blog It may not be a great week to be a customer of one of Australia’s mobile resellers, especially if your provider’s upstream provider is wholesale telco ispONE. The telco this morning issued a media release stating that it had filed an application with the Federal Court seeking to stop its own upstream provider, Telstra, from terminating the supply of prepaid mobile services to ispONE. Why is this an issue? Because if Telstra moves ahead with the move, it will result in some 280,000 customers losing their mobile access. ispONE has issued the following statement:
ispONE has today filed an urgent application with the Federal Court which it expects will be heard at 2.15PM today by a Federal Court judge. ispONE is seeking to restrain Telstra from terminating the supply of prepaid mobile services to ispONE which ispONE on-supplies through over 100 retailers to over 280,000 consumers of fixed line, mobile phone and internet services.
Telstra claims it has a right to terminate the services due to the failure by ispONE to pay invoices issued by Telstra by their due date. However ispONE claims that no amount is presently due and payable, and that Telstra owes it money based on Telstra’s incorrect rating of data pricing for prepaid mobile services. ispONE asserts that Telstra has breached its agreement with ispONE, engaged in misleading and deceptive and unconscionable conduct. ispONE also claims an entitlement to damages based on the significant problems experienced with Telstra’s mobile prepaid platform, which earlier this year left many consumers without service as there were delays in porting numbers to Telstra.
ispONE is very concerned to ensure the continuity of service provision to all its retailers and their ultimate end users. Accordingly, ispONE has been acting swiftly to attempt to affect a resolution of its issues with Telstra and to prevent Telstra from interfering with the ongoing supply of the services. As these attempts have not been successful, ispONE has issued the Court application as a last resort to ensure the continued supply of the services.
A Telstra spokesperson didn’t immediately return a call seeking comment, but the company has provided the following statement to ZDNet: “ISPOne is a customer of Telstra Wholesale. We have met all our contractual obligations to them. We can’t comment on matters before the court, other than to say we will exercise all our legal rights in this case. We have not made any changes to the arrangements with ISPOne at this time.”
Look, to our mind what should happen here is very clear. Under no circumstances should Telstra merely stop providing these mobile services to ispONE in the short-term. The telco has a responsibility to the several hundred thousand customers which are using ispONE’s services. If Telstra does indeed work out that it no longer wants to provide services to ispONE, then it must urgently develop a migration plan with the company, or with the end user customers themselves, so that the continuity of the mobile services which they have paid for will be ensured, at least in the short term. Cutting off several hundred thousand customers from mobile access without notice is simply not on.
Image credit: Kenn Kiser, royalty free
Hmmm. I don’t know Renai. Telstra’s responsibility is to provide a service to ispONE as long as they’re getting paid. Nothing more and nothing less. It is the responsibility of ispONE to provide services to their customers.
If ispONE can’t pay their bills, what else is Telstra supposed to do?
“If ispONE can’t pay their bills, what else is Telstra supposed to do?”
Provide a transition plan for customers, so that 280,000 Australians don’t simply lose their mobile services.
I can’t see Telstra doing that.
Do you see them giving people unlimited plans for mobile for $40 that they charge their own customers $100 a month for?
that would be for their provider (ispONE) to arrange, nothing to do with Telstra.
“If ispONE can’t pay their bills, what else is Telstra supposed to do?”
If you get a bill for 100K from telstra when you calculate you only owe them nothing, are you going to pay 100K then fight them in court to get it all back.
They will DEMAND you pay it, and only AFTER you paid it, will they even bother to look into it and then issue a credit if it is in your favour
That is of course. after you have spent 18 months hassling them and threatening them with laywers
If you were not getting what you signed up for (contractually), and repeatedly kept running in to bureaucratic black holes, would you pay your invoice?
I can see the problem here; ispONE is claiming they are being overcharged, and Telstra are challenging, unable or unwilling to rectify the issue, so ispONE has deducted their claim from the invoices owed to Telstra. Telstra is throwing it’s weight around (and let’s face it, they are the 600lb Gorilla) and ispONE has had to resort to a court filing to prevent that weight from being thrust upon the 280k subscribers.
I have no problem with contract disagreements. But cutting off 280k people is a step too far.
Agreed. 280k would leave about 1.3% of the population without mobile service. This is simply too far.
I’m amazed that the situation escalated to this ‘nuke’ level without us hearing any grumbling or warning signs.
This is what Kogan Mobile had to say on the issue;
Dear ,
Thank you for joining us on the journey to make mobile access in Australia more affordable. We entered the mobile industry in order to increase competition and give consumers more choice and better value. Since starting Kogan Mobile, we are proud to now serve more than 115,000 active customers.
