Kogan Comes Clean On Mobile Customer Dumping, Optus Offers Deal To Jump Ship

Kogan Mobile has released an official response about its impending demise that explains what will happen to customers’ remaining credit. Meanwhile, rival telco Optus has seized the opportunity to rescue Kogan’s customers from the wilderness with a ‘special’ deal.

Earlier today, we reported on Telstra’s decision to dump all Kogan Mobile customers as it progressively makes plans to cancel services on the discount MVNO. Kogan Mobile has since released a detailed statement expressing its “devastation” and explaining what lies ahead for existing customers.

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

Here is the lengthy response in full (we’ve emphasised the more useful sections in bold):

Dear Kogan Mobile Customers,

Important update concerning the continuity of your Kogan Mobile Service: As a challenger brand, we’re used to being up against some of the biggest companies in the world to get the best deal for our customers. We’ve successfully disrupted entire industries, with our low margin, high volume technology business. While the launch of Kogan Mobile was a success for consumers, securing a great deal on mobile access at an unbeatable price, not everyone in the industry was happy about it.

We have fought hard for the Australian consumer, spending countless hours and millions of dollars in legal and administrative costs to defend your right to a fair deal! Our intention from day one was to build a long-term, sustainable, and value-based alternative to the big telcos. We believe technology makes the world a better place, which is why we have fought hard for better value mobile deals for everyone in Australia. The endless negotiations, and even the occasional visit to the Supreme Court to protect your interests and ensure that you continue to get the best deal have worked, until today.

There are forces at play in the Australian telecommunications market that are beyond our control, very powerful, and impossible to ignore. When over 100,000 people took their services to Kogan Mobile, in such a short space of time, it attracted a lot of attention. Unfortunately and frustratingly, it appears like the telco heavyweights may be determined to take their former customers back and they may be prepared to do so by force.

We believe that fair and open competition is great for consumers, but unfortunately that competition is being forcefully limited today. In our email last week, we advised that Kogan Mobile had recently become aware of the following –

  • Telstra is in dispute with ispONE, Telstra’s sole distributor of prepaid 3G mobile services and Kogan Mobile’s essential supplier
  • Telstra had taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE, this would be very likely to impact Kogan Mobile’s own customers’ services (through no fault of Kogan Mobile)
  • ispONE had commenced proceedings against Telstra in the Federal Court and obtained a short term injunction to restrain Telstra from terminating its contract with ispONE
  • The Federal Court ordered Telstra and ispONE to attend mediation. Although not party to the Federal Court proceedings, Kogan Mobile was permitted to (and did) attend the mediation

We now understand the mediation between Telstra and ispONE failed to achieve a satisfactory result for Telstra. Telstra has today notified Kogan Mobile that it will be terminating the supply of 3G Prepaid Mobile services to its wholesale reseller ispONE within 24 hours, and has established a transition arrangement in respect of your service. Kogan Mobile understands that ispONE has appointed voluntary administrators today.

Kogan Mobile has tried to do everything it can to protect its customers. However, contrary to our numerous and concerted efforts to persuade Telstra to maintain and support Kogan Mobile’s arrangements with Telstra’s sole distributor, ispONE, Telstra has advised that it will terminate the 3G Prepaid Mobile services to Kogan Mobile. This will impact the continuity of your service, and those of other Kogan Mobile customers. While the timing and nature of the transition arrangements are dictated by Telstra, Kogan Mobile has negotiated the optimal arrangements that Telstra would allow.

While this matter is entirely out of the control of Kogan Mobile, we nevertheless sincerely apologise for any inconvenience that these transition arrangements may cause to you. Importantly, Kogan Mobile customers who have remaining credit at the time their services are terminated by Telstra will have their entire remaining balance refunded to them by Kogan Mobile. The refund amount shall be calculated as the pro-rata amount remaining on the date of deactivation of service.

We’re devastated. We are extremely upset to have to bring you this news. We set out with the aim to make mobile services in Australia more affordable for all, and were well on the way to achieving this goal. The migration to Kogan Mobile was one of the biggest in Australian telecommunication history. As we lowered the prices for services, we were happy and so were our customers – but not everybody in the industry was pleased with what we were doing.

