Summary The Plan Tier 1 Telcos Are Working On Is NotEffect
As Effective As It Might Be. Focus On Fair.
on the market
2. Analysis
1. Its getting tougher to be a telco :
Profits are down for the tier 1 telcos.
The challenge, as always, is to retain and
grow the customer base.
2. SIM Only is taking over :
Now two thirds of the market, SIM Only is
reducing contracts volumes and thereby
the control Tier 1s have.
Telstra stand to lose the most from the
change in the status quo.
3. Consumers really dont understand data :
Their data usage is growing 70% per year.
Many are too busy to compare plans.
As a result, lots are charged overage.
This may be reducing the levels of trust in
the industry.
The maths of exponential growth makes
this a self exacerbating problem.
4. The budget component of the market will grow fast:
Users are increasingly sophisticated when
considering the mobile costs they face.
And theyre prepared to try smaller brands
although some need reassurance to do so.
Telstra is particularly exposed to customer loss,
given this trend.
5. Optus and Telstra have content strategies. They
appear flawed :
Content can good for acquisition of a
passionate fan base at reasonable cost in small
phone companies.
Its not a good way to retain a large base. Only
10% of people will watch TV on their phone.
6. People want their telco to treat them fairly :
This presents an opportunity for any telco.
However, given the direction of the bigger
phone companies, it seems smaller telcos are
most likely to use this information to their
advantage.
TPG will launch Unlimited Data Plans.
Its Getting Tougher To
Be a Telco
 Telecommunications Services Prices For Consumers EffectAre
on Falling
the market
Quickly In Australia
2. Analysis Consumer costs for telco services fell nearly 4% last year in Australia.

Cost of Telecommunications Services in Australia

In July 2017, the Australian

3.8%
Bureau of Statistics reported a
3.8% fall in prices for
telecommunications services in
the year to June 2017.

This doesnt count the increase Down Year To July 17

in service inclusions (customers
were given more data for the
same cost) which happened at
he same time.
Source:
https://www.businessinsider.com.au/telstra-is-entering-the-low-cost-mobile-market-with-its-budget-brand-belong-2017-
8#v6d0U3cQH4AL1iWC.99
 Its Getting Tougher To Be A Telco. TierEffect
1 Profits Are
on the Declining.
market
2. Analysis
Telstras profits fell 33% last year ; Optus 12%. Competition from smaller phone companies with "lower cost bases, and agile, innovative
business models is driving the change says Andy Penn, CEO of Telstra

Fall In Australian Telco Profits FY 17

Telstras full year profit declined
33% last year to $3.9bn.
Source : http://www.abc.net.au/news/2017-08-
17/telstra-result/8815342

Optus profit declined 12% in 0%

the last financial year. Note,
they still made a profit!, too. -5%

Source :
http://www.theaustralian.com.au/business/technology/ -10%

Profit Reduction FY 17
tighter-competition-dents-optus-full-year-results/news-
story/89fe7778064a049d9babd54bbe74f6d9
-15%

Vodafone lost $242m last year. -20%

Source : Vodafone made a loss last
https://www.vodafone.com.au/media/vha-2016-results
-25% year. The profits of Optus
Quote lower cost bases, and and Telstra were reduced.
agile, innovative business -30%
models from Andy Penn, Telstra
CEO. -35%
Source : https://www.businessinsider.com.au/charts-
telstras-mobile-business-is-under-fire-2017-8
SIM Only Is Taking Over
 Analysis SIM Only Plans Are AlreadyKantar Two: Thirds
All Of theNo
Telco Market
Contract
This is a huge change which has occurred over the last 4-5 years, replacing contracts and moving power to consumers

