What would life be like with a family plan from the phone company ?

Will you save money if you take a family plan ?

They key question is : Will you save real money by signing your family up with a family deal from one of these providers ?

We answer this below. In order to figure it out, we’ve taken a look at what family plans are, how they work, their pros and cons and examine the alternatives.

Family plans were born because we’re spending longer in our Digital Lives

70% of individual Australians use 3 or more devices to access the internet. Estimates for the number of tablets, phones and laptops held by a single family in Australia vary between 4 & 7. The continued increase in the number of ways to access the internet represents an opportunity for the phone companies. Whichever of them can provide the data and data management tools required by ordinary people to live their connected digital lives will make the most money. It’s not hard then to see why Family Plans are the newest addition to the range of products being marketed.

Vodafone has their own ‘flavor’ of Family Plan

Vodafone bought their version of the family plan to market back in February the same year. At the time, Loo Fun Chee, head of marketing at Vodafone Australia said customers who chose Vodafone for their family plans could save up to $200 per year using them.

Vikki Brady, Head of Optus Customer Experience said at the Optus launch “We believe there are around one million households that would want to sign up for family sharing [and] the average household has 4.3 devices that families can share,” ( She was quoting their own internal research. )

Family plans are a new way to save money on multiple SIMs

Currently around two thirds of telco customers are using less than 50 per cent of their monthly data inclusions, apparently. Data is both the most valued feature in phone plans  and the component which is hardest to manage. That’s especially true for younger users. 18-20 year olds use 2.7 times more data than those over 45 years old.

On the face of it, Family Plans are a good scheme. Without them, most members of the family could waste some of their bundle while one person exceeds their allowance. This is the problem Family Plans have been designed to solve :The problem family plan solve

 

How do family plans work ?

best plans options for your family

 

Here are the mechanics of the family plans offered by both Vodafone and Optus.

  • They have a pool of data for the family to share :
    The key attractive element of a shared plan is the shared data allowance. The best way to describe it is to think of the data allocation as a milkshake the family can share. Every family member gets a straw.
  • A single bill :
    All the phones from a single household go on to one bill administered by the ‘Leader’. The Leader has their account set up first and to the degree anyone is, in a family, is in charge of the set up.
  • Keep adding family members :
    Whoever you choose for your family plan Leader, you can add The Brady Bunch as extras. Optus have a maximum of 6 SIMs on the account. ( Optus leader + 5 ) Vodafone have a maximum of 11. ( Vodafone leader + 10 ) There is a minimum charge of $30 to add a SIM with Vodafone ( you’ll get 1GB ) and a minimum charge of $40 with Optus.
  • Everyone gets unlimited SMS and voice :
    Each SIM added to the family plan comes pre-enabled with unlimited national SMS and voice minutes to any network. There may be a cost of $5 per device to connect : Vodafone does not charge a fee to connect people to the service. Optus charges $5.
  • Still tied in with data top ups :
    Overage is still $10 per GB, charged in 1GB increments.
  • Data workout is still included :
    Vodafone still offer their ‘data workout’ plan feature which gives every SIM on the account unlimited data for the first 2 months of the agreement.
  • Vodafone :
    The leader has to be on 12 / 24 month Red plan.
  • Some things aren’t shared :
    International minutes and access to premium services like video on demand are not shared between the SIMs on the family plan

How Optus explain their Family Plan

Optus explain their Family Plans

 

What are the alternatives to family plans?

You know what the alternative is to family plans because you’ve been using it / them for years. The alternative is take out individual plans for each family member. Your options include :

  • Prepaid for the kids :
    Prepaid plans offer complete cost predictability and are often deployed to avoid big bills for kids.
  • Cheaper plans from alternative providers :
    You’ll see these on many of our comparison pages. Smaller phone companies like Amaysim and Bendigo offer better pricing and often access to exactly the same networks. Many of these plans are available as either prepaid or postpaid variants.The alternative to Family plans

 

Good things about Family Plans

  • Clarity of plans :
    The table stakes for getting a shared data plan is that national voice and SMS services are all included already in your monthly cost. To you, this means there’s going to be no bill shock.
  • One bill :
    Having a single company whose bills you have to manage makes things much simpler. Administration of the account is easier and you are likely to have more leverage with them if you ever have a complaint.
  • Multi-play discounts :
    Optus offer you further discounts on their mobile services if you tie their purchase in it in with your fixed line ( broadband or phone ) service. Do this and you’ll get another $10 per month off.
  • More transparency :
    The reporting tools which are available from the phone companies to help you understand the data usage of all the SIMs on your account are extremely strong these days.
  • Less waste : Instead of multiple family members using only a proportion of their allocation, through better management and information plus pooling of low and high users, it’s possible to use your allocation more efficiently.

