Telcos New No-Frills Approach to Mobile Services

Telcos New No-Frills Approach to Mobile Services

The new telco environment is getting less complex and more straightforward

Australia’s telco market has evolved over the years. Once upon a time, phone plans were complex with too many options – so much so that choosing a plan was a chore in itself.

Fast forward to recent years, and the major telcos have made it a priority to simplify their lineups significantly.

So what has changed? What has caused this new “no-frills” approach to mobile services? In this article, we’ll discuss some of the latest updates in the Australian market that have contributed to a more simplified landscape.

Telstra’s latest moves 

Just less than 2 years ago, Telstra refreshed their postpaid lineup to simplify their offerings in line with the T22 strategy. Now, the telco has revamped that same lineup again, opting for an even simpler, straightforward, no frills approach.

New Telstra postpaid plans are upfront plans – while previous month-to-month plans sent you a bill after use and gave you 2 weeks to pay, the new lineup requires upfront payment charged to your credit or debit card.

With this new scheme, you get some more perks, such as unlimited International SMS and MMS, along with data sharing. The revamp is just another example of how telcos are searching for ways to cut waste.

Another example is Telstra’s latest decision to quit offering NRL and AFL streaming on phone plans. Instead, the telco’s customers will receive access to Kayo Sports at a discount. This, again, cuts down Telstra’s offerings significantly, simplifying their line up with a no-frills approach.

OVO closes, Amaysim acquired by Optus

Telcos also seem to be encroaching each other. For instance, just last year, Amaysim acquired OVO, a direct competitor in the MVNO market – and then shut down the company. A few months later, Optus began the acquisition of Amaysim for $250 billion, and then recently finalised the deal.

Optus’ acquisition of Amaysim can be viewed in several ways. One plausible view is that larger telcos reduce the margins of smaller telcos (MVNOs), which can squeeze them out of the market. In this case, Optus acquired Amaysim, which allows Optus to further reduce costs and margins, thanks to the increase in subscribers gained from the acquisition.

Here, we see the same no-frills approach, because reduced margins typically come from more simplified phone plan lineups.

Optus also launched their own sub-brand mobile company called Gomo. Gomo is simple and straightforward – 3 budget-friendly SIM plans with voice and data. The new sub-brand proves how attractive the no-frills approach is to telcos.

Vodafone’s Felix Mobile and the sub-brand/MVNO market

TPG Telecom (Vodafone) also launched a sub-brand last year called  Felix Mobile. This particular sub-brand is the definition of no-frills. They offer only one simple SIM plan, and it includes unlimited data capped at 20mbps download speeds.

Both Vodafone’s and Optus’ release of sub-brands were an answer to Telstra’s sub-brands – Belong and Boost. While Telstra have always been a large, complex entity, their sub-brands offer simplified and straightforward plans.

This has been the case with MVNOs since their onset. These smaller telcos resell the larger telcos’ networks, which means they have less overhead to worry about. This in turn allows them to offer attractive deals and straight forward plans to customers.

Over the years, MVNOs have gained stakes in the telco market, thanks to their budget-friendly models. In turn, the larger telcos have had to adjust their strategies by simplifying their lineups as well.

However, larger telcos have those high overhead costs to worry about, so an outright MVNO strategy isn’t ideal for major telcos. Instead, telcos have acquired MVNOs or launched sub-brands of their own. Either way, such mobile services end up with straightforward plans and growing numbers of subscribers.

Final words

The telco market is changing, as it should. Telcos have opted for straightforward lineups and sub-brand ownership. With telcos snatching up MVNOs and launching sub-brands, they have to stay competitive in this new no-frills market. This typically means better deals for the customer, which is always a great thing.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.