iPhone cost Optus $44m and terrible data/voice performance

Alex Zaharov-Reutt
Wednesday, 05 November 2008 10:38

Opinion and Analysis

Optus says that its EBITDA earnings were down by $44m thanks to costs associated with the getting a 55% share of the iPhone market. Was it worth it?

The Australian IT has the details of Optus’ latest partial earnings report, which shows that a whopping $44m cost is being associated with its efforts in getting 55% of the Australian iPhone market.

Maha Krishnapillai, Optus’ government and corporate affairs director is quoted as saying: "We think it's pretty exciting news. We've captured the lion's share of iPhones in Australia and we think we're heading toward that throughout the region. It does have a downside in the sense that there's an upfront acquisition cost. It's a short-term hit, but we think it's a really good investment for long term growth of iPhones."

But it has come at a cost, putting enormous additional pressure on Optus’ much maligned 3.5G network, which this year has suffered outages and is delivering woeful data performance to all smartphone users on its network.

I’ve used Nokia N95’s of friends connected to Optus to show them that they can get free ABC and SBS TV streaming on their phones, but each time I’ve tried in recent times, the service simply hasn’t worked, timing out.

Interestingly, the $3 per month CNN service has worked on Optus-connected phones of friends that were happy to sign up, but no go on ABC or SBS.

Data speeds on those phones was also incredibly slow compared with experiences on Three Mobile and Telstra connected phones, so much so that it felt like I was connecting to a 2G data network, not a 3G data network.

A phone is only as good as the network it connects to, but unless Optus is pouring a lot of money into dramatically increasing capacity, Optus risks losing many of the hard earned customers it has gained, from the iPhone or otherwise.

Optus launched and then withdrew its mobile Fusion service, and it has allowed companies such as Virgin Mobile and iPrimus to resell its service at prices that seriously undercut Optus itself, putting additional pressure on the network above and beyond the iPhone itself.

Optus has been advertising that “Your iPhone will be happy with Optus”, but given the problems it and its customers have suffered this year, Optus iPhone customers can be forgiven for thinking that it’s all just marketing and spin.

Optus: this is your time, this is your moment. You have all those iPhone customers, but if you want any more, it’s time to start spending $44m – at least – on improving your network, or your iPhone customers may be happier defecting to another network.