Vodafone’s new 2017 plan upgrades
60 second intro
- Vodafone are saying ‘No more phone contracts.’
- They have simplified their entire postpaid plan range
- The company will more clearly break out what you’re paying for the SIM plan plan
- And what you’re paying for the device.
- It’s an important strategic step for a lot of reasons.
- But you’ll still need to work out the maths.
- This is not as clear cut as it seems.
Key points about Vodafone’s new plan range
It’s late 2017 and Vodafone are claiming to have made some ‘sizable’ changes to their entire range of postpaid phones and plans.
Telcos have a number of ‘dirty tricks’ which they use to make it hard to compare what they offer, directly. In the past, one of their favourites has been tying together:
- The monthly plan payment : This is what you pay for your voice calls, SMS and data each month.
- The handset repayment : This is the proportion of your plan which is used to pay off the ‘free’ phone they give you.
It’s an old trick. To muddy the waters further, some phone companies vary the price of the plan, depending on the device you take. So, if you take an iPhone 7, you’ll pay $40 for a plan with 10 GB in it. If you take a Samsung Galaxy S8, you’ll pay $45 for the same plan with 10GB in it. It’s very hard to compare phone plans in this circumstance. This approach is is one of the key ways telcos have deliberately made the market hard to understand for a long time.
With their new schemes, Vodafone is on the front foot trying to change that.
Vodafone is trying to make their pricing clear. To do that, they are splitting out the costs for :
- The phone you’re getting ( if you choose to take one) and
- The monthly access fee ( payment )
They had to do something. Vodafone’s customer numbers are down, their market share is slipping. Recent estimates by Kantar put Vodafone’s overall market share at 14.4%, down from 15.2%, only a year earlier Most of their customers losses came in this very area – postpaid sales. ) To this bleak picture, we add the facts that Vodafone’s rivals are making progress with significant network upgrades and coherent content strategies. Additionally, there is competition coming both in the form of the NBN and TPG.
Vodafone’s SIM Only plans have a couple of key contributing characteristics to them.
First, Vodafone’s network troubles. We have covered this aspect to Vodafone’s service elsewhere and thoroughly. As you’ll sees from our articles on the subject, Vodafone’s network is largely turned around and usable in city areas of Australia. Unfortunately for Vodafone, a lot of customers left them between 2010 and now. What that means to their SIM Only proposition is that they have fought hard to match competitors where their offers improved.
Second is Vodafone’s enormous global scale. It’s hard to conceptualize Vodafone’s reach from Australia. The company has controlling stakes in the better part of 40 worldwide phone companies. They have a whole set of employees in England who represent the ‘Global’ organization. These people negotiate centralized deals with third parties involving huge sums of money and pass the benefits on to Vodafone Australia as Economies Of Scale. This is especially evident in their roaming proposition.
Is Vodafone’s new scheme any cheaper ?
What Vodafone are proposing here is essentially the ‘buy the phone yourself and add a SIM’ methodology that we have been proponents of for some time. Let’s have a look and see if users of Vodafone’s new scheme will save any money.
As you can see from our comparison infographic, you’re still going to want to get into the calculations before you commit to a plan. We compared Vodafone’s current homepage pricing of the Galaxy S8 and a 6GB a month plan. One of Vodafone’s major rivals had a better deal under contract. And it’s possible to beat both of them piercing a deal together yourself, using a phone from Mobileciti.
Went with a Vodafone contract
Galaxy S8 64GB
24 months contract on Vodafone x $44.95
$50.00 Vodafone Red Data plan
(month to month version)
( = Unlimited Oz Talk & Text + 14GB )
Minimum Total Cost $2,278.80
On Vodafone network
Found a deal on WhatPhone
Bought the Samsung Galaxy S8 from mobileciti
$36.90 per month on Kogan
(12 month version)
( = Unlimited Oz Talk & Text + 10GB of 4G Data )
Minimum Total Cost $1,923.60
On Vodafone network
By finding a reseller deal on WhatPhone and buying her phone outright from mobileciti, Sally makes a
Changes to Vodafone’s 2017 plan range
Voice – Vodafone have overhauled their ‘Red’ range
- Unlimited voice and SMS in Australia to Australian phones :
All plans now have unlimited voice and SMS in them. But then they were previously.