Bad things about Family Plans

  • Huge data :
    The data allowances they’re including in their plans are probably more data than you need. The data allocation in these plans is large to the point of silly. This is far more than people are currently using. Average usage  for someone with a smart mobile phone is only around 1.5 GB per month at the moment. It is true that average usage is increasing rapidly but, the lesson here is to ensure you are only paying for the data you need.
  • You’re tied in :
    By far the worst thing about them is that family plans ( and bundle discounts ) tie you in to a single company. Once the problem is solved, and people are signed up, most people stop shopping around at all. Which is, of course, why the companies offer these discounts. Internally, the measure of customers which leave phone companies is known as churn. The more products people have with a single phone company, the less likely they are to leave. Imagine the administrative difficulties of unpicking a contract with Optus if you need to wait until the broadband contract finishes AND a 24 month phone contract finishes ! You know as well as I do. You’re just not going to bother changing.
  • Better deals on single SIMs :
    As you can see from our infographic, Optus’ entry point for a SIM Only plan with 1.5 GB of data is $40 ! For just $5 more, you could get 5GB of 4G data on exactly the same network using Amaysim. There are better offers on the Telstra network from Boost and Cmobile.
  • These plans are postpaid only :
    At the moment, neither of the Family plans from Optus or Vodafone allow the addition of prepaid plans.
  • Existing customers have to move to the new plan :
    Nothing happens automatically, you have to call Vodafone or Optus and get yourself moved to the family plan.
  • Laziness :
    It’s more than possible that once this is set up, you will be stuck with them for a long, ling time because you’re so busy you’ll never shop around again.

Will you save money with a family plan ?

Sorry but the answer’s ‘Yes and No’ :

1. Yes. Compared to multiple, separate agreements from Optus or Vodafone you will save money :
Having a shared plan is going to save you money compared against the same products from the same company. If you compare the options of having multiple separate lines with Optus or Vodafone to the option of having a family plan with either then you’re going to save money.

2. But. If you bought separate SIMs from cheaper providers you’d save more :
There are cheaper alternatives on the market which will give you more data and still cost you less. We’ve included some with significant data allocations at the bottom of this article. You can find more on our ‘Unlimited plans’ page.

3. In either case, measurement of usage is the real issue – so address it :
Remember, you’re going to use more data over time. This scheme is designed to oil the slippery slope of growth in your data usage habits. If you’re confused about that take a look at the fact that the phone companies are offering you’re a free subscription to streaming high def video. This is the free bus to the RSL !

Problems with Family Plans

This scheme should not be considered on it’s own. The phone companies are motivated to help you use a lot more data. They’re encouraging high quality video downloading through their Stan, Presto and Netflix products or affiliations.

If people are not using their data allocations, they can be more efficient by using the app from the phone company’s website to determine their own usage and make the most of what they have. If they are exceeding their usage, it’s not that expensive these days. All 3 of the major phone companies have automatic charging at $10 per GB for those that do.

The biggest problem with shared data is a lack of personal responsibility for the use. When the average cost is less than the personal marginal cost you end up with problems like global warming. This is known as The tragedy of the Commons.  In simple terms, if you add your teenager to a shared bundle and tell him you’ll pay the bill, you’ll be paying more for data pretty quick.

Summing up

Family plans are another step towards the intelligent management of data. They’re and a feather in the cap of both Optus and Vodafone’s Product Management teams for bringing them to market so early.

Family Plans are probably just the first incarnation. The first cab off the rank is offering a new ‘Product’ ( Family Plans ) to multiple people in a family. Further down the line, the principal can be assigned to multiple SIMs for an individual to cover things like the SIMs in their car, boat, umbrella and laptop as everything gets added to the bill.
In our view, a better way to manage data usage ( than grouping it in to a family plan ) is to make yourself aware of your own using the app from the phone company. If the real problem you have with data is usage, then a shared plan insulates you from the effects, it doesn’t solve it.

We advise that you consider alternative plans from smaller phone companies. They give you data allowances which are so much bigger than Optus or Vodafone, there is no need to share data. They avoid the problem of encouraging usage by avoiding responsibility for it too ( because everyone pays their own bills. )

Alternative Plans to Family Plans

 

 

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.