We’ve had some pretty good deals for mobile calls and data access over the last few years. It started with the most profile when Amaysim entered the game with low per minute costs, then added almost unlimited plans shortly after for under $40. They were joined by Red Bull Mobile, Kogan Mobile and Aldi among others, but as it stands today the industry is being turned on its head with major players in court just inches from being shut down and the likelihood of these plans existing in just a few short months from now looking more and more grim.

Wholesale provider ISPOne has the only deal with Telstra Wholesale in this country. The company on-sold that deal and the Telstra network to Kogan Mobile and Aldi Mobile which both launched with great fanfare less than a year ago. Things started looking dire when Kogan took ISPOne to court demanding they fulfil their deal to provide SIM cards for new customers and they won. This week ISPOne has gone to the Federal Court to seek its help to stop Telstra shutting ISPOne down over allegedly unpaid invoices.

UPDATE: (19 August) – ispONE has gone into Voluntary Administration, and Kogan Mobile will cease within the month.  For information on plans and carriers you can choose – read my “what next” article right here at EFTM

ISPOne had a small win in the court today, however EFTM understands that the parties have been ordered into mediation tomorrow, and while it would be great to see the 280,000 customers of Aldi and Kogan among others get looked after in those discussions – this is all about money. EFTM understands that ISPOne is suffering from losses as a result of their payment structure with Telstra not being as they had originally hoped. The success of Aldi and Kogan has meant a huge number of new customers for the Telstra network, and perhaps Telstra has noticed just how many of them were in fact Telstra direct customers originally.

EFTM has obtained a “commercial in confidence” email sent by ISPOne today to some of it’s smaller mobile customers. Those customers are not average people, they are small business or community organisations running virtual mobile networks. These customers are likely connected to the Optus network through ISPOne deals with Optus, so to protect that business ISPOne is restructuring its operations by moving these customers to a new company “iboss international pty ltd”. The email claims that the new “brand” iboss will offer the same service, and will be the same team behind the scenes.

Confidential email notification sent from ISPOne to it's customers regarding a change in company structure

Confidential email notification sent from ISPOne to it’s customers regarding a change in company structure

All the hallmarks of a company which knows the end is near.

Taking a look around the low-cost mobile market it is pretty clear that Red Bull Mobile is not the only company exit from the “unlimited” mobile access market.

Lebra Mobile who have been in operation for many years have removed their best value plan which had a large data allowance and replaced it with a diminished 500MB per month.

LEBRA Mobile - no longer has a huge data allowance in it's high end package

LEBRA Mobile – no longer has a huge data allowance in its high end package

Cast your eye over Dodo Mobile’s offerings today and you’ll find the $39.90 “unlimited” plan which had 5GB of data is now gone – a distant memory for customers keen to recharge.

DODO Mobile has removed it's package which offered a large data allowance

DODO Mobile has removed its package which offered a large data allowance

Now look at Savvytel – they used to have a $38 “unlimited” plan with 4GB of data – that too is now long gone. Not available.

Savvytel has removed it's package which came with a large (5GB) data allowance

Savvytel has removed its package which came with a large (5GB) data allowance

Making matters worse for Savvytel are the rumours circulating within internet forums at Whirlpool. One customer claims a Savvytel staff member told him “they would be sending out notification about the business closure to their customers soon.”

If that’s true it’s sad news for the staff at Savvytel, and customers will need to find a new provider when their credit expires. EFTM will seek more information from Savvytel and update this post when we get it.

Observing the market from a distance, it’s clear that Telstra are not keen on a large-scale “low-cost” mobile market based on its network. Vodafone too have made all the moves one would expect from an organisation not keen to continue offering MVNO (Mobile Virtual Network Operator) services, which leaves Optus.

Optus provide several of the abovementioned carriers with their network services. With contracts in this industry likely spanning 2-4 years there may be a level of certainty available in some carriers, however when you look at all the evidence above and that which has occurred over recent months, the future is grim for low-cost mobile plans.

There is one exception. Boost mobile offers a pretty compelling package with 3GB of data per month for just $40. That’s as low as it’s going to be, and I expect Boost will be a solo player down that end. Boost is essentially a Telstra company. Telstra runs the network and the back-end, Boost is a marketing front end business that generates the business.

Right now, it’s wise for anyone on a pre-paid or post-paid low-cost plan to check their carrier status, check their recharge ability and remember – you can change carriers any day, any time, you can keep your mobile number and switch over in a matter of hours.
UPDATE : 10.00am – Tuesday.
Kogan Mobile has issued the following statement to its customers

13th August 2013

Dear Kogan Mobile Customers,

Thank you for joining us on the journey to make mobile access in Australia more affordable. We entered the mobile industry in order to increase competition and give consumers more choice and better value. Since starting Kogan Mobile, we are proud to now serve more than 115,000 active customers.

We have fought hard for the Australian consumer – there have been endless negotiations and even the occasional visit to the Supreme Court to protect our customers’ interests and ensure that our customers continue to get the best deals. However, there are forces at play in the Australian telecommunications market that are beyond our control, very powerful and impossible to ignore.

You may be aware that we procure our mobile services for part of the Telstra 3G Network through Telstra’s sole and approved distributor – ispONE. ispONE is the only company in Australia that wholesales Telstra’s Prepaid 3G Services and is essential to the operation of our and any business through that network. Telstra’s Prepaid 3G Network is not integrated with any other wholesale platform, other than ispONE’s.

Since day one, Kogan Mobile has complied with all its obligations to its service providers. We keep our agreements. We have paid every invoice on time or early. Like our customers, we expect our service providers to deliver what they have been paid for.

Kogan Mobile has 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 has taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE this is very likely to impact Kogan Mobile’s own customers’ services (through no fault of Kogan Mobile)

ispONE has 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 is permitted to (and will) attend the mediation
Kogan Mobile is doing everything it can to protect its customers.

We are monitoring these developments closely, as they may affect the continuity of our prepaid mobile services. We will provide a further update when further information comes to hand.

You may also wish to contact Telstra directly, and ask Telstra what it intends to do in respect of its wholesale prepaid mobile business and customers’ mobile telephone services if it achieves its goal of terminating its contractual arrangements with ispONE.

Kindest regards,

Kogan Mobile