- What’s included :
Voicemail retrieval is free. 13 and 18 numbers are free to call.
- What’s not :
Obviously, you will still pay extra for premium text and roaming.
Data allocations in Vodafone’s new postpaid range
- Vodafone’s plans start at $30 :
That’s $30 per calendar month since we’re talking about postpaid plans. Vodafone will give you between 1GB and 3GB of data for that amount, depending on whether you take a Red plan, a month to month plan or a 12 month contract plan. We think those data allowances are low compared to the competition.
- They appear to be trying to incentivize the uptake of Red plans :
Vodafone offer preferential pricing for their ‘red’ range. Remember, however, that committing to a plan for some time, can lock you in to it’s features while the rest of the world gets an increasing data allocation.
- Extra data is still $10 per GB :
The new plans maintain the useful ‘add data when you need it’ plan feature. We offer the usual proviso: watch your usage using their self-service app.
Changes to how Vodafone charges for phones
One of the most appealing things about buying a phone under contract is that you don’t have to pay for it upfront. Vodafone has maintained that feature in their new plans by offering to split the cost of the handset over a period which suits you. To a large degree, this is making the postpaid range look a lot like the way they manage their prepaid customers.
- You still buy the phone from Vodafone :
You can bring a phone from elsewhere or buy a new one yourself (see options below.) However, if you want Vodafone to supply the phone, they will.
- You can split the cost over multiple timelines :
The cost for your new device can be broken down over 12, 24 or 36 months. The financial and technical scheme they use to do this is called Vodafone’s MPP – Mobile Payment Plan and they’ve had it for years !
- You can throw in extras :
You can still get all of your accessories from Vodafone, too, if you like. They will bundle the cost up and include it in your monthly repayments.
- Leave when you want to :
You don’t have to stay with Vodafone for the entire time you have the phone. You can leave whenever you want to, you just have to pay the cost of the phone
- You get to keep the phone :
Remember, you own the phone at the end of it. That’s not true of every phone leasing scheme out there, notably, Telstra’s new phone feeling. (But then, with Telstra’s new phone feeling, you get a new phone every 12 months.)
Important note : Make sure, if you are comparing devices, when you look at their site, that you are clear on the term they have used to break down handset costs. The default seems to be 36 months. It’s true that people are keeping their phones longer these days. However, if you are comparing with, say, the same phone under a contracted plan with one of Vodafone’s rivals then they are likely to have broken down the cost over only 24 months. This could make Vodafone look cheaper, even when it’s not.
Where Vodafone’s scheme really will help people, is at the end of their contracted agreement period. At the moment, the monthly payments people make for their phone and plan in one can continue at the end of the contract. That means you’re still paying for the handset even when you own it !. Vodafone themselves say the average person spends $500 when their contract ends – an eye-watering amount. This accidental spend will not be possible in the new scheme.
Roaming and international is one area Vodafone shines.
- International from $40 :
International call inclusions start on their $40 per month on Vodafone’s red plans.
- $5 a day is market leading :
Vodafone’s $5 a day to use your phones overseas in most international destinations is the industry benchmark.
What are your alternatives to Voda’s new scheme ?
In our view, Vodaofne’s new scheme is mostly window dressing. You certainly have options from other places to create the same opportunities. You could :
- Buy the handset yourself :
From a handset point of view, we would advise you evaluating Mobileciti’s hardware. There are, of course, high street alternatives like JBHiFi and grey market imports which
- Avoid the upfront cost of the device :
If you want to split the cost of a phone there are other ways to do it, too. Moose Mobile have started leasing phones, so have Vaya, another Australian telco. Note, you also end up owning the device when you buy it from these companies.
- Telstra’s ‘New Phone Feeling’ :
Telstra’s scheme lets people upgrade their phone after 12 months if it’s in good nick. They sometimes charge $99 for the privilege although at the time of writing, that fee is being waived. Other major Vodafone rivals have similar schemes.
