The New Cuddliness

Optus is about to release a range of new mobile plans. Contain yourselves.

Several weeks ago the new Optus CEO Kevin Russell made the apparently shocking admission that Australian telecommunications providers are ‘increasingly reliant on revenues from breakage fees’. This admission, to be sure, wasn’t shocking for its content: breakage fees, which occur when you exceed your cap allowance for calls or data, are now so prevalent that the telco would be stupid not to have factored them in to their forecasting. I doubt anyone thinks they don’t. It was mostly just surprising to hear someone from a large telco admitting it.

It has since become clear that this was entirely in keeping with Optus’ broader corporate rebranding exercise. They’ve changed their logo – readers are invited to judge for themselves – and added a lethally cute mascot with all the deadly charm of Clippy. Those assorted zoo animals whose connection to telephony was nowhere explained are gone. ‘Yes’ has made a return. Time will tell if it works.

Most pertinently to Dog and Bone’s mission, there is a range of new Optus mobile plans, which will be released, or unleashed, on July 1st. These are called My Plans, and they are in keeping with the new Optus cuddliness, or in any case, with Kevin Russell’s ostensibly laudable commitment to eradicate bill shock!

(Bill shock!, for those who don’t know, is the term for those moments when you receive your phone bill and discover it to be astronomically larger than you’d anticipated, featuring a total only expressible in scientific notation. It is a legal requirement that the term always concludes with an exclamation point, lest its quality of wail-inducing horror be diminished.)

The key feature of the new plans is the addition of voice and data blocks for $10 each, which kick in automatically once cap limits are reached. For example, if you exceed the data allowance for your plan, you would previously begin tolling on PAYG rates, which are exorbitant. A single GB of data on PAYG would have cost $250. Instead you will automatically be given a $10 1Gb block.

The same concept works for voice. Going over your voice allowance (now much rarer) means you will automatically have a $10 voice pack (200 minutes) added to your bill for that month. Thus there will still be some excess charges, but they won’t be anywhere near as shocking. They won’t require an exclamation point.

Optus have anticipated – indeed advertised – that they will take a revenue hit as a result of this. Recall that part of their previous revenue was the predictability of people going over their caps. They have offset this hit in a few sneaky ways, however. Firstly, the plans themselves cost more. Gone is the $40 plan – the new My Plans start at $50. Secondly, data allowances have been heavily reduced (by 500Mb on the lower tiers).

In fact, the new data allowances are far too small. The $50 plan provides only 500Mb of data, which is paltry, especially on an LTE device. This is particularly strange, given Optus' statement that '[t]he plans are built around a data-centric world, our old plans were built around a world where customers largely used voice'. The upshot is that far more citizens of this data-centric world will blow out their data caps. 

Of course, they won’t be slugged with astronomical excesses for doing so, merely a predictable $10 pack, again and again. This is the crux of the matter. One wonders how much of a revenue hit Optus will really take, despite their implied willingness to martyr themselves for the customer’s benefit. Bill Shock! was undoubtedly a real winner for the telcos, but there’s a lot to be said for a more stable revenue stream, delivered in $10 increments from a lot more customers.

There's also the small matter of PR, which is really no small matter at all: whereas a large bill blowout will often see escalation, and appeals, and the involvement of the Telecommunications Industry Ombudsman, the new model of the My Plans never will. 

Ingenious, wouldn’t you say?