MVNO

Church Resources

As you may or may not be aware, Church Resources has recently moved its telecommunications services from Telstra to Optus (via Ethan Group), a move that has far-reaching telecommunications ramifications for church-based organisations in Australia.

This move is part of a general (and welcome) move towards offering a fully integrated suite of ICT products and services, including fixed and mobile telephony, internet and managed IT services. Church Resources have indicated that this was a direction they have been interested in for a while now. This is being offered in partnership with Ethan Group (as far as we can tell Church Resources doesn’t deal directly with Optus).

Leaving the other services to one side, I’ll here focus on telephony, since the newly negotiated Optus rates were recently announced.

 

Highlights, if that’s the word, include:

 

  • An increase in PSTN line rental. Gone is the wonderful old $12.41 rate. The new rate is $27.32. This will have a serious impact in the Church space, since these organisation typically maintain a large number of PSTN lines (particularly at small outlying sites).
  • Mobile data costs and allowances are vastly more generous, reflecting Optus’ more-aggressive offerings in this space. For example there is now a $33 8Gb plan, which blows anything offered by Telstra out of the water.
  • Contracted unlimited call mobile plans begin at $33 per month ($44 for uncontracted).

Coverage is another issue, although one that is becoming less so as time goes by. Optus is currently deploying 4G services to a further 200 regional centres, but in terms of coverage they continue to lag behind Telstra, geographically speaking. On the other hand, Optus will begin rolling out 700Mhz 4G services early next year, which helps signals travel farther and penetrate buildings. (Of course, for that to be of benefit you’ll need a device that can use 700Mhz. The iPhone5S and 5C, for example, cannot).

 

The long and short of it is that organisations requiring Telstra’s superior coverage should think long and hard about a potential move.

 

On the subject of Telstra, there is word that Australia’s largest telco is currently working out its own Church rates, which it will offer directly to Church-based organisations (i.e. not through a dealer). Indications are that these rates will be similar (if not identical) to the previous Church Resources rates, but this is only speculation as they haven’t been released yet.

 

So what will this mean for organisations that currently use Church Resources for telephony? That largely depends on your organisation’s current contract status, and your requirements regarding coverage.

 

However, some general points can be made:

 

  1. Organisations that are currently under contract will remain on Telstra infrastructure for the duration of their current contract, and will continue to enjoy currently contracted rates.
  2. If for whatever reason you are still under contract but would like to move from Telstra to Optus, you will need to break your current contract. There is no provision for contracts to be waived.
  3. Any new agreement with Church Resources will use the new (Optus) rates, and will see services migrate to Optus infrastructure. Larger organisations on ISDN10 or above infrastructure will have to migrate those services to Optus Multilines. Multilines are cheaper than ISDN per channel (in this case $27.50 per channel compared to $30+ per channel), but they require additional installation, with can take up to six weeks and be disruptive.
  4. Relating to the last point, Church Resources will continue to resell Telstra PSTN services to organisations reliant upon that infrastructure, but have yet to reveal the pricing. It may well be offered at SFOA rates ($34.95), which is of course much higher than the previous charity line rental rates.
  5. Moving to Optus will also entail unlocking any mobile devices that are currently locked to Telstra (this is typically free).
  6. If you’re at all concerned about coverage issues, we encourage you to obtain a SIM from each carrier and test it out for yourself in all key locations. Telcos are generally happy to do this. Do not rely on the coverage maps!
  7. If an organisation is not under contract and for whatever reason prefers to stay with Telstra, they will have to enter a separate agreement with Telstra (which will mean no longer dealing with Church Resources for telecommunications services). As mentioned Telstra should soon release new Church rates of its own.
  8. It is our experience that adding an additional layer of service provision can complicate fault resolution. For example: whereas before a fault would be logged with Church Resources who would then log it directly with Telstra, now a fault is logged with Church Resources who then must log it with Ethan Group who then log it with Optus.
  9. Whilst I’m primarily addressing fixed and mobile telephony here (and mobile data), I don’t wish to downplay the value of a full end-to-end integrated ICT solution.