We have fought hard for the Australian consumer – there have been endless negotiations and even the occasional visit to the Supreme Court to protect our customers’ interests and ensure that our customers continue to get the best deals. However, there are forces at play in the Australian telecommunications market that are beyond our control, very powerful and impossible to ignore.
You may be aware that we procure our mobile services for part of the Telstra 3G Network through Telstra’s sole and approved distributor – ispONE. ispONE is the only company in Australia that wholesales Telstra’s Prepaid 3G Services and is essential to the operation of our and any business through that network. Telstra’s Prepaid 3G Network is not integrated with any other wholesale platform, other than ispONE’s.
Since day one, Kogan Mobile has complied with all its obligations to its service providers. We keep our agreements. We have paid every invoice on time or early. Like our customers, we expect our service providers to deliver what they have been paid for.
Kogan Mobile has recently become aware of the following:
Telstra is in dispute with ispONE, Telstra’s sole distributor of prepaid 3G mobile services and Kogan Mobile’s essential supplier
Telstra has taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE this is very likely to impact Kogan Mobile’s own customers’ services (through no fault of Kogan Mobile)
ispONE has commenced proceedings against Telstra in the Federal Court and obtained a short term injunction to restrain Telstra from terminating its contract with ispONE
The Federal Court ordered Telstra and ispONE to attend mediation. Although not party to the Federal Court proceedings, Kogan Mobile is permitted to (and will) attend the mediation
Kogan Mobile is doing everything it can to protect its customers.
We are monitoring these developments closely, as they may affect the continuity of our prepaid mobile services. We will provide a further update when further information comes to hand.
You may also wish to contact Telstra directly and ask Telstra what it intends to do in respect of its wholesale prepaid mobile business and customers’ mobile telephone services if it achieves its goal of terminating its contractual arrangements with ispONE.
Telstra “engaged in misleading and deceptive and unconscionable conduct.”
situation normal
10 bucks that ispONE are in the right and telstra is trying to screw them with some overcharging.
Interesting that Telstra decided to threaten the nuclear option (disconnecting all ispONE customers) rather than take legal action to recover the money, or have the dispute mediated.
It suggests to me that Telstra treat their reseller customers just the same way they treat their retail customers: pay what we demand or else.
This looks like a win win for Telstra, they get paid, or they kill a direct competitor.
The court option really is the only option for ispONE if they want an honest solution.
Funny,
The situation sounds remarkably similar to an issue that occurred with a Telstra reseller going back almost 10 years ago. http://en.wikipedia.org/wiki/Crazy_John's
What was the final judgment? Was Telstra or Crazy John in the right according to the court?
I don’t see a mention of Telstra returning the money, but that could just mean no final judgement yet?
Just another demonstration of the result of creating a private monopoly that is too big to fail. If Telstra are overcharging ispONE and the bill is paid, they win. If ispONE win in court & they don’t have to pay, Telstra are only up for legal fees (and no guarantee they will have to pay ispONE’s legal fees). Even if there’s an inquiry performed by the ACCC, in 18 months they may find against Telstra and even then, the fine will be miniscule and not in any way representative of the damage Telstra have caused to other businesses, let alone large enough to discourage them from similar practices in the future.
No matter which way this goes, ispONE’s business model is f#@&ed – Telstra will seek to terminate their relationship as soon as they are legally allowed to (probably sooner, if their track record is anything to go on).
The writing was on the wall the moment people started to notice Telstra’s 3g services suffering as they expanded their 4g coverage – Renai wrote such transition was perfectly normal, but there are many 3g customers who will be perfectly happy to remain on 3g for years to come. Telstra wants to shut it down, so kicking off a huge number of customers in one move and blaming it on the reseller through a situation they’ve engineered probably seems like a clever move from where they’re sitting.
The problem is, the government, regulators and the courts are not providing a regulatory environment with enough clout to actually curb anticompetitive behaviour from Telstra – there are no substantial financial penalties to the company and no individual penalties for directors or senior managers who are directing or authorising this behaviour. As long as the penalties are small enough to justify the objectives, Telstra will continue to pursue such tactics as legitimate business practices. Why wouldn’t they? They exist as a profit generating machine, so they will pursue that objective within the environment they must operate within. Right now, the rules of the environment favour their size and market position and are ineffective in restricting anticompetitive behaviour, so that (anticompetitive behaviour) is simply part of their strategy and will continue to be until it is no longer economically (or legally) viable. It’s pretty simple really, just not politically convenient.
“Just another demonstration of the result of creating a private monopoly that is too big to fail.”
Both Optus and Vodafone have 3G mobile networks. Where doe the monopoly come into it?
from what I’ve read ispONE are all but bankrupt.
Writing is on the wall. Eveyone with the budget supplier, will have got what they paid for when they go broke.
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