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.