Home Industry Market ispONE gives up, Kogan users ‘deactivated’, Optus circles (UPDATE)

ispONE gives up, Kogan users ‘deactivated’, Optus circles (UPDATE)

ispONE has called in the administrators, unable to continue its battle with Telstra. Kogan and Aldi customers now have to find somewhere to go. Optus has a special deal for them.

Every cloud has a silver lining. One’s man’s milk is another man’s poison. It’s an ill wind that blows nobody any good.

A week after taking out an injunction against Telstra to prevent it from cutting off services to its customers, ispONE has effectively admitted defeat in its long battle with Telstra. It has appointed administrators and cancelled its contract with Telstra (which Telstra would have cancelled in any case).

ispONE has debts of around $30 million, according to administrators Ferrier Hodgson, with Telstra the biggest creditor. ispONE has no comment, on anything. Its website is unchanged, and still offers services to MVNOs  (mobile virtual network operators) and end customers.

As a wholesaler, ispONE was a reseller of Telstra services to over 100 retailers, covering 280,000 mostly domestic consumers of fixed line, mobile phone and Internet services. Its largest resellers were MVNOs Kogan and Aldi. Kogan alone had 120,000 ispONE users.

spONE was Telstra Wholesale’s first prepaid 3G wholesaler, in a deal announced in November 2012. It was in the news earlier this year when Kogan sued it for suspending 700 retail customers after they exceeded their ‘unlimited’ limits. In May Kogan won that case, with costs.

On Monday 12 August ispONE sought and was granted a temporary injunction preventing Telstra from terminating ispONE’s prepaid mobile customers. There followed a week of unsuccessful mediation and court hearings, at which Telstra said ispONE was insolvent and could not pay the money it owed.

ispONE countered that the only reason it was in debt was because Telstra had charged it too much, and if its invoices were revised it would be able to pay Telstra.

Now it’s all over. Mr Justice Pagone at the Federal Court in Melbourne has dismissed the case. ispONE has nowhere to go. And what of its customers’ customers? Telstra has said that Aldi’s mobile customers will continue to be served, but no such deal has been reached with Kogan, which is considering its options.

Kogan Mobile customers have been informed by Telstra, via text message, that they are no longer covered, that they cannot recharge, and that all existing prepaid services will expire in 30 days. Last night Kogan posted an announcement on its website, saying it is ‘devastated’ by the news of ispONE’s demise:

For Kogan's statement, go the the next page.

Here’s the Kogan announcement:

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 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 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 port your mobile number to another provider, or otherwise make arrangements for continuity of your mobile service. We also encourage you to plan ahead 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 wil refund to you the unused portion of your Access Period back to the credit card or Paypal account.

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.

Within minutes of the news of ispONE’s actions becoming public late Monday, Optus announced it will offer a special half price deal to any mobile customers with Kogan Mobile and Aldi who transfer to Optus prepaid before 30 September.

For OPtus's statement, go the the next page.

Here’s the Optus announcement:

Special prepaid offer if you transfer your number to Optus

Optus is providing certainty for people who are unclear about their current mobile service with Kogan and Aldi, with a limited time offer for those who bring their number to Optus.

From 5pm today {Monday 19 August], people who transfer their number to Optus Prepaid can get a special deal. Sign up to Optus Prepaid Social 4G and on your first three recharges of $30 or more, we’ll give you double the data and double the standard talk in Australia.

Ben White, Vice President Mobile Marketing at Optus said, “No one likes uncertainty with their mobile service and we feel for people who are currently worrying about it. We’re hoping to make things better by offering an easy way for you to come to Optus, keep your existing number and continue using your mobile service.

“We’re offering a service people can trust with clear and simple plans, and assurance about their network, with access to Optus 3G or superfast 4G.”

Tips for transferring your number (we call it porting):

  • To transfer your number, you need to swap your current SIM with an Optus one
  • You can get a SIM at your local ‘yes’ Optus store^, on the Optus website or from anywhere that sells Optus Prepaid (available at over 9,000 retailers across Australia)
  • The friendly people at any ‘yes’ Optus store can help you port your number or you can do it yourself at optus.com.au/activate
  • Make sure you give us your correct mobile number and date of birth so we can get the details right
  • Remember, porting can take up to four hours so please be patient, but hopefully it will be a lot quicker
  • Oh and by the way, you can bring any phone that’s compatible with the Optus network, whether it’s 3G or 4G ready

To get this limited time offer, you need to transfer your number by 30 September.

Ah, those nice people at Optus.


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.