ispONE implodes, cancels Telstra contracts

17

atombomb

blog Well, it looks like those rumours that mobile wholesale player ispONE (which supplies services to both ALDIMobile and Kogan Mobile) was going bankrupt were true. The company’s Federal Court action against Telstra to stop the telco from cancelling its service to ispONE appears to have been railroaded by ispONE’s sudden move to go into administration. Telstra has a detailed statement on the lowdown and what it means for the company’s many customers:

“Telstra Wholesale has been advised that ispONE has appointed Ferrier Hodgson as a voluntary administrator and the administrator has cancelled ispONE’s contracts for the supply of Telstra Wholesale pre-paid mobile products.

Telstra Wholesale has entered into an interim agreement with Medion Australia for the supply of wholesale prepaid mobile services. Medion is the supplier to ALDIMobile.

ispONE had been a customer of Telstra Wholesale for mobile products as well as a broadband and a relatively small number of fixed line voice products. ispONE on-sold these products and services to retailers and in some instances to the public. For example, ispONE supplied two companies, the online retailer Kogan and Medion (who sells mobile service through the ALDIMobile brand), utilising the Telstra Wholesale pre-paid mobile product.

Telstra Wholesale Group Managing Director, Stuart Lee, confirmed that given the relationship with ispONE for pre-paid mobile services had ended, Telstra would not be accepting any requests for new Kogan Mobile services from ispONE, although people with existing services would have the opportunity to switch to other providers.

“For mobiles, we will not be accepting new activations, number port-ins or processing credit recharges from ispONE on behalf of Kogan Mobile. An interim service will be available for a fixed period of time for people who have active pre-paid mobile services from Kogan Mobile so they have time to choose their next steps,” said Mr Lee.

“Because Medion and Telstra Wholesale have been able to negotiate a direct supply agreement there will be no changes to the services for ALDI Mobile.

People who have services through ispONE and its retail partners, such as Kogan Mobile, are not customers of Telstra. “We do not have their account information and we cannot provide them any customer service support. For any questions about their service, people should contact their retail service provider,” said Mr Lee.

There are limits to the industry’s capacity to implement mobile number porting requests and requests to churn fixed line voice and broadband services. If large numbers of people try to switch providers at once there may be some delays across the industry.

“People who want to change providers should approach their service provider of choice who can request the number port, but we would ask for patience as there are limits on how many ports the industry can undertake in addition to normal sales and activation activity. To provide for a smooth transition we are providing interim voice services across the impacted mobile and fixed line services.”

So you probably already know this, but if you’re a Kogan Mobile customer, or a customer of ALDI, you should probably be looking for another provider rather urgently. I’m sure both Kogan and ALDI will be able to work something out with Telstra, or possibly the industry’s other major mobile wholesaler, Optus, but in the meantime there may be some flak. Let’s hope it’s not too much of a bumpy ride.

Image credit: United States Geological Survey, public domain

17 COMMENTS

  1. It sounds like Aldi customers don’t need to move Renai… since it has negotiated a direct supply agreement with Telstra Wholesale. However, since their website is currently a whitelabeled ISPOne website, it will be interesting to see how they can migrate their recharge processes and customer accounts across to their own systems.

  2. Wow. That’s going to be very interesting to watch what happens for Kogan Mobile. I still have a Kogan sim and the Kogan 5.0 android phone as my backup phone.

    • Kogan Mobile Announcement

      19 August 2013

      Dear Kogan Mobile Customers,

      Important update concerning the continuity of your Kogan Mobile Service

      As a challenger brand, we’re used to being up against some of the biggest companies in the world to get the best deal for our customers. We’ve successfully disrupted entire industries, with our low margin, high volume technology business.

      While the launch of Kogan Mobile was a success for consumers, securing a great deal on mobile access at an unbeatable price, not everyone in the industry was happy about it.

      We have fought hard for the Australian consumer, spending countless hours and millions of dollars in legal and administrative costs to defend your right to a fair deal! Our intention from day one was to build a long-term, sustainable, and value-based alternative to the big telcos. We believe technology makes the world a better place, which is why we have fought hard for better value mobile deals for everyone in Australia. The endless negotiations, and even the occasional visit to the Supreme Court to protect your interests and ensure that you continue to get the best deal have worked, until today.

      There are forces at play in the Australian telecommunications market that are beyond our control, very powerful, and impossible to ignore. When over 100,000 people took their services to Kogan Mobile, in such a short space of time, it attracted a lot of attention. Unfortunately and frustratingly, it appears like the telco heavyweights may be determined to take their former customers back and they may be prepared to do so by force.

      We believe that fair and open competition is great for consumers, but unfortunately that competition is being forcefully limited today.