Below : What Sort Of Agreement Do You Have With Your Phone Company ?
Prepaid + SIM Only (Postpaid) +
PAYG is now 66% of consumer
connections and rising. Why ?
1. It is often cheaper to buy
outright and add a SIM. Responses grouped.
2. Cheaper Chinese phones ( 8 of
the top 22 phones sold in 2017
were Chinese.)
3. Strategic movement away from
telcos as primary sales channels
for phone OEMs.
4. Device tenure is increasing (see
next slide.) SIM Only variants are
So what already two thirds of the
SIM Only is likely to continue Australian market.
and potentially trivialize the
number of phones sold under
Source : WhatPhone Survey
contract and therefore reduce http://www.trustedreviews.com/news/iphone-or-samsung-most-purchased-phone-in-first-half-of-2017-revealed-3303959
the control tier 1 telcos have to
prevent their customer base
leaving.
 The Move To SIM
Q2. Analysis OnlyofTrends
30% Is Exacerbated
Australians Have by LackLuster
Owned TheirDevice
Phone Increments
3 Years Or More
30% of Australians have owned their phone for 3 years or more this average tenure is rapidly rising

Below : Q : How Long Have You Owned Your Phone ?

Research suggests that

the average amount of
time people are holding
on to their phone is

Proportion of Respondents
increasing.
This group is growing.
Our survey reveals the
same thing. Plateauing
specification
improvements and rising
device costs mean people
are holding on to their
device longer, fueling the
SIM Only market.

So what ? This is another

Source : WhatPhone Survey
factor which will drive the
uptake of SIM Only plans.
 These Trends14%
Wereof iPhoneByUsers
Underlined Intend
The Latest iPhoneTo Upgrade
Launch. To The
Analysis
Only 14% of iPhone Users Intend To Upgrade To The iPhone 8 / 8 Plus / X. Of those that will upgrade, the majority will buy outright +
Add SIM iPhone 8 / iPhone 8 Plus / X

Below : Q : (Of iPhone Users) Will You Below : Q : (Of Upgrading iPhone Users) Will You Buy
Upgrade to The 2017 iPhone ? Outright or Take A Contract ?
We asked Now You know
The Australian price, do
you intend to upgrade To
The New iPhone 8 (from
$1079) / iPhone 8 Plus

Proportion of upgrading iPhone users

(from $1229) 14% Average
/ iPhone X (from $1579) ?
50% of those upgrading
will buy outright and add a
SIM.
So what ? Both charts show
The most recent data we proportion of iPhone
respondents
have shows that even the
most expensive phones are
being bought out of
Source : WhatPhone Survey Sept 2017
contract.
Consumers Really Dont
Understand Data
 Heres One Example Of Why People Dont Think Its Fair At The Moment.
Customers dont understand the trends in their data usage.

Below : Q : Do you think you'll use more data this year than last year or less?

It is extremely unlikely these 70% of people got this question wrong.

people are correct in their More is the right answer.
estimation of their data needs
next year.

On average, people use

between 70% and 100% more
data per year. (See next slide.)

So what ?

This is a fundamental
misconception which leads to a
lack of trust in telcos. (See 2
slides on. )
Source : WhatPhone Survey Sept 2017
 Whatever People Think, Average Data Usage Is Rising Fast
The ACCCAnalysis
and Cisco report that personal mobile data usage is rising At 70% per year. People will almost certainly use more data next
year than this

Below : Q : What Do You Want Most ? A Phone Below : How Would That Growth Look To A
People it really hard to Company Which .. User ?
anticipate exponential growth in
any circumstance - including The ACCC and Cisco
their phone usage. estimate growth in
mobile data is Over 5 years,

Actual Growth Rate in Mobile Phone Data Uage

So What ? running around 70% individuals data usage
CAGR grows 1300% from 1GB

GB Of Data Per Month

Few people realize their data to 14.2GB (@70% p.a.)
usage is growing fast but its
rising at 70% per year. This
mismatch of expectations cause
unforeseen charges on
customer bills and may fuel a
lack of trust between user and
telco.
Cisco : Source :
http://www.cisco.com/c/en/us/solutions/collateral/serv
ice-provider/visual-networking-index-vni/mobile-white-
paper-c11-520862.html

ACCC : Source: https://www.accc.gov.au/media-

release/demand-for-data-driving-changes-in-telco-
market
 Many People Are Too Busy To Compare Phone Plans
xv Nearly 20% of people cant remember the last time they compared plans

Below : Q : When did you last compare your phone plan's cost & features?
We asked When did you last
compare your phone plan's
cost & features?

The most common answer we

received was I cant
Most common
remember. To be fair, we answer I cant
received a range of answers, remember.

