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The Bloody Kogan Mobile Saga

Posted on the 23 August 2013 by Prepaidplans @prepaidplans

If you aren’t a Kogan Mobile customer and you follow the mobile phone and plan press machine you are probably sick of it. Today a new article was released by Gizmodo promising to provide an exclusive insight into why it all went the way it went.

The article is here for you to read.

It is a worthwhile read and you get the gist of what likely happened to Kogan for him to eventually pull the pin in the whole Kogan Mobile business. I predicted earlier this week (see twitter feed) that Aldi with its new Telstra Wholesale agreement will also in the near future likely require a price adjustment. The article makes the same assessment although it does reveal who is paying for the difference at the moment. Medion Mobile might have the appetite for now but with many Kogan customers jumping left, right and center (Aldi being one of the major three to receive business), the cost of funding the Telstra direct move might just prove too much.

The only thing I wanted to add to what was written by Gizmodo is that ispOne might have come out the real loser in all of this but you can’t tell me that they didn’t know what they where getting themselves into by entering into agreements with the likes of Kogan and Aldi. Price is the key driver for both of these businesses and the models they operate under and so ispOne new what the likely product offerings where going to be like.

Without any insight into the reseller agreement or discussions they had with both Kogan and Aldi, ispOne must of had discussions regarding retail pricing options. How could you not and how could you not place restrictions in your agreement about them.  Think about it another way, why would they have approached both of these parties if it was not about prepaid mobile acquisition. Having played their own hand in the prepaid game via One Mobile and One Seniors as well as years of experience in the wholesale distribution game, ispOne saw this as a great opportunity to make a quick dollar at the expense of the existing players without having to buy the retail customers themselves.

Whether the contracts where adjusted by Telstra Wholesale after the launch of the offers is something I have no insight into, but ispOne has enough experience to know how to count data and to predict what usage levels would be like with a plan offering 6GB. Like I have said before, if you didn’t want the customer to use 6GB why offer it at such a low cost. Offer 3GB and protect your margins. ispOne do this day in day out, they just gambled and lost.

I think the Gizmodo article actually makes ispOne look like the innocent party in all of this when really they are all just as guilty as each other. Kogan for being so aggressive and not thinking about or caring about what would happen should Telstra pull the pin. IspOne for being greedy enough to chase such arrangements when it knew it was risky and the outcomes could be catastrophic for their business. Why would they risk so much on so little? Telstra for being greedy with their wholesale pricing.

Who really is the winner in all of this is Amaysim, Aldi, Boost and Yatango who have picked up a chunk of customers (that they may have lost in the first place) for very little marketing expense. I just wonder whether they really want them all. Numbers are great, but heavy users don’t make for profitable prepaid customers and Kogan users are not light users by any means.

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