Kogan Mobile is a favourite player in the low-cost prepaid mobile space. The online retailer offers the most cost effective solutions and inexpensive data plans within Australia. Along with its thousands of other products online, Kogan also sells pre-paid sims, which can be ordered, configured and used within the comforts of one’s home. With 4.2% of Kogan’s profits coming from mobile and this figure increasing by 50% quarter on quarter, the case for Kogan to invest in Telco seems quite strong.
And Kogan is taking this quite seriously. It has recently signed a 4-year agreement with Vodafone to use their networks to launch NBN services in 2018. Currently, Kogan mobile and Kogan broadband are both powered by Vodafone, and the partnership seems to be quite profitable till date.
What can Kogan customers expect?
NBN services are a significant opportunity for Kogan, which is already known for its competitive prices and excellent customer care. Piggybacking on Vodafone would mean getting the network infrastructure and reliability needed for great telco service. Some things customers can watch out for from this partnership:
- Competitively priced NBN plans on the Vodafone fixed-line NBN network
- High-speed mobile broadband at affordable prices – Kogan already offers some of the best data deals in the market – and this feature is likely to continue.
- Digital efficiency and data driven analytics in the NBN space.
- Combination packages with Vodafone’s fixed broadband bundles. Vodafone has announced that it will be entering the fixed broadband market by the end of 2017 – rolling out its NBN lease lines directly to the 4 million Australian homes which will be NBN ready by then.
What can Vodafone customers expect?
Vodafone has currently concentrated its services in the mobile arena only. It is entering quite late into the NBN fixed line game, presently dominated by Telstra and Optus. But with the Optus-Amaysim partnership taking off, looks like Vodafone, too, is trying to gain some competitive advantage with Kogan.
The little trick that Vodafone plans to play utilises 4G Sims in its modem devices. Customers don’t care how they connect to the Internet; they only want to do so quickly. The biggest irritant for everyone, (me included), is the black hole period between signing a contract and getting activated. Vodafone wants to leverage its 4G network to fill the gap. They have a simple workaround to the NBN activation wait time:
- A Customer approaches Vodafone and requests an NBN connection.
- Vodafone checks if the customer is NBN-ready and has 4G coverage.
- If checks are ok, the customer will be given Vodafone’s new Wi-Fi Hub, a modem-router co-designed with Australian electronics manufacturer Technicolor.
- The modem will include a pre-installed 4G SIM. When plugged in, it will connect to Vodafone’s 4G network in the interim of an NBN service being provisioned.
Voila! The customer has Internet instantly.
Vodafone also plans to use this sim as a back up during NBN outages (and you can expect some while the service is being fine-tuned. Having invested millions in its mobile network, it makes sense for Vodafone to blur the lines between mobile and fixed line, to give customers reliable and consistent Internet access. The Kogan partnership gives customers a chance to use cost-effective Kogan data sims with Vodafone modems, making the deal even sweeter for all concerned.
Vodafone’s NBN issues
Vodafone wants to be the “cornerstone of competition” in fixed-line broadband and wants NBN to deliver its side of the bargain. With NBN having used taxpayer funds to create an infrastructure significantly faster than DSL, it is a bit confusing as to why it would offer low-speed tiers in its pricing packages. Vodafone does not want to purchase 12MBps and 25MBps wholesale broadband lines, as it does not intend to offer these to customers. But it looks like the NBN pricing structures do not support this. Vodafone has already submitted to the NBN’s Joint Standing Commission arguing against their pricing policy.
“The industry is not currently incentivised to deliver the full potential benefits of the NBN … the pricing model discourages RSPs from offering higher-speed data plans.” – Vodafone has stated in its submission.
With NBN being so new (and different) from what Australian telcos are currently used to, we will just have to wait and watch how things work out. Even though fixed broadband prices will drop significantly with so many players rolling out NBN services (Telstra, Optus, Vodafone, Kogan, Woolworths and more) I do expect some glitches in the initial days.