‘It’s not our fault’:
Kogan on dumping high-usage customers


news Maverick online retailer Ruslan Kogan has blamed an upstream wholesale Telstra partner for a policy which has seen some early adopters of his company’s “unlimited” mobile plans dumped for using too much of their quota.

Kogan first launched its mobile plans in mid-December last year, stating that it was the first Australian mobile provider to use part of Telstra’s mobile network for prepaid mobile services. At the time, Kogan chief executive Ruslan Kogan said Australians had been paying way too much for too long in terms of their mobile phone bills — a situation the newly launched Kogan Mobile would resolve.

“It’s a disgrace that current providers have been able to get away with astronomical charges, network issues, poor customer service, frustrating excuses and deliberately misleading pricing structures designed to trip customers up,” Kogan said. “Millions of Australians rack up unexpected excess usage charges, with the average ‘bill shock’ now standing at about $30 bucks per bill! No one likes to pay more than they expected, and no one likes to get ripped-off, so we’re putting a stop to it,” he said.

“From today, Australians can choose to say goodbye to excess usage charges and will be guaranteed to get what they pay for. No more running out of credit mid-month, no more complicated fine print tricking you into paying more – just $29 per month for unlimited standard calls and text and 6GB of data, or even cheaper if you sign up for a full year!”

Kogan’s offering was launched at a number of different flat price points revolving around a so-called “unlimited” proposition where many mobile calls and all text messages would not count against a normal ‘quota’ system used by other telcos, but would essentially be un-metered.

However, as first reported by Lifehacker earlier this week, a number of early customers who signed up to the service were rapidly churned by Kogan, as the company stated they did not appear to be using the service for “personal use”.

Queried about the issue today, a Kogan spokesperson directed Delimiter to a statement which the company first provided to News.com.au. In it, Ruslan Kogan stated that it on-sold its mobile services from a Telstra partner.

“Telstra’s partner is under significant pressure to restrict excess usage on the Telstra Network,” Kogan said. “This pressure is not being applied by Kogan Mobile. It is not Kogan Mobile, but Telstra’s partner, that administers the Acceptable Use Policy. While it is clear that certain users of Kogan Mobile have exceeded the normal usage of an ordinary person – some average over 14 hours of continuous calls per day and some have used over 40GB of data per month – it is also true that Telstra’s partner has acted without Kogan Mobile’s authority in preventing certain users from extending their access after their initial access period had expired.”

“Although Telstra’s partner acted without authority from Kogan Mobile, any affected users still received all of the services they had paid for.”

Kogan said there were a very small number of users who attended to use its services in a way that breached its Acceptable Use Policy, and as with any other telco, the company needed to ensure that the network was only used for personal use, to ensure the 99 percent-plus of customers could continue to get “a fantastic network at a great price”.

“We have nearly 100,000 very happy Australians enjoying the best value mobile phone plan in Australia, in what has been one of the biggest migrations in Australian telecommunications history. We love technology and we want everyone in the world to have access to it,” concluded Kogan.

So who’s to blame here? Is it Kogan’s high-usage customers, for attempting to push the definition of “unlimited” beyond all reasonable limits? Is it Kogan itself, for setting some rather weasel-word definitions of “unlimited” (I recommend you read its acceptable use policy to get the idea)? Or is it the nebulous Telstra partner which Kogan hasn’t named, for pushing Kogan to get its usage down?

Personally, I’m going to lay the blame for this one squarely at the feet of Kogan itself.

Some readers may remember that I had a little Twitter stoush with Ruslan Kogan in the closing days of 2012. At the time, Kogan was launching its much-hyped Kogan Mobile service, and Ruslan Kogan himself had taken to the Twittersphere to claim that his company was all set to revolutionise the Australian telecommunications industry and take on the big telcos.

In essence, what I highlighted to Kogan at the time was that Kogan Mobile wasn’t set to take on the big telcos, in actual fact; as it wasn’t building its own mobile infrastructure; rather, it would be reselling services on top of the infrastructure owned by other telcos (in this case, Telstra), and thus supporting them.

