news Vodafone customers concerned by the company’s move decision last month to start charging for mobile data usage on a per megabyte basis can rest easy, with the company announcing it would back down from the decision, in a move it dubbed a “Vodafix”.

Early in January, the ailing mobile telco ramped down the value it gives customers as part of some of its prepaid plans, eliminating free access to social networks and changing the way that it account for mobile data, so that customers would pay per megabyte used rather than per kilobyte. The move meant that customers would pay for a full megabyte of data even if they only used a much smaller amount, in a similar way that it is common for mobile telcos to charge for voice calls in 30 second blocks or so.

However, following a customer backlash, yesterday Vodafone announced what it termed a “Vodafix”. “Vodafone today announced it will be changing the way it charges for data going from a proposed per megabyte block charge to per kilobyte charging,” the company said in a statement. “The decision follows feedback from Vodafone prepaid customers, who favoured simplicity but expressed concern about per megabyte charging.”

Vodafone noted that it had surveyed 10,000 customers before Christmas on the megabyte proposal, and had received “general acceptance” with regard to the pricing change. But the feedback after it was announced had pushed the company back the other way.

Cormac Hodgkinson, Vodafone’s Director of Customer Care, said: “We value customer input that helps us deliver pricing that is simple and makes sense. We are determined to show our customers we are listening.”

“There’s no denying data pricing is confusing, industry-wide. Our intention is to introduce a consistent rate across our prepaid plans, and there’s more than one way we can do this. We have decided to not only reverse our decision to introduce per MB charging, we’ll also be dropping the existing minimum data session to 1kB for all our prepaid customers.

“We are committed to listening, being transparent and providing our customers a worry free experience. Thank you to all our customers who took the time to talk to us. Please do not stop. It’s what drives the way we do business. We have some of the best value plans in market and, now, 2.6 million customers will benefit from simpler pricing. Pay only for the data you use – it doesn’t get much simpler than that.”

The customer backlash over the megabyte pricing comes as Vodafone in Australia continues to suffer from a poor reputation stemming from a series of network outages over the past couple of years which customers have dubbed ‘Vodafail’. In mid-November the company revealed it lost a further 154,000 customers in the three months to the end of September, with the continued customer churn piling on more financial woes for the company and signalling that the company’s internal transformation under new chief executive Bill Morrow may not yet be having a positive impact.

In Vodafone Group’s global financial results, the company said “the continued weakness is brand perception and [mobile termination rate] cuts” in Australia meant that revenue from mobile services declined by 14.8 percent in the period.

The company is currently embarked on network rejuvenation initiative in Australia, and is taking other measures such as restructuring its operations and shutting down its subsidiary Crazy John’s retail brand. However, Vodafone continues to suffer from troubling network outages.

On Friday last week, for example, the company published a post on its blog letting customers know that it was experiencing a disruption to 2G and 3G services across parts of Victoria including select areas of metropolitan Melbourne and surrounds. “Customers in these areas may be experiencing degraded or no service,” Vodafone wrote. The services were restored later that afternoon.

opinion/analysis
I never viewed the prepaid per megabyte pricing as a huge issue for Vodafone (personally, I already pay top dollar through Telstra), but apparently many of the company’s customers disagree, and right now Vodafone is nothing but the creature of customer sentiment. If there is something Vodafone’s customers want right now, you had better bet the company will bend heaven and earth to give it to them – because if it doesn’t, those customers will join the hundreds of thousands who have already deserted the telco over the past several years. Customer retention is the name of the game with the big V right now.

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1. Monsta
   Posted 21/01/2013 at 11:36 am | Permalink | Reply

   You have been hoodwinked Renai. The whole ‘Charge per MB’ was a smokescreen for the media to latch onto, and then for Voda to backflip and claim that they are “Listening to Customers”.

   Truth be told, there are other changes in the plans now which nobody will notice. The main one is that Prepaid expiry is now 28 days rather than 30, in effect meaning that people that buy 1 recharge per month will now need to buy 13 per annum rather than 12.

   Crazy Johns prepaid recharge expiry is now 30 days rather than 45 days – that’s a reduction of 33% and certainly not trivial.

   But of course, these are now going to sail through without a peep as Voda very cleverly overreached on the changes and were always going to backflip on the Per MB Data charging.

   • Dan
     Posted 21/01/2013 at 1:07 pm | Permalink | Reply

     Spot on Monsta. It’s the classic money grab to give less and charge the same. Some other historic examples are…

     Cadbury chocolate blocks: 250gm -> 200/190gm
     “Premium” Beer bottles: 375ml -> 355/345ml -> 330ml (Hence why Coopers are the beers in my fridge)

     And while I’m off topic, who at Arnotts decided that 11 was the “right” quantity for a Tim Tam packet?? It’s a prime freakin’ number! No end to arguments in our house…

     • Harimau
       Posted 22/01/2013 at 7:00 pm | Permalink | Reply

       To be fair, people shouldn’t be eating so much chocolate or drinking so much beer… Not that these companies care about our health, I’m just saying.

