expensive. Kogans 1 year plan was $25/month for unlimited + 6gb. You'd be unhappy too if you lost that!

    In regards to point 2 - Telstra do offer unlimited no-lock in plans now, but they're a good deal more expensive. They're basically the same as the standard 24-month Everyday Connect plans, but they have no contract and no mobile repayment option.

    Lifehacker should do a article on what prepaid plans are available.

      Yeah i'd like to see that, but given Telstra themselves have 6 or 7 varieties of prepaid, it could be a bit messy.

        Internode look interesting $30 for 1.5gb Data and $500 calls (2 minute call costs $2.15).

          Woah.. That's worse call rates than Telstra's Encore Prepaid Cap.. They only charge 89 cents a minute with 39 cents flagfall :S

          TPG have a similar deal to that I think it's also 1.5GB and $500 and texts for $20 a month.

            well the call rate may be worse than Telstra... but its only $30 a month with better data. besides i wont use the full $500 in calls in a month. I may use 90% of the data when on holiday (within australia).

    I'm a Kogan Mobile customer who now has to switch providers. I've received the first text from Telstra and I'm expecting I'll be notified in a couple of weeks that I need to move on. Telstra indicate that those with the shortest prepaid amounts are going to be notified (bumped) first. Telstra also say they'll keep us on for the period they've specified, at their own cost. They've also explained how many numbers can be ported in a day, and.. yada yada yada. :)

    I was a Vodafone customer for as long as I remember, let's call it 12+ years. I switched to Redbull Mobile from Vodafone last year because there was a big cost saving. If I could recall prices per months from 12 years ago, my stab in the dark would be $45/month including a SonyEricsson phone of some sort, it was probably also for allowances that were more understandable than the last contract I had with Voda. Fast forward to more recent times and I was paying $79/month and no fee for a HTC Desire HD, contracted for Nov 2011-2012 to Voda.

    I was a silly consumer that renewed contracts without checking other options. Last year, I saw Redbull Mobile. I saw no reason to pay $79 a month for what was possibly the same phone services as Voda, and RB also offered more data. I switched to RB and I then switched to Kogan Mobile within a month of signing on to RB because the need arose for the "Telstra coverage" inside Hospitals, buildings etc.

    I was paying $79 for a "$550" amount of calls/sms/mms usage and 2GB + 1GB "bonus" data per month over at Vodafone on a post-paid account. That's $948 p.a. I signed on for 2 years and I now see the 24 month contracts are just another way to sign a reasonable amount of your money over for the foreseeable future.

    At Redbull Mobile I prepaid $365 for 12 months usage. If I had stayed a year (I prepaid a year, and was refunded pro-rata when I left) I was going to save $583 vs what I was paying at Vodafone and get more data per month, and never go over my calls/sms/mms allowance per month.

    At Kogan Mobile I prepaid a full year, and I'm now 8+ months in. The saving vs the plan I was on at Voda is $649. p.a.

    What I've saved won't be that much because I never got a full 12 months at Kogan Mobile :) Also, what I've saved will be relative to what it's compared to. Given I was a silly consumer, it's likely I'd still be on $79 p.m. at Vodafone and locked in for 24 months.

    The "next best" offering that's out there compared with KM's offerings (I think) would be ALDI Mobile at $420 p.a. The offering at ALDI Mobile appears somewhat the same (not quite?) as KM, and it's on Telstra's wholesale network. They've reached a deal with Telstra, so who knows if their price will remain $420 p.a. or quickly increase.

    Anything else as close to those allowances offered by ALDI Mobile, costs more. Some are A LOT more, like Telstra's "No Lock-in XL" is $130 p.m. for "Unlimited" and 3GB data, their "BYO" is $100 and 1.5GB data, and their Telstra Prepaid is on the "difficult to understand" side with too many options. Let's call it "more $ than" ALDI Mobile.

    Obviously one moves based on the offering and cost associated, going to ALDI will be a cost effective option. Even if it means a slight decrease in network coverage compared to being directly with Telstra.

    Some simple calculations show that if there are actually 115,000 customers at Kogan Mobile like they've claimed and if all of them move to ALDI Mobile they'll all pay $121p.a. more than at Kogan Mobile. That's a staggering $13,915,000.. THAT puts into perspective how much $$ was potentially "saved" by customers only comparing to ALDI Mobile. If it was compared to other options, it's a lot more money.

    On one hand money is certainly required by the Telco's to maintain and upgrade their services. On the other, the customer should be aware that they can move about if they want to, and spend as much or as little as they want to.

    The Telstra network, even the wholesale network, IS the draw card but so is the price. I was obliviously and happily paying $79 a month and contracted to 24 month blocks, because that's what I did. I poo-pooed prepaid previously as a pain in the rectal passage.