I can’t recall precisely what Kogan said at the time, but I do recall the debate got a little nasty. Well, I have to say, the problems Kogan appears to be experiencing this week are precisely those which many telco resellers experience. On the one side, Kogan has customers trying to eke out the most they possibly can from its service. On the other side, it’s got the major telcos trying to ensure their networks can still function. In the middle sits Kogan, which has suddenly gotten a taste of the huge revenues which telcos command; but it’s also got a taste of the small profit margins telcos, especially telco resellers, command, and how those profit margins are squeezed on both sides by customers and wholesalers.

This is nothing new for the telco sector. And Australian customers are certainly not new to so-called “unlimited” plans. But it is something new for Kogan. The company should have expected precisely this situation to occur; and the fact that it hasn’t headed it off at the pass is emblematic of Kogan’s approach to everything he does. The entrepreneur is clearly a maverick upstart with a huge clutch of great ideas and a gift for publicity. And he’s had great success in many areas — we have to give him credit. However, there’s also a strong dose of arrogance in Kogan’s make-up; he would be wise to look carefully before stomping down where so many have trod weary paths before.

Image credit: Kogan Technologies


    • Yea but the issue here is it is being sold as an unlimited quota maybe that means something different in Russia but follows on from the whole Kogan business model cheap and nasty

  1. … and here I was thinking ‘unlimited’ was ‘unlimited’. The ACCC should put an end to that word once and for all. There’s no such thing.

    • If there is one thing we’ve learnt over the past decade in Australian telecommunications, it’s that “unlimited” does not mean “unlimited” ;)

      • I vaguely remember a case years ago where the ACCC came down on Optus for misleading people with ‘unlimited’, but I obviously it wasn’t enough to end the practise across the board. I just can’t see how advertising ‘unlimited’ and then imposing a quota is anything but misleading (even if the majority of customers are clued into the fact). I’m sure it’s an old old discussion that Whirlpool (and Delimiter) regulars are bored to tears with … but why hasn’t the ACCC put an end to this once and for all ? Too busy with more important things ?

      • It’s not so much the “Unlimited” it’s the fine print “Fair Usage” component

  2. How can they use too much of their quota?

    Unlimited calls/sms/mms…. nuff said, can’t go over THAT QUOTA.

    Then there is data and you get 6GB a month…… The T&C clearly have excess data fees listed for data, so when you go over your 6GB, one of two things either happen. You either get the data cutoff till the next billing cycle, or you start paying excess data fees if you have ‘bolt on credit’.

    So Kogan is clearly misleading customers again here and they are wanting a smack around from the ACCC for quoting one thing, but only offering something else.

    • In the terms of use it’s stated that these mobile plans are for personal use only, so if you’re using one for a business, then you’re going to get in trouble no matter how much you use.

      Of course this is only tangential to your point.

      • I don’t disagree, but what is classes as ‘business’ use? Running a business and having this as your primary number would be business use.

        Using your unlimited plan heavily isn’t business use! Which is what Kogan is doing, claiming heavy users are using it for business!

        • I think their logic is that if you assume that they sleep OR work 8 hours a day, there is not much time left for anything else if they used the phone for a continous 14 hours.

  3. Also .. “some have used over 40GB of data per month”. That’s supposed to be a huge unreasonable amount of bandwidth ? (It’s certainly < infinity = unlimited). 40 Gb in a month wouldn't be all that unusual for my regular home and mobile internet connection for personal use.

    I like that Kogan gets in there and gives things a go, but is he so naive to think that this wouldn't happen ? Or is it all part of the plan to generate more publicity (even if it's negative publicity) ? I'm perplexed.

    • But Andrew Perry, you can’t use 40GB a MONTH…. Kogans plans have 6GB of included data, and they clearly list excess data fees. So if a user is using excess data, they have to pay for it!

      What was happening I think, is that you could ‘recharge’ early and this reset the data clock. but this would mean that users had been paying for the data, its pay $29 you get unlimited phone calls and 6GB of data to use in 30 days, if you used this data in 7 days, and recharged again, the clock got reset and you got unlimited calls and 6GB of data to use up again in 30 days. BUT this is what you are paying for….. you have upto 30 days to use what you ‘paid’ for. So users recharging early and giving up the remaining days of unlimited calls they had, so in a round about way kogan shouldn’t be complaining as users are PAYING and using what kogan is selling and giving up some of what they paid for in exchange to being able to recharge early.