2. Michael Wyres
   Posted 21/01/2013 at 12:11 pm | Permalink | Reply

   I know from my own recent experiences with Vodafone that they are genuinely trying to be more proactive about any issues that arise.

   The biggest problem they have is that they have neglected so many things for so long, that their culture is largely “set”, and trying to change things meets with cultural resistance – (people don’t want to change) – and structural resistance – (things are in such a way, that they are difficult to change, even if the people want to change).

   How quickly the market’s perception of them changes is entirely up to them – they need to make sweeping changes across the board to shift the culture…

   …and that’s the hard part!

3. Trevor
   Posted 21/01/2013 at 12:50 pm | Permalink | Reply

   Maybe if they charged per MB rounding down to the nearest MB instead of customer backlash they’d have customers singing their praises. When offset against their marketing budget I expect this would actually be a feasible move (and would set one hell of an act for other mobile operators to follow).

4. Dave I.
   Posted 21/01/2013 at 1:05 pm | Permalink | Reply

   I don’t know if the Voda approach was to propose something really stupid and then back off to what they wanted (no social media included), but the MB charging increments are used by some other providers.

   My wife uses her smart phone for checking the weather, catching up on twitter etc when travelling to and from work. Not a huge amount of traffic, but with bus tunnels and stations the connection drops quite often. If she was hit with 1MB of ‘traffic’ each time she checked twitter then the 350MB data pack would go in no time.

   It is good for Vodafone that they changed their mind, as we’ll keep the prepaid service going. If they ever go to MB charging then another company will get our money (e.g. TPG with 100kB charging but only costing $1 for 150MB).

5. Master T
   Posted 21/01/2013 at 1:17 pm | Permalink | Reply

   A strong part of this Renai is Optus’ inclination to force all users of their Fibre network access a 1MB session. Luckily while we werent crippled with this like MVNOs of Optus were (outside of Virgin), Optus does set some pretty strong requests for us offloading excess data traffic onto their Fibre Links.

   Hopefully the Directors above me are definitely paying attention – as a Shareholder and a Network Engineer; I should think they are.

   While there are detractors who would think that this may be to do with claiming more money per customer – I understand your point; but doesnt change that we’re limited in some degree HOW we charge because the network partners we have (who handle our fibre traffic in times of congestion) wish to charge this way.

   When quizzed on this some weeks ago and it came up in a meeting – I still objected – I strongly believe we can avoid charging per MB instead of per kB like it should be, because lets be honest :

   We need all the weapons in our Arsenal we can get.

6. Steve Emery
   Posted 22/01/2013 at 1:40 pm | Permalink | Reply

   My issue with charging per MB rather than per KB, is that it will just confuse customers more. The telco can pretend to offer huge amounts of data, but when in reality, its only equivalent to a much smaller number. Its my same issue with these silly high call/sms caps, where a 2 min call costs $5.

   Woolies mobile offer 5GB data on their $29 prepaid plan, but charge per MB. I ended up using 1.5-2GB just surfing fb, twitter and a small amount of podcast downloads. Whilst going over the cap wasnt an issue for me given the high data cap, i found it very hard to correlate data charges to my actual usage – which would be a problem on a smaller data cap.

   • NightKhaos
     Posted 22/01/2013 at 2:27 pm | Permalink | Reply

     That’s more a problem with charging per session rather than per megabyte.

     If you take all aggregate sessions and then charge per megabyte on say a daily basis then the user should be fairly charged.

     If however you charge users after every session this adds up. Each session might only be a hundred kilobytes, but you’re effectively charged a megabyte every time.

     • Steve Emery
       Posted 22/01/2013 at 2:33 pm | Permalink | Reply

       Yeah true, but are they doing that? or is it charged per session, and how long does a session last?

       either way its a different concept to what we are all used too. Eg data caps for adsl broadband.

       • NightKhaos
         Posted 22/01/2013 at 3:47 pm | Permalink | Reply

         I honestly couldn’t tell you. My experience with Telstra seems to indicate they do a daily cumulative, only problem is they don’t have any facility to provide real time usage data to clients (despite obviously needing it for prepay customers).

         Frustrated me when Steam did an automated update, and I couldn’t tell if it used Telstra servers (which are unmetered) or another until 2 days later. Unfortunately they didn’t, and I had to fork up $250 that month. :(

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