60 Second Intro
- Unlimited voice and SMS inclusions are now commonplace in Australian phone plans.
- 2018 is likely to see a number of plans with unlimited quantities of mobile data included.
- The change is going to be precipitated by the arrival of a new Australian cellular (mobile phone) network which will be launched by TPG.
- 37% of Australians say they want one of these Unlimited plans – to help them manage the cost of being more mobile.
- But we’ve taken a look at the places in the world where Unlimited data plans are sold.
- There, only 2% of people take them up because they’re expensive and sometimes have restrictions on them which users don’t like.
- In Australia, Optus’ recent unlimited mobile data plan launch shows us how a version of these plans might look in this country, and gives us hints as to why it’s so difficult for phone companies to offer them.
- We’ve considered the options people have and looked at alternatives to mobile plans with unlimited data in them.
- We believe there are better options out there that will save you money.
- In our view, unlimited data plans are not the best solution for the vast majority of people.
Unlimited Data in phone plans
Unlimited voice and SMS plans now make up the vast majority of Australian phone plan sales (see chart). Data is the battlefield between phone companies now and you can see the results of that in the prices shown on our comparison tables. The ACCC says Australian data pricing has fallen 11% since 2014. And remember, that’s while data inclusions at these price points have skyrocketed.
Alt text: The majority of phone plans chosen on WhatPhone contain unlimited voice and SMS in Australia to Australian numbers
Caption: Most plans are sold with unlimited Australian voice and SMS inclusions these days.
Australia already has Mobile Data bundles with allocations that will meet the requirements of all but the highest users. To these normal data bundles, we have seen free data inclusions like sport, video, music and Netflix added.
There are a number of misunderstandings surrounding the likely next step in the data fight – phone plans with unlimited mobile data inclusions. For example, there are very few people in the world who have phone plans with unlimited mobile data included. The reality is a lot of people say they want one of these plans, but very few actually take them up when they’re available.
Additionally, experience in the US, UK, and with Optus down here, shows that Unlimited plans are also not always what you think they are. Many overseas unlimited plans are limited in speed after quite small data allowances. We have some examples below. In fact one of the reasons we haven’t been given access to unlimited data plans is that down here, the ACCC is so strict in preventing phone companies misrepresenting what these plans do in our market.
That said, we’re about to see a flurry of activity around unlimited mobile data plans.
Why 2018 is the year of Unlimited Data Plans in Australia
37% of Australians say they want an unlimited mobile data plan (see chart). According to research which Deloitte, undertook in to Australian consumer behavior, unlimited data is the most desired plan feature bar none.
A phone plan with unlimited mobile data is the number 1 most wanted feature in Australia.
2018 is special because we may well see this sort of plan come to Australia. The major change happening to the our market, precipitating the change, is the imminent arrival of the new TPG network.
TPG are already a SIM Only provider who operate on the Vodafone network. They have a range of smartphone plans in market now. In parallel, they are building their own phone network in major cities around Australia. They’ve spent nearly $2bn on ‘spectrum licenses’ (one of the key things phone companies need to be able to set up a network and have built 1200 cell towers, in the major conurbations of Australia. Now, TPG are nearly ready and have announced a launch date which will be sometime in late 2018.
When TPG launch their new set of plans on their new network, they will have a great deal of network capacity and a relatively small number of customers. They will want to fill their new network with customers, and they will need an enticing offer to do it. The industry is betting that their new plan structure will include an unlimited mobile data offering, at the $40 – $50 price point.
This is a nightmare scenario for the major phone networks. Optus, Telstra and Vodafone stand to lose a lot of their revenue (and profit), having to remain competitive with TPG’s new plans. The AFR says TPG are going to cut prices across the market from 30% – 60%.
There are 3 main effects of this. Every one of them is bad for the phone companies and good for you. Unlimited mobile data plans will:
- Wipe out the top half of Optus and Telstra’s SIM Only service offerings:
When you can get unlimited data for $40 or $50 per month, it’s hard to charge more than that for any kind of plan. All of the major phone companies have plans which cost $60, $70, $80 and more per month. The price point of any new unlimited plan will become the most the market will pay.
- Unlimited plans will reduce the ‘overage’:
Overage is what phone companies charge you, when you use more data than what’s included in your plan. For example, if your plan has 5GB included in it and you use 6GB, you’ll pay $10 for the extra GB with most phone companies currently. Overage is the name for the extra $10 and it alone nets phone companies hundreds of millions of dollars per year. (One estimate says about $350m.)