      The problem is, kogan wanted to sell a unlimited calling/sms/mms service with 6GB of data and wanted people to make NO calls and use NO data……

      Its crazy, the data only plan is $9.90 a month for 2GB of data, but has this 400mb daily limit and you can’t recharge EARLY, so it you run out, you are dataless till the end of the billing cycle. This is not how telstra/optus/voda prepaid data works. You pay x, you get y data to use in z time frame. If you use it up early, you can recharge again.

      Basically something got a decimal point wrong and Kogan is selling the data too cheap I think?

      • I get this, I was more just highlighting Kogans exasperated quote about “40 Gb a month” (!!) as if it’s an unreasonable number. From the perspective of a naive consumer expecting ‘unlimited’ service for regular use, it’s not unreasonable. I read the fine print, but incredibly not everyone does (I’ve met them, they exist).

        If the situation with recharges you describe is the case, he really shouldn’t be complaining that people are buying more service. It’s just like having multiple customers in one ! But I think you are right, more likely he wants those customers that turn on their phone once a month to recharge their account, and then turn it off again until next month.

        • The problem is people are saying its unlimited and they quote that a user used 40gb of data in a month. These two facts are not related. The unlimited side is only for calls/sms/mms, the data side has very clear limits and excess fees if you go over this.

          Kogan is just trying to pull the pity card out so people go, ok fair enough they abused the service by using 40GB when they had upto 6GB of data. Its just more lies from Kogan as its just not true!

          • So where are these excess data fees advertised. The plan I’m on clearly says 6GB Data (for 30 days) and subsequently added in recent days show a limit of 400 MB per day (so much for unlimited). It now also states the plan can only be purchased once per 30 days. Can’t see anywhere about excess data charges. If it is written somewhere, it is well hidden.

            Then again it just could be another misinterpretation of the plans. Quite clearly people are getting what the have now paid for. Those that are given an inch and take a mile are being told they are no longer wanted.

            If everyone used the plans as is intended, there would be no issues. In the end there are people that can’t help themselves. Once these are identified, Kogan is (now) fore-filling the paid up contribution and is exercising its right not to extend the service.

            Those who are getting 40GB out of the service, good luck to them. It would be up to the Kogan to cut them off when their 6GB is used.

            For Kogan to blame its wholesale provider (I still don’t get why the big deal is in not declaring who it is), is also a bit over the top. Surly this provider has an agreement with Telstra about costs of usage, Just like Kogan has with it.

            In reality I am of the opinion Kogan has just worked out the service is costing them more than what they are charging.

            My predication, Kogan will be gone within 6 months because it won’t be able to pay the fine it receives for the use of the term “Unlimited” and failing its “critical information summary” declaration. Those who have paid for 12 months, I would brace yourselves for the failure of the company.

        • and yes you are right. Kogan wants the mum and dads who don’t use the phone at all. If this was the case he should have set limits like upto 10hrs of calls a month plan, rather than throw the word unlimited around.

          He offered unlimited calling/sms/mms and 6GB of data on the Telstra network for $29 a month (lower if you brought 12 months in advance) and he now complains when he attracted the ‘whales’ as they are refereed to. You know, those users who want to make calls or use lots of data or gasp do both!

          He got the type of user he wanted……

          That said, Aldi mobile does the same deal but with 5GB of data for $35 a month, so Kogans pricing isn’t too far out from the aldi business model either

          • Gives me an idea actually. Here Ruslan, you can have this one for free:

            Set an age limit for signups .. lets say only older than 85 years of age. Make the contracts 48 months, but VERY aggressively priced. You’ll get the pensioners signing up in droves. Now here’s the pinch – by the end of the contract, most of your customers will be dead. And as they say, “dead men don’t use no data”. The perfect Kogan customer.

            Okay, enough trolling Kogan, I honestly love the guy, despite the missteps. Back to work … :)

  4. “…has seen some early adopters of his company’s “unlimited” mobile plans for using too much of their quota.”

    Seems to be a verb missing between plans and for?

    • What a stupid statement……. People are not saying they don’t like the service, they don’t like the way kogan is treating users who dare use what they offer. Want to get booted from kogan? Make some calls, use a few gb of data and surprise surprise you won’t be able to recharge next time round as thats classed as ‘business’ use!