    Having actively assessed my costs and allowances with Vodafone it was obvious there were better offerings in both post and prepaid. Now the best one has been taken away (and so be it) but it's pretty amazing to see how much more money will change hands for almost the same service (KM vs ALDI).

    While Kogan as a company has a so-so reputation, the name was popular enough to draw my attention to their mobile company. My complaint with KM was only their customer service was Poo. The coverage was great, because it was Telstra's.

    That is a LONG post. Sorry :) .... but HOLY BALLS NEARLY FOURTEEN MILLION DOLLARS!

    I have to agree with Kikalo.

    I started off a Tesltra customer on pre-paid many moons ago and got fed up with their customer service and fake promises. Thick international accents that I couldn't grasp also didn't help my customer experience.

    I jumped ship to Vodaphone with a plan and phone deal which cost me $45 a month with unlimited talk and text with 500MB of data (I got an HTC Desire HD). In hindsight, it was a good at the time so no complaints there at all. While the overall experience wasn't that bad, I did struggle a bit with the service especially in regional areas and this did get a bit frustrating. My experience with the customer service was very good, and I told them so. No hard feelings at all with Vodaphone, except their coverage weren't up to scratch.

    And I found a better deal with Kogan. Kogan's deal, to me, was irresistibly good. Pay $299 for 12 months (approx $24.92 a month) with unlimited calls to Australian numbers including 1800 and 1300, as well as unlimited SMS and MMS with 6GB a month. Kogan also used Telstra towers so I would also have better reception. For me, this was a no brainer deal. Over the year, if I was destined to have an extra $241 in my back pocket, then it's better in mine than in anybody elses.

    I have been with Kogan for only about a month, but I have rung their customer service and they were ok. The mobile coverage has also been great. As for the supposed "lack" of communication, I would beg to differ as I was first informed of the Telstra vs ipsONE court case through Kogan via an email they sent directly to me before mediation. Kogan also sent me a text informing me that the mediation had failed and to be prepared for communication with Telstra. The next day I got communication from Telstra, also via text, informing me of the actions they are going to take.

    Signing up with Kogan was worth the risk. I will get my money back on pro-rata rate so I still have no hard feelings with Kogan. To be honest, I am more pissed at Telstra. They have taken on ALDI customers and kept ALDI but are not taking Kogan, nor are they offering Kogan customers any good deals. Rumours on the wind suggest that Optus might be making a move on Kogan customers and I say bring it on. It's time to bring some of these overpriced rates down, and I for one would be willing to jump ship to Optus if the deal was similar to what Kogan were offering.

    I honestly think Telstra isn't that much more expensive, such as the $67 plan for 24 months for the iPhone 5 - $1,608 overall for the 2 years. At $799 for the iPhone, each month equates to only $33 per month for the phone plan, and you get the benefit of Telstra LTE (and this doesn't include the 2 month free for recontracting). Its not as much data, but you can change that.

    One other thing I don't quite understand is why people need unlimited plans. Don't those people have a job or something productive to do than talking on the phone all day?

      I am a moderate user of my mobile for work and social purposes,
      including calls to interstate relatives. I also dont have a fixed line at home
      Plenty of people need unlimited plans just for normal or moderate use
      They also benefit people who have time to talk all day or nothing more
      productive to do than make comments in forums ;)

    I too am a Kogan Mobile customer on the $299 deal since December 2012. I also don't have a land line, hence the unlimited plan. Furthermore, whilst I live in the heart of suburbs of Sydney, coverage at my house is beyond [email protected] Hence, the move to KM when I realised it used Telstra. In all honesty, in the back of my mind was the old adage "if it sounds too good to be true, it usually is". So ... whilst I'm not surprised, I am disappointed. In my short time looking at other options, there really isn't much out there that can compare. I never used the service to it's full potential, but knowing it was there at no additional cost, was important. I'm now in the position of contemplating whether I really need a phone at all. I think I could live without it, at least for a little while. I just don't want to give Telstra, Optus, and most particularly Vodafone, my hard earned cash. I was a Vodafone customer for many years until they failed sensationally on coverage, I switched to Amaysim which was okay, but once again issues with coverage as it was the Optus network. I'm not disappointed with Kogan as they actually did offer a good service at a reasonable price. They probably should have had a more watertight contract with ISPone and Telstra - I believe these are the two parties who have really let the consumer down. It smacks a little of price fixing to me. I'm going to wait and see what happens, if I lose my number, so be it, I'll just get a new one one day.

      That really sucks, I hate Telstra so much - they definitely have a monopoly and although they have the best network I will never support them in anyway.

      My Kogan mobile has just been partially cut off, I can still receive calls and texts but not make calls or send messages out. Also data has been cut off - so no skype or viber calls. Still havnt received the second text message Telstra advising of the last 7 days.

    Only one comment you pay for what you get try getting service at Burrinjuck on anyone but Telstra.

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