- It’ll cut the number of SIMs you have:
Unlimited plans will force the conflation of services. For example, if you could use your phone with an unlimited mobile data plan, would you also buy a separate Mobile broadband plan? Probably not. In this (and many other scenarios) the phone company will end up with fewer SIMs on their books.
Why do people want unlimited plans?
10 years ago, I was asked to do some research for Vodafone on the major problems customers were trying to solve. The general trend was that people were more mobile, in both their personal and professional lives, that they were using mobile phone and data products to help them when they found themselves out and about, and that they wanted to control the costs of that.
To summarize: There was a move to mobility, a need to stay productive on the move and a desire to control the costs associated with that productivity.
As Australian individuals and employers become ever more mobile, they look to unlimited plans to help them manage the costs they face.
The same is true when you look at the trends today. For Australians at home:
- 17% of people already use mobile only products in the home :
That’s 1 in 6 Australians who have mobile broadband instead of a fixed broadband connection AND only a mobile phone in the house, no fixed (landline) voice connection.
- The average Australian home already has 17 connected internet devices in the home:
From iPads for the kids to Smart TVs and internet connected lights. Australians are among the early adopters of the world and we’ve welcomed these technologies in to our homes.
- The Internet Of Things:
Is talking over. One estimate suggest that the average Australian household will have 30 connected devices by 2030. (Although many of these will be services through WiFi / fixed broadband connections, not over cellular (phone company) networks.
Source: Center For International Economics – prepared for Vodafone. This research is not related to the work I did for Vodafone.
And for Australians at work:
- 30 % of employees now work from home.
- 80% of work is now processed in cloud based data centers.
- 62% of firms are preparing to support more mobile workers in the next 12 months
Source : ITBrief
The need for mobile data, both at work and home, presents a problem for most people.
The easiest way to manage the cost of mobile data is an unlimited mobile data plan
As we move to a more mobile world we have to face a new kind of problem. 88% of Australians now have a smartphone. Each of those uses some kind of data connection. Typically about half of people’s smartphone data usage is transmitted over a WiFi network, the other half over a cellular / phone company network.
The problem is that data is a concept most people don’t understand. They know what an hour is, they know what an SMS is, they don’t know what a ‘Gigabyte’ (GB) is. That makes picking the right kind of phone plan hard, in many cases.
Getting your data inclusion wrong can be expensive. Our own survey shows that 28% of Australians were charged $10 or more for extra data in their plan in the previous month. It’s these charges that lead to that massive $350m annual bill for ‘overage.’
As we’ve shown elsewhere that the problem of overcharging for data is getting worse, as people’s usage increases. The result is that many Australians do not trust their phone companies.
So, people are more mobile and they don’t understand as much as they need to about mobile data. That could hint as to why Unlimited plans are of such interest to people. Experience with unlimited plans overseas gives some indication of how an unlimited plan might be structured, and the level of appeal they will have down here.
Unlimited Data Plans in the USA & UK
Unlimited data plans, of one form or another, are available in many other parts of the world. (As you’ll see below, that doesn’t mean people end up picking them.) These overseas plans are worth taking a look at, because they could well outline very similar products to what we will ultimately see in Australia.
When you look in to it closely, there is really only one type of ‘Unlimited’ data plan which is currently available in other markets. They’re so called ‘Never ending plans’ and they have what we would consider to be a small data allowance – at least when we’re thinking about marketing which says (or is at least strongly associated with) ‘Unlimited’. Check out giffgaff’s ( an MVNO on the O2 network ) plans in the UK, below. You’ll get, perhaps 20 GB of 4G data. After that, you can still use the plan, you will still get data but it will be speed restricted.
Interestingly, the people who invest in these plans very often do not understand what they’ve bought. They lodge in their head the idea that the plan will be unlimited and then move on. I had a friend in the UK tell me about this plan from giffgaff and he told he it was unlimited.
Our unlimited plans could look similar to those seen overseas. Giffgagg ‘shape’ the data in this plan (see below for an explanation of what that means.)
Above source : GiffGaff website retrieved 23.3.18.
But let’s have a look at that ‘small print’. To be fair to GiffGaff here, they haven’t hidden the terms, this is on the homepage and I think the text is clear in both it’s size and meaning.
Source: As above.
Breaking the Giff Gaff plan down :
- The cost of the plan is 20 GBP – that’s 9GB of 4G data:
Today, that’s worth about $36 AUD. In Australia, you can get 10GB of 4G data for $29.90 from OVO and 32GB of 4G data from Kogan Mobile for the same price.