      In our email last week, we advised that Kogan Mobile had 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 had taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE, this would be very likely to impact Kogan Mobile’s own customers’ services (through no fault of Kogan Mobile)
      ispONE had 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 was permitted to (and did) attend the mediation

      We now understand the mediation between Telstra and ispONE failed to achieve a satisfactory result for Telstra. Telstra has today notified Kogan Mobile that it will be terminating the supply of 3G Prepaid Mobile services to its wholesale reseller ispONE within 24 hours, and has established a transition arrangement in respect of your service. Kogan Mobile understands that ispONE has appointed voluntary administrators today.

      Kogan Mobile has tried to do everything it can to protect its customers. However, contrary to our numerous and concerted efforts to persuade Telstra to maintain and support Kogan Mobile’s arrangements with Telstra’s sole distributor, ispONE, Telstra has advised that it will terminate the 3G Prepaid Mobile services to Kogan Mobile. This will impact the continuity of your service, and those of other Kogan Mobile customers. While the timing and nature of the transition arrangements are dictated by Telstra, Kogan Mobile has negotiated the optimal arrangements that Telstra would allow.

      While this matter is entirely out of the control of Kogan Mobile, we nevertheless sincerely apologise for any inconvenience that these transition arrangements may cause to you. Importantly, Kogan Mobile customers who have remaining credit at the time their services are terminated by Telstra will have their entire remaining balance refunded to them by Kogan Mobile. The refund amount shall be calculated as the pro-rata amount remaining on the date of deactivation of service.
      We’re Devastated

      We are extremely upset to have to bring you this news. We set out with the aim to make mobile services in Australia more affordable for all, and were well on the way to achieving this goal. The migration to Kogan Mobile was one of the biggest in Australian telecommunication history. As we lowered the prices for services, we were happy and so were our customers – but not everybody in the industry was pleased with what we were doing.

      As you may have seen recently, many companies have fallen out of the prepaid unlimited market. We’re afraid that due to certain industry dynamics, this is a sign of things to come. We’re concerned that it won’t be long before your choice as a consumer is eroded almost completely. We worry that the big telcos in Australia will continue their consolidation of power. Inevitably, this will mean higher prices. We’re not happy about this but at this stage it’s not something we can do anything about. Kogan Mobile has been muscled out of the mobile industry against our will by a force much bigger and much stronger than us.
      What will happen to my mobile number?

      Don’t worry, your number is safe! Your mobile number will stay active for 180 days from today. You will be able to transfer (port) your phone number to another provider at any time for the next 180 days.
      What does this mean?

      Based on information provided to us by Telstra, we understand that the following will be the transition arrangements that Telstra will enforce –

      Within the next 24 hours, Kogan Mobile customers will be unable to activate new services, or recharge existing services
      In the coming weeks, you can expect to receive an SMS from Telstra advising you that your service will cease within a limited period (up to 60 days), but not before you receive a second SMS advising that there are 7 days to change (port) your number to an alternate provider
      During this period, you will be able to use your existing service and consume your existing credit
      Telstra will then send a second SMS at some stage during the 60 day transition period, which will advise that there are 20 minutes of calls and 20 SMS remaining credit available for use within 7 days to Australian numbers, while data services, international calls, international SMS and MMS will be excluded. You will continue to be able to retrieve your voicemail messages during this 7 Day Plan and for up to 10 days afterwards.
      For 180 days from today, customers will still be able to receive calls, receive SMS and transfer (port) their mobile numbers and make emergency calls at any time for 6 months thereafter. If your service has not ported out after the 6 month period, the service will be cancelled by Telstra
      Kogan Mobile recommends that, upon receiving the second SMS from Telstra, you take action to transfer (port) your mobile number to another provider, or otherwise make arrangements for continuity of your mobile service. We also encourage customers to plan ahead for receipt of the second SMS from Telstra by acquiring a new SIM card from another provider as soon as possible.
      On behalf of our customers, we are currently seeking to negotiate some deals with several leading mobile phone providers. We will keep you informed about any special offers we manage to negotiate on your behalf and which you may wish to take up.

      What will happen to the unused credit I’ve paid for?

      Once you have ported your number to another provider, or your service otherwise ceases, Kogan Mobile will, of course, refund to you the unused portion of your Access Period back to the credit card or Paypal account that you originally paid with.

      As a consequence of Telstra’s termination of the 3G Prepaid Mobile services, the Kogan Mobile customer service team is likely to be inundated with calls and emails, and is likely to take longer than normal to respond. We will provide further email updates to answer your most common questions, and will provide you with further information as it comes to hand.

      If you have an urgent enquiry, please email koganmobile@kogan.com.au and we will respond as quickly as we can.

      Thank you for your patience and understanding.

