Telstra has released the latest version of their ever-evolving mobile business offering. It is called Business Fleet Connect (BFC) and from November 26 it will replace the existing Business Mobile Advantage (BMA) product. From that date, no new connections will be available on the existing BMA plans.
Dog and Bone has run this pricing over a range of different client types and sizes, and have yet to find a single one for whom it is an improvement. This is a serious problem.
To be blunt, Telstra’s new fleet plans are worse in nearly every way in which a mobile plan can be worse: access fees are up, call rates are higher, data allowances and handset subsidies are down, while overall there is much less flexibility. I will break down each area below.
What is a Fleet Plan?
At its core BFC works the same as BMA did (and before that Telstra’s Fleet Select). It is a fleet plan, meaning that all the individual mobile plans on your account are added together, as is their provided call spend, in addition to other perks.
Example: On a fleet plan three $40 plans will have a combined monthly access fee of $120. If each of those plans provided you with $30 of call spend, then this would be added together to provide $90 of call spend across all phones. The thing to know with fleet plans is that the spend of an individual service doesn’t matter as much as the total spend of all the services.
The call rates you enjoy on those plans improves the more services you have i.e. a larger mobile fleet opens up higher tiers of pricing. Thus a $40 plan for a 5-mobile fleet will be worse than a $40 plan for an you have 80-mobile fleet.
All plans since BMA also include a portion of mobile data, which is also shared among all users (aggregation is a huge plus, explained here). As with call spend, this let businesses stop worrying about how much data each user chewed through, so long as they ensured the fleet’s total data consumption was below the total pool.
So what has changed with Telstra’s latest offering, Business Fleet Connect?
Higher Access Charges
There are now fewer plans, and they all cost more. BMA used to have nine different price points. BFC has five. In one sense, this is a useful simplification, but in another it is an excuse to increase the price of each plan that remains. For example: there used to be a $40 plan and a $50 plan. There is now just a $45 plan, which is similar to (but slightly worse than) the old $40 plan.
Across a large fleet of mobiles, this has a severe impact on total cost.
Lower Loyalty Bonuses
Each Telstra fleet plan also includes a monthly loyalty bonus, which is applied as a credit each month to any plan that is on a 24 month contract. These have all been heavily reduced. For example, the loyalty bonus on the new $45 plan is $5. On the old $40 plan it was $10. Lest it needs to be spelled out: that’s a 50% reduction. The reduction at other price points is slightly less dramatic. The old $90 plan has become the $95 plan, yet the monthly loyalty bonus has decreased from $20 to $15 per month.
As with the increased Access Fees, the reduction in Loyalty Bonuses strongly affects overall costs.
Some of the new plans have the same amount of included data as the plans they are ‘replacing’. For example the old $40 plan came with 200Mb of data, as does the new $45 plan.
However, some of the new plans have substantially less. The old $90 plan came with 2Gb of data, while the new $95 ‘replacement’ only includes 1.5Gb. Less data is never a good thing, but especially not as more and more users migrate to LTE (4G) devices.
Higher Call Rates
It is a little bit difficult to compare the new rates to the old ones, because the old ones came in a choice of timed or untimed flavours, which could be tailored for each user depending on their calling habits. What can be said is that for the vast majority of users the new rates are higher.
Offsetting this, the new BFC plans all include SMS and Voicemail (including Voicemail Plus) for free. This helps.
BMA was already considerably less flexible than its predecessor (Fleet Select), but it still had some scope for customisation if you knew what you were doing. The timed and untimed call rate option mentioned above is an example of this. Having a larger range of plans also helped a great deal.
The new BFC has been simplified still further, leaving far less opportunity for astute managers to tailor it to their particular needs. This ‘five-sizes-fits-all’ approach means that everyone is paying more.
Lower Handset Subsidies
We’ve remarked before that the golden age of the handset subsidy has passed. There was a time when you could get an excellent handset for a bargain, but no longer. We are approaching a point at which it costs as much simply to buy a phone upfront rather than pay it off over two years, quite aside from the greater convenience of owning your device outright. Telstra’s new BFC continues that trend.
Preliminary Modelling and Results
As mentioned, we have modelled Telstra’s new BFC plans across a few of actual companies (since fleet plan modelling has little point unless it is applied to real world situations). One of these is a sizeable client of Dog and Bone’s, currently on Business Mobile Advantage (BMA).
Suffice it to say that BMA in and of itself was not the most competitive pricing by any means, but there were several hundred thousands painstakingly negotiated reasons why this client chose this Telstra option. All else being equal, there is much better pricing available in the market. This is an important to bear in mind, because BFC is noticeably worse. This client, even with the most effective tailoring we could manage, would see its mobile costs increase by 10.30% on Business Fleet Connect, which would come to about $32k additional expenditure over the life of a 24 month contract. They would also see their aggregated data pool reduced by around a quarter. If we assume they also want new handsets, this would further increase their costs compared to doing so on their current plans.
I will return to this topic repeatedly in the next few weeks, because this is an important issue that affects a vast number of Australian businesses, and no one seems to be talking about it. Telstra’s market share in the business space is overwhelmingly strong, and many of those organisations are currently on BMA. Soon they will be on BFC, and they’ll rightly wonder why their mobile costs have increased by so much.