Proportion of Respondents
and more than 30% of people
had compared in the last 12
months.

So what ?

When your data usage is

rising (as shown on the last 2
slides) and you dont compare
the competitiveness of your Source : WhatPhone Survey Sept 2017

plan, you will be charged

overage youre not expecting.
( See next slide.)
 When Data Use Rises and You Dont Compare Plans, You Get Charged Data Overage Fees
6. Analysis 28% of phone users have been charged for extra data in the last month

Below : Q : Have You Been Charged $10 or More For Data In The Last Month?

28% of people have

As weve seen, average data
usage is increasing for normal been charged $10 or
users at a rate of 70% plus a more in the last
year in our region. month for extra data.
That means that unless your
data plan increases, you will
start to exceed your data
inclusion and incur a $10 fee per
GB for overage.

So What ?

This wouldnt feel very fair for

consumers they dont
Source : WhatPhone Survey Sept 2017
understand why its happening.
 These Factors May Be Contributing To Very Low Levels Of Trust In The Industry
3. Analysis
The most common answer in our survey was that people dont trust their telco at all

Below : Q : How Much Do You Trust Your Telco?

Complaints to the TIO ( The

Telecommunications Industry Most common answer not at all
Ombudsman, the telco 40% are in the bottom 3
regulator) about mobile services

Proportion of Respondents
rose substantially over the last
year. The most common were
billing enquiries. (Likely related
to users being on the wrong
data plan-see previous slides.)

So What ?

Customers lack of
understanding about data
trends and time required to
make sure they have a
Source : WhatPhone Survey Sept 2017
competitive inclusion package
may be eroding trust with their
provider.
 Advanced! The Maths Of Exponential Data Growth Makes The Decline In Trust Issue Self Exacerbating
With 3. Analysis
a standard charge of $10 per GB for excess data use, exponential growth in data transacted raises excess bills from
>$300 to > $600 in time over the course of a contract

Scenario 1 : User buys Contract Scenario 2 : User buys Contract

In both scenarios, the user with starting usage of 12GB and
with starting usage of 6GB and Exponentially
begins their contract with a data data allocaiton of 24GB
data allocaiton of 12GB rising data usage
bundle twice the size of their 40.0
20.0 makes excess
current usage need. Excess Charge
18.0 Excess Charge 35.0 charging self
$610 over 2 year
$330 over 2 year exacerbating.
In scenario 1 the data usage 16.0 30.0 contract at $10 /
contract at $10 /
shown in the calculation is 14.0 GB.
GB. 25.0 In scenario 1,
about the current average.

GB OF Data In Plan
12.0

GB OF Data In Plan
Overage charge is $330 during 20.0
user is charged
10.0 $330. In scenario,
the course of the contract.
8.0 15.0 they are charged
In Scenario 2 a fictitious time 6.0 10.0
more than twice
in the near future - the user 4.0
that, despite
starts with a need of 12 GB per 5.0 starting with a
2.0
month and a bundle of 24GB - bundle of twice
- 0 2 4 6 8 10 12 14 16 18 20 22 their usage in
but ends with a charge of $610. 0 2 4 6 8 10 12 14 16 18 20 22
Usage (GB) Plan Inclusion
each scenario.
Usage (GB) Plan Inclusion
So what ? Excess Data Used
Excess Data Used Source : WhatPhone Analysis

Levels of trust are likely to fall

further over time as data usage
rises. We have already seen it
will.
The Budget Component
Of The Market Will
Grow Fast
 Analysis This IsKantar
The Current MVNO Market
Market ShareShare
MVNOs have been a consistent 20 15% of the market for the last few years

Australian MVNO Market Share

MVNO market share is

around 20% at the
moment.

Share of Australian Market Made Up By MVNOs

MVNOs have been a pretty
consistent part of the market.

To be fair, there appear to be

multiple measures of MVNOs
market share and I have seen
some showing MVNO market
share is rising.

Its probably around 20% now.