- Phone companies which use the Vodafone network :
There are alternatives on the Vodafone network including Lebara and Kogan Mobile which both use the full Vodafone 4G network.
For some of us the most important factor when choosing a phone plan is the quality of the network. You don’t want to find yourself consistently without coverage. You might miss an important business call or find yourself stranded in the middle of no-where without an on screen map. Vodafone have spent $billions trying to improve the performance of their network and how it’s talked about in the media.
Vodafone Australia is not a tiny company. It has a 14.8%
market share, behind Optus at 22.3%
and Telstra at 39.9%
. The problem is, those market shares aren’t changing quickly. It’s a difficult spot for Vodafone. The simple truth is that if people have a 3G phone, they choose plans from Cmobile Red / Lebara ( who resell the Vodafone 3G network. ) And if they have a 4G phone, people buy from an Optus Reseller. You can get the same product as you do from Vodafone but, with this 4G example, you’ll get 4G coverage across 96% of the Australian population
instead of Vodafone’s 96% of metro area
Who are some of the companies that use the Vodafone network ?
Did you know that Vodafone, Optus and Telstra are the only three mobile providers in Australia that actually own and run their own mobile network? All other mobile phone plan providers just rent access to one of these three networks!
These companies also use the Vodafone network.
How does buying through a reseller work ?
Quick summary of Vodafone’s SIM Only plans vs Telstra and Optus
- Adding more data when you’ve used yours up:
Vodafone has a facility on their SIM Only plans whereby, when you reach your data limit, you will automatically have more added. Optus have the same thing. Data speeds are increasing. 4G is faster than 3G was. They’re already working on 5G. Newer phones have faster processors and they pull information down from the network faster. The result is that people are using more data this month than they did last month. By most people’s reckoning, each phone user will get through twice as much data next year as you are now. The safety belt feature that Vodafone and Optus have put in place with their auto add data is a lifesaver. It reduces the risk of using data in the first place. It also avoids huge bills for those who accidentally use too much.
- Sharing Data over multiple devices:
Vodafone have launched their data sharing scheme and it’s very similar to Optus’. With it you can add another SIM to what is effectively a family account. Here’s how they work. Imagine a father is paying $50 per month for a SIM Only plan with ‘infinite’ SMS and voice from Vodafone. For $30 per month, he can add another family member, let’s say his wife to that plan. She also gets ‘infinite’ SMS and voice and now splits the data with him. Vodafone’s SIM Only sharing option is an important first step along the multi SIM management path but at this time, the practical benefits are, in our view not worth having. Far better, instead to manage your data needs yourself and buy a bundle you’ll use.
- Overseas roaming at daily prices:
Vodafone have the best proposition in market for overseas roaming on their SIM Only plans. For $5 per day, you can safely (and that is probably the key word) use your phone overseas. Vodafone’s huge global coverage works in their favor here. The range of countries you can go Red Roaming in is already large and is growing every day. Optus and Telstra’s equivalents are more expensive and offers less international coverage. If you travel overseas regularly then Vodafone should be a strong contender for your money.
- Simple ‘Yes’ Insurance:
Vodafone have effectively emulated Optus’ insurance scheme. And it’s really good. It’s less than $15 per month, it has some very reasonable terms and it’s far more useful than what was the industry standard until recently. Remember, you’ll only be able to use it if you got your phone from Vodafone in the first place. So, if you’re after a SIM Only plan then this might not be relevant to you. Also, Optus’ scheme is just as good (which is why it was copied!) However, both Vodafone and Optus beat Telstra hands down on insurance.
- Good Self Service App:
Typically, a cost of approximately $5 is assigned by a phone company like Optus or Vodafone to a customer calling in to the customer care organization. If they’re dialing in to do something they could have done online, it makes sense to create an app which allows them to do it. Banks blazed a trail of Self Service which it took the telcos a while to catch up with. These days, the apps from all 3 phone companies is exceptionally good. That includes Vodafone. And you’ll be able to manage your SIM Only plan just fine using their ‘MyAccount’ app.