  5. Apparently the assumption is that if you let people have an endless ball of string, they won’t use it?

    Worse, if many people start using that string, it might cost a bit and cause a run on string supplies, so much so that, in order to protect the available string supplies, people are shipped off elsewhere.


  6. You’d think he would have realised after the US experience where telco’s couldn’t back out of their unlimited plans fast enough.

  7. I would like to see plans in Aus switch from $ value to time based. Like a telstra plan that may give you $500 dollars of calls a month at 80c per min or another plan that gives you $500 at 60c per min. The per min costs are always in very fine print. If they switch to a time based service such as 20 hours of voice calls per month for standard landline or mobile calls for all plans unlimited $ value plans could not exist and it would easier for customers to compare plans and that is a good thing imo.

    • 80c a min? Try 99c a min. Telstra hasn’t been 80c for a long time… plus the connection fee! don’t forget the connection fee.

    • The problem with time based is that most plans include phone calls, SMS and data in the same plan. Some people might predominately use SMS while others call.

    • Exactly. I recall decades ago (60s or 70s) when Ralph Nader was first being heard, petrol companies were having a “price war” with similar misleading advertising, using big signs that carefully avoided mentioning the actual sale price, but instead screamed — “10 % OFF!”. The gullible never thought to ask — “But 10% off what, exactly?”, and of course they got creamed, like the Woolies and Coles gullibles do now with this bullshit discount strategy. The solution back then was to mandate clarity — the price per litre (or gallon, whatever it was back then) was all they were allowed to hang out, as a matter of law.

      The telcos likewise need to be held to a similar standard as a matter of law. Talk time is principally what its all about. All we need to see is how many hours talktime for the period , how its charged — per second, per minute, etc, and how much $ it costs. Leaving aside the vexed question of network availability for the moment, of course …

  8. There is absolutely no doubt in my mind the ACCC will be showing Kogan the correct path and it will cost him, just a matter of time.

  9. There’s actually a couple more issues here. For one, on the whirlpool forums customers reported being accused of ‘business use’ (which they vehemently denied) and thus being refused a recharge without warning.
    Another issue here is the legality of denying your customers mobile services when they are on a prepaid account.
    Either way, I believe the arbitrary banning of high use customers should be illegal. Especially when they’ve gone through the trouble of signing up to your service, purchasing a sim and porting their number.

  10. So are they being kicked off due to…

    A. Over-use of calls and text
    B. Going over their data limits

    Which is it?
    As far as I’m aware, you get 6GB of data. I assume you go over that limit, you get capped or charged per KB or MB.

    Booting someone off for calling/texting as much as they like is wrong if you’re offering “unlimited”.
    Booting someone off for downloading 40GB in a month on a wireless connection where the limit is 6GB, we’ll fine. I doubt they’d be able to even pay the bill if they’re charged per KB after the 6GB limit.

    • The people who are using 40 gig are using 6 gig in a week or less then recharging with another 6 gig which would be 7 recharges in 1 month. In the fine print it stated that the data could not be used as a pimary internet connection so I guess Kogan is using this loop hole to kick those customers. Someone commented above that now they have changed it to 1 recharge per 30 days which will limit everyone to 6 gig maximum.

  11. I would love to see how someone can justify 14 hours a day on average for “personal” use.

    To me the maths just do not add up, unless it is the parents / significant other paying the bill for them.

    • that’s my sister in law. bloody hell can she use the phone! and yes, its all personal.

    • Surprisingly, unemployed people have phones. They also tend to like low cost/high value deals. Shock, right.

  12. Fair enough, if you can balance 8 hours of work and 14 hours on the phone into a day I will take your word for it but damn……

    • It’s cheap enough for unemployed people to buy. They could be talking to their cousins for 14 hours per day. Or calling potential employers, one could hope.

  13. “However, as first reported by Lifehacker earlier this week, a number of early customers who signed up to the service were rapidly churned by Kogan, as the company stated they did not appear to be using the service for “personal use”.”

    I remember back in the day (this is only like a decade ago) I was with OzEmail on a dialup plan, it was supposed to disconnect after 4hrs but sometimes it didn’t drop so I’d just leave the connection up for days at a time until I needed to use the phone.