      For ease of reference, this is a copy of the email we sent you on Tuesday 13th August:

      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.

      Kindest regards,
      Kogan Mobile

  3. It seems that aldi mobile through the “Medion” name has negotiated a direct arrangement with Telstra.

    On Kogan I wonder if the 6 gig was simply to much for to little $? I wonder if they had offered an unlimited talk/text plan with only 1 or 2 gig data if it would have been sustainable. Even with 1 gig of data per month it would of seemed like a good deal to me especially now virgin has reduced data and increased price on some of their plans.

    On the 400mb per day limit which may have been a result of people recharging many time per month (1 person claimed he recharged weekly before being kicked off which would of been 24 gig data per month) What if these so called unlimited plans were limited to 1 recharge per month (30 days) without the daily limit. If u burned all your data in the first 2 weeks you would just have to use wifi until the next 30 days started.

  4. For a while now I have been advising family to not risk having a mobile service with some of the mobile resellers in case thousands are forced to port as in the situation like what is now occurring with ISPone. Particularly those that use their mobile for small business and look at $ savings and ignore the very real risks of supply chain failure.
    Now to decide what to do with my daughters ALDI mobile prepaid service which was fantastic value for money for Telstra 3G in emergencies and is still on its initial $5 credit.

  5. “On behalf of our customers, we are currently seeking to negotiate some deals with several leading mobile phone providers.”

    Perhaps Kogan will at least see out a service to those of us with a remaining prepaid period.

    *Fingers crossed*

    • Imagine the cost of ‘re-simcarding’ all the customers with another telco, upgrading billing systems etc. I doubt it will happen.

      Anyway, if you were a telco would you go with Kogan?

  6. Now the truth comes out – neither Telstra nor Kogan are the bad guys here.

    ispONE were stupid enough to provide per-subscriber pricing to kogan whilst being charged per minute/sms/meg by Telstra – at rates that meant that only light users were profitable, and hadn’t contractually given themselves a way to escape the situation if their gamble didn’t pay off.

    Kogan attracts plenty of medium-heavy users, ispONE starts losing money hand-over-fist and goes broke. Everyone loses.

      • That “News” link is a rehash of Kogan’s bleeding-heart email which has a lot questionable ‘facts’.

      • Indeed, after all Telstra were very happy to deal direct with Aldi, mind you, Aldi have the name and resources to make telstras life difficult if they wanted to. But the Aldi plans are very reasonable (I use them as backup to the sloppy sloptus service we get at home)

        Cutting out the middleman is always a good thing.

        I’m rather amazed at Kogans statement on this though, rather than talking to Optus and arranging for them to wholesale to them, ok, sure Optus might not permit the same silly data plans as they got off ispone/telstra, but at least their customers will still have phone services and still some data, and their statement linked to yesterday, shows all the signs of giving up.

        • Cutting out the middleman isn’t so good if the middleman does a lot of work for you, and earns their cut.

          Also, Aldi presumably got a lighter users (and they charge them more) than Kogan who would have taken all the heavier users who were drawn to their higher quotas (and cheaper pricing.) So perhaps Aldi can turn a profit with a move to Telstra’s standard per-meg/minute pricing, whilst Kogan couldn’t.

      • Kogan were paying ispONE less than ispONE were paying Telstra, so of course Telstra wouldn’t offer Kogan the pricing that ispONE had offered them! Why should Telstra charge Kogan less than they charged ispONE?

        Telstra knew what ispONE were paying them, and might have guessed roughly what Kogan were paying ispONE given their retail pricing. Even if they weren’t contractually or legally prevented from doing so, do you expect them to tell world + dog “Don’t sign up to Kogan cause their reseller is going to go broke soon?”

        If Kogan knew what price ispONE were paying Telstra, they should have seen the writing on the wall from the start.

        • “Kogan were paying ispONE less than ispONE were paying Telstra”
          Nothing in this article says that. All it says is that ispOne ran out of money…. possibly due to not charging kogan enough but also possibly due to having to pay kogan in damages for the law suit in april.

          “If Kogan knew what price ispONE were paying Telstra”
          You dont give out how much you are paying your supplier as that leaves the door open for someone else to muscle you out of business.

          “so of course Telstra wouldn’t offer Kogan the pricing that ispONE had offered them”
          Telstra may not have made ANY offer (this is what it sounds like from Kogans email).
          Telstra can reserve the right not to deal with Kogan and may have done so simply because he is difficult to work with or maybe they didnt want Kogan in the mobile business.
          Its really all speculation without either Telstra or Kogan giving more information as to why a deal couldnt be worked out.

          • Other articles say that Kogan were paying ispONE less than ispONE were paying Telstra.

Comments are closed.