- After that 9GB of 4G data, the speed of your data download will be reduced to 384 kbps. That’s a significant number. (384kbps is the theoretical maximum for 3G speeds).
Out of interest, the practical upshot of this is that you could almost certainly create the same plan now on your phone by picking up a Kogan SIM and limiting your phone to 3G speeds when you get to 9GB of 4G usage. Most phones will let you turn the speed ‘down’ to 3G if you want to. It’s a feature in settings.
In reality, unlimited plans are not that popular where they are available. Only 2% of people in the US have chosen one. Partly, that’s because they’re so expensive. $50 USD – $90 USD per month is a lot for a SIM Only plan.
In the United States, only 2% of people use the unlimited plans that are available. The cost of unlimited mobile data plans is high.
Unlimited data in an Australian Context
Data is a problem for the phone companies. Recent reports show the race to the bottom that the phone companies are in.
Telsyte is a consumer behavior company. Their data, reported in the Financial Review show that Phone plan data inclusions MNOs – the Mobile Network Operators, have increased 100% in the year 2017 / 2018. This is the fight that Optus, and Vodafone (and, to a lesser extent, Telstra) are in daily. To get your business, they are constantly upping the amount of data they provide per dollar.
Optus and Vodafone are focusing on the $30 to $60 per month price range. However, as our data shows (see chart, below), most people are choosing plans from MVNOs or Mobile Virtual Network Operators – the smaller phone companies which resell the networks of the bigger telcos.
It’s not just Australia which is experiencing this, either. Check out the global view. (Chart below) The cost per MB/GB that phone companies are charging is falling quickly. It is asymptotic to zero. The mathematical result of which is a phone plan with unlimited data.
The cost per GB of mobile data has been falling steadily for years and will continue to do so.
Above source: The World Economic Forum
Why unlimited plans are such an issue for telcos
And yet, we still have extremely limited access to unlimited mobile data plans in Australia. (We show the only current example, below, including the caveats under which it is sold.) So why is that? There are 3 main reasons.
- Historical use of the term ‘unlimited’ resulted in ACCC fines:
In 2011, Optus was fined by the Australian Consumer ‘watchdog’ – the ACCC, for misleading use of the term ‘Unlimited’. Optus were a bit unlucky there. The behavior of all the big phone companies in this sort of ‘misleading’ terminology had been a cause of concern for the ACCC for at least 2 years prior. That’s why you’ll se
- A small number of people use an inordinate amount of data:
Nearly all Australians have a smartphone, as we’ve seen. Some of those people like to make the most of unlimited plans when they are offered. Some make a sport of it. When Telstra offered a ‘free data’ day, the equivalent to 3.4m Standard Definition films. One individual alone downloaded nearly 1 TB (call it 1000 GB, nearly 2 years worth of average monthly data usage) in a single day. Managing the excesses of this small group is what has led to the ‘fair go’ policies the phone companies use and acts to deter telcos from offering unlimited plans which will be exploited in this way. Part of the concern is the aggregate level effect on network capacity. (See next point.)
- Concern over network limits:
Vodafone Australia’s network is actually very good now. However, their brand suffered a great deal with they failed to anticipate the network demands that they’d feel when smartphones took off. Unlimited plans could, together, risk the amount of capacity available in phone company networks.
These are all good reasons and, until Optus, Telstra or Vodafone breaks ranks and offers an unlimited plan, the others choose not too either. Unfortunately (for them) a new entrant will soon make the decision for them.
So then, what proportion of people need an unlimited plan ?
Almost no-one actually needs a mobile plan with unlimited data. Take a look at the research below. Statistics from our own survey, conducted late 2017, show than only 20% of Australians had a mobile phone plan with more than 11GB of data. At most, it is this 20% of people who would need to consider an unlimited plan.
Only one fifth of phone users currently have a plan with more than 11GB of mobile data per month.
It is also worth noting that the people represented by that 20%, above, have almost certainly bought more data than they need, just to be sure they don’t get charged ‘overage’.
Unlimited plans are going to be expensive. Optus’ current version is $60 per month for the first SIM you get with unlimited mobile data. Below, you can see that, when the highest mobile data users, even that 20% of people we surveyed who ‘needed’ more than 11GB per month, could get a plan for $40 per month, which would almost certainly satisfy their requirements.
$40 per month will get you 16GB – 19GB at current rates. That’s cheaper than an unlimited plan and it gives you more than you need.