As you may have seen recently, many companies have fallen out of the prepaid unlimited market. We’re afraid that due to certain industry dynamics, this is a sign of things to come. We’re concerned that it won’t be long before your choice as a consumer is eroded almost completely. We worry that the big telcos in Australia will continue their consolidation of power. Inevitably, this will mean higher prices. We’re not happy about this but at this stage it’s not something we can do anything about. Kogan Mobile has been muscled out of the mobile industry against our will by a force much bigger and much stronger than us.

What will happen to my mobile number? Don’t worry, your number is safe! Your mobile number will stay active for 180 days from today. You will be able to transfer (port) your phone number to another provider at any time for the next 180 days.

What does this mean? Based on information provided to us by Telstra, we understand that the following will be the transition arrangements that Telstra will enforce:

  • Within the next 24 hours, Kogan Mobile customers will be unable to activate new services, or recharge existing services. In the coming weeks, you can expect to receive an SMS from Telstra advising you that your service will cease within a limited period (up to 60 days), but not before you receive a second SMS advising that there are 7 days to change (port) your number to an alternate provider.
  • During this period, you will be able to use your existing service and consume your existing credit.
  • Telstra will then send a second SMS at some stage during the 60 day transition period, which will advise that there are 20 minutes of calls and 20 SMS remaining credit available for use within 7 days to Australian numbers, while data services, international calls, international SMS and MMS will be excluded. You will continue to be able to retrieve your voicemail messages during this 7 Day Plan and for up to 10 days afterwards.
  • For 180 days from today, customers will still be able to receive calls, receive SMS and transfer (port) their mobile numbers and make emergency calls at any time for 6 months thereafter. If your service has not ported out after the 6 month period, the service will be cancelled by Telstra
  • Kogan Mobile recommends that, upon receiving the second SMS from Telstra, you take action to transfer (port) your mobile number to another provider, or otherwise make arrangements for continuity of your mobile service. We also encourage customers to plan ahead for receipt of the second SMS from Telstra by acquiring a new SIM card from another provider as soon as possible.
  • On behalf of our customers, we are currently seeking to negotiate some deals with several leading mobile phone providers. We will keep you informed about any special offers we manage to negotiate on your behalf and which you may wish to take up.

What will happen to the unused credit I’ve paid for? Once you have ported your number to another provider, or your service otherwise ceases, Kogan Mobile will, of course, refund to you the unused portion of your Access Period back to the credit card or Paypal account that you originally paid with.

As a consequence of Telstra’s termination of the 3G Prepaid Mobile services, the Kogan Mobile customer service team is likely to be inundated with calls and emails, and is likely to take longer than normal to respond. We will provide further email updates to answer your most common questions, and will provide you with further information as it comes to hand. If you have an urgent enquiry, please email [email protected] and we will respond as quickly as we can. Thank you for your patience and understanding.

Optus also released a statement this afternoon offering Kogan and Aldi customers a ‘special’ prepaid offer if they transfered their number to Optus.

From 5pm today, people who transfer their number to Optus Prepaid can get a special deal. Sign up to Optus Prepaid Social 4G and on your first three recharges of $30 or more, we’ll give you double the data and double the standard talk in Australia.

To get the above deal, customers need to transfer their number by 30 September which gives you roughly one month to get your act together.

Optus also provides the following mobile phone porting tips:

  • To transfer your number, you need to swap your current SIM with an Optus one
  • You can get a SIM at your local ‘yes’ Optus store^, on the Optus website or from anywhere that sells Optus Prepaid (available at over 9,000 retailers across Australia)
  • The friendly people at any ‘yes’ Optus store can help you port your number or you can do it yourself at optus.com.au/activate
  • Make sure you give us your correct mobile number and date of birth so we can get the details right
  • Remember, porting can take up to four hours so please be patient, but hopefully it will be a lot quicker
  • You can bring any phone that’s compatible with the Optus network, whether it’s 3G or 4G ready

Well, it’s certainly been an interesting day for telecommunications in Australia. We’ll keep you posted with any new developments as we get them. In the meantime, Kogan Mobile customers may want to read our guide on what to do when your prepaid mobile operator shuts up shop.

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