MVNOs Could be a Viable Alternative to Optus, Vodafone and Telstra

australia telcos

There are three main communication service providers covering more than 30 percent of Australia’s total area. Even though, of course, we all know there is an awful lot of empty spaces where nothing much lives at all, so the statistics are pretty much meaningless.

Telstra, Vodafone and Optus the Main Providers

Telstra, Vodafone and Optus have already worked out that animals like kangaroos, cockatoos and emus don’t need mobile services, as they have their own traditional means of communication. Humans want communication at their fingertips and, in particular, when they are out and about. The problem with having 3 independently operated communications companies is that each of them pays out cash to improve their own network. As each company adds more investment, so the other has to follow suit to remain competitive.

For example, statistics indicate that the 3 companies invested $1 billion each in their 4G upgrades. These are parallel communication lines following the same routes to the same customer base. In practice if all the money paid out had been pooled, the whole service could have been expanded to include more parts of the country, instead of offering the upgraded service to just the same customers, mostly in the more populous areas. It could have meant better service and a better price for consumers.

Free market doesn’t favour all

In this case there is a flaw when it comes to the free market and the inevitable competition that goes with it. This means overproduction instead of planned production. Who bears the cost is an easy question to answer and that is the consumer. Competition like this doesn’t favour anyone when it comes to an essential service like communication. We all need it whether it’s to keep in contact with family or friends, to run our business or inform our boss when we are too sick to go to work. We would be at loss without it so we pay our bills at all costs.

Mobile Virtual Network Operators (MVNOs) can offer a better priced service

Most of the MVNOs are tied to TelstraVodafone or Optus, but none operates across all the networks as this is not part of the equation. One exception is Macquarie Telecom, which offers a mobile service to its customers allowing access to the networks provided by the three main carriers. Otherwise, each MVNO has to choose who they buy the mobile product from.

The problem for an MVNO is the price that Optus, Telstra and Vodafone ask for their product. If it was fairer, an MVNO could buy products from all three companies so they can operate a service with better coverage at a fairer price. Of course the Telcos don’t want that to happen.

One network provider, many MVNOs is the answer

By providing one network with one set of lines for communications, smaller MVNOs could be in charge of servicing and pricing. There are already at least 20 MVNOs offering a various mix of phone and data services, which would be far more competitive if prices of the telecommunications products could be fought out between them after buying the product from the single network provider.

At the moment, the way things are going, Optus, Telstra and Vodafone are taking the lion’s share of the profits fuelled by Australia’s consumer base without allowing any form of profit sharing or by only releasing access to services at a price a potential MVNO does not have the means to pay for. Of course, share holders get a bit restless when they find their company has just invested $1 billion in upgrades and want the money repaid in the form of consumers paying the price for the improved coverage. Money has clearly been wasted by all through providing the same telecommunication line in triplicate.

Australia belongs to its citizens, not the profit gouging companies that offer their services with excessive profits in mind. There are people out there who want to benefit from the technological innovations brought to telecommunications by setting up an MVNO like Crazy John’s in 2003. This business offered cut-price deals from 120 of its outlets with a pre-tax profit of $200 million. If it hadn’t been for the owner’s untimely death it would most likely have closed because of the bullying tactics used by Telstra in demanding an unreasonable commission.

Who are the MVNOs customers?

MVNOs have a tendency to target customers who want a prepaid month by month deal and do not want or require the elaborate add-ons the major 3 providers offer, such as music, sport and movies. Increasingly, MVNOs are being offered the faster 4G service because the wholesalers such as Telstra are prepared to offer it, including Woolworth’s mobile and ALDImobile. MVNOs like Kogan Mobile do have specials available from time to time, such as the recent 12GB of data package offered for $4.90. Boost Mobile another MVNO which is now classified as a Telstra subsidiary offers not only 4G but SIM only plans using your own unlocked phone. These sorts of deals offered by MVNOs make mobile communications as flexible as they were originally designed to be.

The coverage of an MVNO

Some MVNOs may only cover a local area but bigger MVNOs like Lycamobile cover all the main urban areas. Their coverage map indicates you could drive from Melbourne to Cooktown without a gap in coverage.

You will be the winner if you sign up to an MVNO

Ultimately, the person who moves around a lot or is on a budget like a student would benefit enormously from signing up to a MVNO. Most of the persuasive tactics used to encourage consumers aren’t based on tying them down for months or even, sometimes, years because of the attraction of being offered the most up-to-date phone as a reward for loyalty. If you are just after data, minutes and texts there is no better way to go than with an MVNO. There are even some MVNOs that offer unlimited calls to overseas countries. That’s a bargain if you are temporarily living in Australia.

 

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.