If you would like to know how the new Optus-based rates compare to the previous Telstra-based rates, or how they compare to Telstra new standalone Church pricing, please contact Dog and Bone. We can conduct a full market assessment tailored specifically to your organisation’s actual usage, and help your explore the financial realities of moving or staying.

Pricing the Cost of a Handset

The purpose of this article is to show you how to work out the most cost-effective way to acquire a new mobile handset – whether it is cheaper to buy the phone outright, or to get it included with a plan. There still seems to be a great deal of confusion about this.

Recent analysis has shown that Australians are increasingly buying their mobile phones outright. There are a number of reasons for this. For one thing, getting a phone on a plan typically locks you to that device for 24 months, and customers – especially younger ones – are increasingly keen to upgrade their handset more frequently than that. This is why Apple and Samsung release new flagship handsets every year.

Perhaps more importantly, however, is the simple matter of cost. While the prices of the premium handsets that drive the market – iPhones, Galaxies etc – haven’t fallen significantly, the willingness of telcos to subsidise that cost has vanished. It used to be that you could get an excellent phone included on a relatively modest plan, but those days are past. Now the best phones are only included on higher plans, and often there are extra charges, both hidden and overt. Dog and Bone looked at this issue several years ago – the article is still well worth a look. But costs are different now, and plans have become even worse value.

The first, and most important thing you should know when working out which option is best for you, is which plan you really need to be on. Ignorance, in telco land, is not bliss; it is expensive, and telco loves to sell plans based on the urge to own a lovely device. Do not let the device drive your choice of plan. It can inform it, certainly, but your plan choice should be determined initially by an honest appraisal of your actual phone usage. I long ago lost count of the number of times users and businesses signed up to vastly over-serviced plans in order to secure ‘free’ or ‘cheap’ handsets, thus spending far more in the long term. So, to stress it again: to start with, ignore the handset!

Broken down, this is the information you will need, and the process:

  1. Ascertain your ideal plan, based on your actual usage. This should be a plan with no phone included (i.e. a BYO plan).
  2. Multiply the cost of this plan by 24.
  3. Work out the outright cost of your desired handset.
  4. Add the results of steps 2 and 3 together. This is the 24 month cost of buying a phone outright.
  5. Find a plan that includes that handset. Make sure you have the total cost, including extra monthly handset charges.
  6. Multiply the cost of this plan by 24. This is the 24 month cost of getting a phone on a plan.
  7. Compare the results of steps 4 and 6. This will tell you which is cheaper.
  8. If it turns out that buying a phone outright is cheaper, you now have the exact value of the difference. Only now can you weigh that difference against intangibles such as coverage levels, customer service quality, taste in logos, or whatever you may deem important.

Example 1:

Sally wants a new iPhone 5S (32Gb), so let’s look at the most cost-effective way to secure one, appropriate to her situation. For the purposes of this example, Sally really likes Optus. (Perhaps she’s taken with that odious little lemon drop mascot. Who knows?)

  1. Sally has examined her last few bills, and worked out that she uses less than 1Gb of mobile data per month. Her call usage would fall comfortably under Optus’ $40 My SIM Plan.
  2. The total cost of this plan over 24 months is 24 x $40, or $960.
  3. The cost of an outright iPhone 5S (32Gb) is $999.
  4. The total cost of buying the phone outright with this plan is therefore $1,959 over 24 months.
  5. The cheapest Optus plan that includes an iPhone 5S (32Gb), appropriate to her requirements is the $60 My Plan. Getting the phone on this plan costs an additional $19 per month. Total monthly cost is thus $79.
  6. The total cost of this plan over 24 months (it is a 24 month contract) is $1,896.
  7. Buying the iPhone 5S (32Gb) outright is thus $63 more expensive cheaper over 24 months ($1,959 - $1,896).
  8. Given both options are on Optus, there is little comparison to be made. The subsidised phone on the plan is overall slightly cheaper. Sally will have to decide if she is willing to pay $63 to avoid being locked into a 24 month contract. On balance I'd say that's worth it.