    Come the end of a month I’d used about 2GB or something of data, they called me up and started going rank, claiming I was running a business over the residential service because it was not possible that a residential service could be using more than 650MB/month, anything above that was just unheard of. Of course that was a futile argument and I was forced to change providers.

    Anyway, my point is what is “personal use” and what isn’t is relative to the user, and putting hard and fast guidelines kind of misses the point.

    • Just from the hours in a day,

      if you use the phone for 14 hours,


      work for 6-8 hours.

      that leaves, 2-4 hours for sleep.

      That is not a fun weekday.

    • No wonder Malcolm is happy with an inferior NBN if that is what his company classed as high usage. He had no idea then and has no idea now, perhaps he should just stick to buying stocks.

      • Well keep in mind that was around a decade ago, so pre-Facebook, YouTube, etc. Google was still in it’s infancy (compared to today anyway) and MSN Messenger was what people used to chat. Really everything was in its initial stages of ramping up, even DSL was a relatively new kid on the block.

        Putting a 650MB limit may seem a little low but the bulk of people probably didn’t even come close.

        • You mean back in the dial up days of BBS’s and IIRC, yeah it was still pretty easy to chew 600 Meg.

  14. Whoever’s fault it is, the customer’s relationship is with Kogan, so Kogan is responsible for fixing this.

  15. Kogan must define the loose words in their ‘Fair Usage’ Policy -:

    “We reserve the right to disconnect” (if you) “stay connected to the Service continuously for an unreasonable amount of time” – how long is “unreasonable”?

    “We consider your use of a service to be unreasonable if you make or receive calls on our
    network other than for your own personal use.” HOW DO THEY KNOW IF ITS **NOT** FOR PERSONAL USE? They should disclose how this is determined.. (I hope they dont monitor calls…)


    If a telemarketer calls say 300 unique numbers in that 14 hours would it be safe to assume the calls are not personal?

    • Grump3 – I agree that the example you give would be a clear indication (if over a longer period of time) – but (IMHO) Kogan should stipulate and list what is “unreasonable” in their Fair Usage Policy … but, you could argue, that if I did call 300 unique numbers in 14 hours, as a once off, that it would be personal. eg. call everyone on my guest list for my (personal) event/celebration.

  17. My ISP Amnet has just released new plans, all 3 of which include ‘Unlimited’ weekends.

    It used to be with Amnet that:

    Monday to Friday you got Peak International, Off-Peak International, Peak Peering and Off-Peak Peering.
    Saturday and Sunday (the entire 48hrs) went towards offpeak quota and only offpeak quota.

    Now they have harmonised everything (downside is they now count uploads, but oh well) so that Monday to Friday (6pm) you have 1 single quota.

    6pm Friday till the end of Sunday is unlimited.

    Looking forward to changing from my existing plan, moving up to the new 1TB one for less than i currently pay (especially with the stupid regional surcharge completely removed).

    Nice thing about Amnet is that everything runs over Amcom’s (Amnet’s parent company) fibre network until the point it leaves the Amcom network to go to the upstream provider. This very same fibre network runs all their corporate customers during the week which will be much much heavier users than residential people i imagine.

    Looking very much forward to this new found unlimited as soon as make the plan change request.

  18. I guess the point is, as he said, the customers have got what they paid for. He never states anywhere that you will always be allowed to sign up for a second month really does he.

    So realistically, he hasn’t done anything wrong.. they paid for a month of unlimited usage.. they got it.. and then he refused to sell the product to them again.

    Don’t think there is really very much that you can do about this one!

    • There are reports in whirlpool of a few people on the 365 day access plans being cutoff with 10+ months left to go for making too many calls.

    • You are probably right ,Paul. its a 30 day contract. A subsequent refusal to enter a new contract would not likely be covered by contract law. that would not be the case for people on 12 mo contracts that are terminated early, but then what damage have they suffered? …. the loss of an unlimited use to make free calls for the remainder of the year … hmmmm what would that likely cost at retail from Telstra?

  19. BTW, that said, while Kogans behaviour may not be caught under contract law, it is still subject to consumer law and provisions relating to deceptive and misleading conduct. So who does decide what “unlimited” means? Ultimately, a court. The standard to be applied here to meaning is likely to be what does a “reasonable man” consider the word “unlimited” to mean, ie what’s in your dictionary?

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