To this scenario, we can add the anticipated outcome of TPG joining the market. The AFR suggests that TPG are likely to reduce the cost of all phone plans in Australia by between 30%-60%. That means you’ll get this 15-18 GB for something in the range of $20 per month. TPG will cut the price of data, for sure. But the cost of data has been falling for some time and will continue to do so. So, when unlimited plans launch down here, your options are likely to be :
Unlimited plans are likely to be more expensive than people want to pay in reality. At the moment, only a small proportion of visitors to this site pick a plan costing $30 or more each month.
Our own analysis shows that people are prepared to pay less and less for a phone plan each month. Most visitors to this site pick a plan which requires a spend of less than $30 per month.
- A ) More data than you need for $20 per month – an amount which is in line with what people are prepared to pay.
- B ) Unlimited mobile data for $50-$60 AUD per month. (With restrictions.)
The simple truth is that almost no one needs a mobile plan with unlimited data in it and very few people will be prepared to pay the $50 or $60 it will cost.
Where can I find an Australian phone plan with unlimited data?
Optus are the only Australian phone company to offer any sort of unlimited mobile plan at the moment. Strategically, Optus are exceptionally good these days. Having worked with him, I see the hand of Tim Cowan at play. Tim has worked for Optus for a long time now, nearly 10 years and he’s been behind many of the better moves they’ve made – from their daily roaming charges to their $10 extra for excess data approach.
Source : Optus.com.au. Retrieved April 2018
Optus’ mobile phone plan with unlimited data is called unleashed.
It was initially released in March 2018, and then only to existing Optus customers and only for a very limited time (about 24 hours). It costs $60 for the first SIM, $50 for the second and $30 for the third, Optus likely betting that there’s only so much mobile data a family can use and that adding multiple SIMs to the same account wouldn’t impact the amount of data they got through.
Optus have also limited the maximum speed of download their plans will allow with some clever network threshold setting – a bit like what giffgaff did in the example above. If you’re tethering or streaming video (like Netflix) on Optus’ plan, you could be limited to 1.5Mbps which is slow. (That’s about 3% of maximum 4G speeds.)
This is called ‘shaping’ and we offer a bit more information on it below. Some Australian providers, including Belong Mobile limit (shape) their network speeds too. Optus very rarely do, even to those who resell their network but they have on this unlimited plan.
Netflix may just be watchable over an Optus unlimited plan.
Above source : Netflix
Optus’ plan is also a 12 month contract. We generally advise people not to sign contracts because their data allowances will almost certainly increase ( see section above ) over the course of the 12 month you’re tied in. Some 12 month contracts are worth considering, especially those with double the data you’d expect and, since Optus’ here is unlimited, we’d have to agree that the case in this situation.
Optus’ unlimited plan also has some other terms to consider.
- All usage is subject to ‘fair go policy’ :
This is how the phone companies deal with those very high users. Usage has to be ‘reasonable’ and ‘acceptable.’
- Only for smartphones and tablets:
Other devices (smart TVs, laptops, both of which could chew a lot more data than your phone) may be blocked.
- Only by invite:
These plans are currently only for those invited.
- Not to be shared on an account:
Are not part of shared plans.
- Time limited offer:
Promotional period only from late march to the end of April 2018.
What is speed shaping in an Unlimited Data Plan?
Phone companies don’t want to sell you data, they want to sell you a service. To maximize the amount of money they can make, they want to differentiate the way you use data and charge you the most they can. They see the data you use on your phone as different to the data your TV uses or the data your laptop employs to access the internet when you tether your phone to your laptop.
‘Speed shaping’ is how the phone companies try and differentiate the services they’re selling. By limiting the data speeds you’ll get (that’s the ‘shaping’ their marketing is talking about) they effectively preclude your ability to use the mobile data in the plan they’ve sold you for anything other than a smartphone.
Here are the ways they can ‘shape’ your data usage and how each type will affect your experience.
They can detect when your phone is tethered to your laptop and limit the data speeds you receive when you’re connected that way. Optus have limited their ‘unleashed’ plan to 1.5Mbps in this instance, which is around 1% of the speed you’d get on even the lowest tier of a fixed broadband NBN connection. Effectively, Optus are trying to encourage you to take a second mobile broadband connection for your laptop to get better speeds.
- Speed at limit an allocated data value:
This is what giffgaff did, above. They give you fast data up to, say 9GB per month, and after that ‘throttle’ (force a slowdown) of the mobile data speed your device gets – perhaps to 3G speeds.