- Free content:
Vodafone’s global negotiating power has been used here to negotiate a deal with Spotify which applies to some of their SIM Only plans. In Australia, you’ll also get free access to Stan on some plans although you will be required to pay for the data you use watching it on your phone. Dropbox is another globally negotiated deal that Vodafone have secured. If you do these things on your phone, this is a big deal. If you watch TV or listen to music – and a large and growing number of people are doing them, this alone could be reason enough to choose Vodafone.
- Network Guarantee:
We have covered Vodafone’s Network Guarantee in some detail before. It’s an important feature if you’re buying a contract. Not so much for a SIM only plan. After all, Vodafone’s agreements are month to month. If it doesn’t work, you just port and go to Boost.
- New phone feeling :
Vodafone do not offer a ‘New Phone Feeling’ equivalent to Telstra’s scheme. Telstra’s plans are so expensive, there is likely more margin in them to cover the provision of this sort of feeling to customers. With Telstra, the New Phone Feeling capability enables customers who pay an additional fee each month and return their device after 12 months, to a new phone each year.
- Free WiFi:
Vodafone SIM Only customers can use the free Telstra WiFi Hot Spots that are currently in market as part of Telstra’s trial just as easily as Telstra customers can. That said, in time, Vodafone customers will be charged for the facility. Telstra’s will be able to use their own plan allowance over the Telstra wifi network. Vodafone are considering an equivalent scheme with JC Decaux, an equally global provider of advertising spaces at places like bus stops.
- Loyalty rewards scheme:
Vodafone also now offer a Frequent Flyer program. For every dollar you spend on your phone plan, they will give you some Frequent Flyer points. Our view is that these schemes are something to be careful of. They sound great but then, when you’re in them, you make all sorts of decisions that you wouldn’t have made before. For example, signing up to Vodafone when it doesn’t have the best deals just to get air miles.
Summing up Vodafone’s new ‘no contract’ range
No wonder Vodafone’s customer numbers are stuck in the doldrums. Unless you are seduced by the ‘nice to have’ features Vodafone offers, it often makes more sense to go with a network reseller. Kogan and Lebara offer better deals under almost any circumstance.
Vodafone’s new 2017 postpaid plan range is, at the very least, ‘inspired’ by similar ‘Uncarrier’ activities overseas. T-Mobile (who coined that ‘uncarrier‘ phrase did an almost identical thing back in 2013. It was only a matter of time before splitting handset and plan came to Australia.
There are only so many ways you can cut and dice a phone plan, I guess. I remember my first meeting with my new manager at Vodafone Australia in 2005. We talked then about the Vodafone ‘no contracts’ scheme which was in place at the time. So, in a way this idea is new but it’s also very old.
Industry observers say that the number of phone contracts are going to halve in the years ahead from about 18% of the market to about 8%. Vodafone’s new plan range is just one of the factors pushing that along. ( Other factors driving that change are covered here.)
Vodafone’s scheme does serve a useful purpose. It’s important strategically, with the eSIM arriving soon. In our view, it won’t be long until Telstra and Optus have to release their own version of what Vodafone have one here..
Unfortunately, Vodafone’s pricing does not appear competitive in the example we checked. The ‘freedom’ they now offer was always there through deals offered by other SIM only providers – mostly the small telcos. The people who will benefit from this are the ones who were going to buy a contract and then leave.
In summary, Vodafone’s proposition difference here is a small change but a worthwhile one. It adds to the options and addresses an important point about what happens at the end of your contract. It’s worth doing with the changes the eSIM is likely to instil into the market starting very soon. However, with the handset options we’ve seen become available this year – multiple forms of leasing, grey market imports, Australian resellers with discounted prices, there are other ways to achieve the same thing, more cheaply.
We quoted the fact that the postpaid market makes up two thirds : http://www.theaustralian.com.au/business/technology/vodafone-rips-up-lockin-contracts/news-story/78f0a145c9683a86a02301939431c580
T-mobile started this separation of phone plan and phone service in 2013 : http://techland.time.com/2013/03/25/5-things-you-should-know-about-t-mobiles-new-no-contract-plans/
You can find Vodafone’s new price range here : http://www.vodafone.com.au/plans