Example 2:

But wait! Sally has heard that some of the budget resellers offer very cheap BYO plans, and decides that maybe she isn’t as fanatical about the Optus mascot as she’d thought. She decides to check these other carriers out. Same phone: iPhone 5S (32Gb)

  1. Sally has examined her last few bills, and worked out that her usage would fall comfortably under Vaya’s $18 Power Plan. She uses less than 1Gb of mobile data per month.
  2. The total cost of this plan over 24 months is $18 x 24, or $432. Sally also prefers not to go on a 24 month contract, so she pays an additional $20 upfront for the month-to-month plan, bringing the total cost of the plan to $452.
  3. The cost of an outright iPhone 5S (32Gb) is $999.
  4. The total cost of buying the phone outright with this plan is therefore $1,451 over 24 months.
  5. The cheapest Australian plan that includes an iPhone 5S (32Gb), appropriate to her requirements is Vodafone’s $50 Plan. Getting the phone on this plan costs an additional $18 per month. Total monthly cost is thus $68.
  6. The total cost of this plan over 24 months (it is a 24 month contract) is $1,632.
  7. Buying the iPhone 5S (32Gb) outright and going on the Vaya plan is thus $181 cheaper over 24 months ($1,632 - $1,451).
  8. Sally can now weigh up other factors. With Vaya she would own the device outright, and not be locked into any sort of contract. She would also be using the Optus LTE network. The plan would also include an additional 500Mb of data per month. Balanced against this, she may not be comfortable using an MVNO, or Vodafone may have better coverage in her area. Perhaps she intends on travelling overseas, and finds Vodafone’s latest pricing in this area attractive. Now that she has an actual dollar figure, she can weigh these factors more accurately against it.

For comparison’s sake, if Sally prefers Telstra, their most appropriate plan which includes an iPhone 5S (32Gb) is $84 per month, or $2,016 over 24 months. If she still prefers Optus, their most appropriate plan is $79 per month, or $1,896 over 24 months. 

 

NOTE: This article is not intended as an endorsement of any particular mobile phone carrier or product. Examples used in this article are intended only for illustration. Similar results can be achieved with other carriers and other plans.

Three Lessons from the ispONE Collapse

Here are three quick lessons we should all heed.

1. Always get everything in writing.

This is a bit of a mantra around the Dog and Bone office. We have learnt the hard way that a promise delivered verbally, especially when it comes to telecommunications matters, means precisely nothing. 

ISPone's claim that the Telstra wholesale division had indicated that it would match Optus wholesale rates might well be true. But there is no written record of it. This means disaster.

2. The Good Guy - Bad Guy trope is irresistible for the media.

Remember when the story first broke about Kogan Mobile users being cut off for violating the Fair Use Policy? Kogan was immediately painted as the bad guy, a big company ripping off innocent customers. 

Then it turned out that Kogan hadn't cut them off at all - it had been their wholesaler ispONE. Now ispONE were the bad guy, with Kogan going in to bat for their poor customers. 

Then ispONE was taken to court by Telstra for unpaid invoices, which has ultimately led to their collapse (as well as Kogan Mobile's). Now Telstra are the bad guy. A number of highly sympathetic articles have appeared about the two guys who started ispONE from nothing, struggling for years before they finally struck it big. It's a lovely rags-to-riches-to-rags narrative arc. Such tales always play well. 

I imagine the slippage of villainy will stop here, though. Rightly or wrongly, Telstra are always the ultimate bad guy in the Australian telco morality play. 

3. MVNOs only exist by the grace of the big guys.

Running a profitable Mobile Virtual Network Operator (MVNO) can't be easy. Budget mobile services is a hugely competitive space, and the margins are infinitesimal. Beyond that, however, you always operate knowing that your entire business is only one serious decision away from disaster.

Vodafone's woes weren't bad news only for Vodafone, but for anyone reselling their network. When Telstra ruined ispONE, it removed Kogan Mobile from the landscape at a stroke. Telstra then stepped in and saved Aldi Mobile. But what if it hadn't? All the power in this relationship resides with the big telcos, whose retail divisions are sometimes in direct competition with the budget resellers buying wholesale services. 

Optus has traditionally been the strongest supporter of the MVNO market. Let's hope that doesn't change, because the ramifications would be profound.