In circumstances under which there is no technical flag to determine what you’re using the service for, they can put something in their terms and conditions which will prevent you using it. For example, Optus commercially limits the type of person using the unlimited plan to consumers. Businesses are not allowed to use this unlimited plan. They can’t tell from your phone whether it’s a business device but if they do find out, they can shut off your access because the terms preclude that usage type.
Optus’ motivation to maintain service level charging is just one of the things we can learn from their recent ‘unleashed’ plan release. There are other things we can learn, too.
What can we learn from Optus’ ‘Unleashed’ plan?
- It’s clearly focused on customer retention at this point:
It’s a compelling offer available only by invitation and then, only to a small number of existing customers.
- They dipping their toe in the water:
Optus are probably trialing the market. They will be examining the proportion of people who took the service up, how much data people will consume if they are given unlimited access to mobile data, looking for those ‘rogue’ individuals who use significant volumes of data and determining whether they need to adapt the offer they currently have in market before they release it to a broader base.
- It’s a pre-emptive step:
Optus releasing the plan robs TPG of headline ‘unlimited plans – only from TPG.’ Any press interest in the TPG launch will reference Optus’ unlimited plan.
- It may stimulate similar behaviour from others:
We can expect Vodafone to do the same and perhaps Telstra through Boost or Belong (their sub brands) – rather than their own primary (retail) brand. Telstra have the most to lose. All of Telstra’s SIM Only month to month plans cost more than the highest price point that Optus charge for unlimited data in their plan. In Telstra’s base offering, their website offers 2GB of 4G data, compared to Optus’ Unlimited at the same price point (Optus’ requires a contract.)
So, where does all this leave us?
When TPG launch their unlimited mobile data plan, it’s going to be such a big deal in the world of telecommunications that it may well leak over in to ‘real life (where people don’t care a lot about phone plans.) Real, normal people are going to see the price of phone plans halve overnight and everyone is going to consider moving phone company to get a better deal.
Unlimited mobile data plans are not a panacea. Plans of the sort released by Optus, with inclusions that technically preclude the key things mobile data is used for – streamed video like Netflix and tethering – are service pricing methodologies that real people hate. To normal people, mobile data is just data.
And unlimited plans are only of use, in practical terms, to people who are currently paying more than $30 per month. As we’ve seen in the charts on this page, $30 a month, spent in the right way, can get you a phone plan with enough data for almost any conceivable use. Allowances in the mid 20 GB can be found now in Australia, for less than $30 per month and only a tiny proportion of people use that amount. This is why, as we’ve seen in the USA and UK, where versions of unlimited mobile data plans are offered, only around 2% of the market has them.
Nevertheless, unlimited plans will be offered in late 2018, by every operator. Here is how we see it working out.
- Vodafone unlimited data plans:
Vodafone have matched Optus in offering data limits that have benefitted consumers over the last year. That means they’ve moved many users to lower cost plans – because their data needs are met there by the additional inclusions the two phone companies now offer. Given this, and Optus’ launch of an unlimited mobile data plan in ‘Unleashed’, it seems unlikely that it will be a long time before Vodafone launches it’s own version. They tool will need to get some information on how usage of such a plan will look, when other operators move the market in that direction. In my view Vodafone will launch an unlimited mobile data plan in the next few months, which exactly mimics Optus’ price points..
- Telstra’s unlimited mobile data plan:
Telstra won’t like offering an unlimited mobile data plan. Their goal for the last 10 years, since the launch of the ‘Next G’ (3G) network, has been to offer mobile plans which are differentiated on quality – coverage and speed. Telstra have a precarious competitive position across telco. They have just had to release an unlimited fixed broadband product for the first time to stay competitive in market. They are trying to fill the revenue gaps left by the sale of their wholesale broadband business to the NBN. In my view, Telstra will launch an unlimited mobile data plan at about $100 per month.
- Optus’ Unlimited mobile data plans: Optus have shown their cards already. They’ll have some variants of that plan ready to go for TPG’s launch.
- Smaller phone companies: Since smaller phone companies are where the bigger phone companies compete for savvy, value based shoppers, they will each release an unlimited 4G data plan to their wholesale partners when TPG release theirs.
What people really want is fairness and the ability to simply manage their phone bills. Of course, that’s unlimited for most people at least in principal. In practice, you can achieve this with some simple management of the data you have in your plan.
When the new 5G networks are released at the end of 2018, they’ll offer a new premium price product for early adopters. Optus, Telstra and Vodafone are going to be hoping this sustains their average revenue per user – a key industry measure.