Source:: Kantar
 Analysis Andy Penn
Its Going Telstra
To Get Worse For exemplify
Tier 1 TelcosYou wouldnt want to
be a big telco.
MVNO Share could grow by up to 50% in the next 2 years (from around 20% of the market to around 30%

By 2020, budget
conscious will be 30%
So what ?:

This is a substantial industry

change forecast to happen in
only 2 years.

The MVNO market is around

20% now. A movement to 30%
of the total market by 202
of the market
requires a 50% growth from
current levels.
Andy Penn CEO Telstra
Source : https://www.businessinsider.com.au/telstra-is-entering-the-low-cost-mobile-market-with-its-budget-brand-belong-2017-8#v6d0U3cQH4AL1iWC.99
 Phone Buyers Are Increasingly Sophisticated When It Comes To Comparing Costs
50% of people know it depends and they have to do the maths.

The good news is that 50% of

Below : Q : Whats the Best Way To Minimise The Cost Of Your Phone ?
people reaslise that a small
amount of maths is involved
in calculating the most
effective way of getting a This is the
phone. right

Proportion of Respondents
answer.
So what ?

People are increasingly

sophisticated about the best
way to manage their costs.
Thats important as the
market moves to SIM Only
and picking a budget
provider which is right for
them.

Smaller phone companies Source : WhatPhone Survey

often offer more data for the

same price and use the same
networks as the big telcos.
 When Would you consider buying a phone plan from an unknown / lesser known
People Move From Contracts To SIM Only, They Are Prepared To Consider Smaller Brands
10. Analysis brand
43% of People Are if it was
Prepared To cheaper
Try Lesserand offered
Known Phonethe same service
Company Brands and benefits?

Below : Q : Would you consider buying a phone plan from an unknown / lesser known brand if it
We asked : Would you was cheaper and offerd the same service and benefits.
consider buying a phone
plan from an unknown /
lesser known brand if it was
cheaper and offered the
same service and benefits? Note, some would
need reassurance
Around 45% of people before they

would consider buying from
a smaller phone company
(those with lesser known
brands.)
Proportion of Respondents
considered a smaller
phone company.

So What ?

This is a key finding. Smaller

phone companies often
offer better SIM Only deals Source : WhatPhone Survey
than those available from
the tier 1 phone companies
were used to.
 Telstras Problem : They Dont Perform As Well Where The Market Is Going
Analysis Telstras Problem
Telstra have 42% of the Phone and Contract Market and only 31.9 % of the SIM Only Market. They stand to lose around 25% of their
(Source : Kantar)
base as customers migrate to SIM Only.

Below : Telstra Market Share In Phone + Contract and SIM Only Markets
Telstras retail brand performs
relatively poorly in the new
world.

Telstra are not as appealing to

customers in the world of SIM
Only Plans as they were in the
world of contracts.

So What ? This gap represents

around 25% of
The problem for Tier 1s, Telstras customer
especially Telstra is retaining base.
customers as the market moves
to SIM Only and budget plans. Telstras %age Market Share In Each Category

Source : Business Insider

Telstra could lose a quarter of its
base during the transition.
 Analysis MVNO Split ByMarket
Kantar Network Share MVNO Split
As the market moves to SIM only and considers budget MVNO brands, Optus take around 50% of those connections as things stand

Below : MVNO Market Share By Network Partner.

Kantar release quarterly market
share information of MVNOs by 18%
Service Provider.
16%

This chart shows the sum of 14% Conversely,

operator shares by network. Optus stand to
12%
win big as the

Market Share Split

Optus are clearly focusing on 10% move to SIM
MVNOs strategically. 8% Only and
Budget Plans
6%
Telstras recent launch of Belong happens. They
Mobile / SIM Only is likely a 4% have about
reaction to this information. 2%
50% of MVNO
connections.
0%
So What ?
Jul-14

Jul-15

Jul-16
Jun-14

Nov-14

Apr-15
May-15
Jun-15

Nov-15

Apr-16
May-16
Jun-16
Aug-14
Sep-14

Dec-14
Jan-15
Feb-15
Mar-15

Aug-15
Sep-15

Dec-15
Jan-16
Feb-16
Mar-16

Aug-16
Sep-16
Oct-14

Oct-15
While Telstra struggle to retain All Telstra All Optus All Vodafone
their customers who are moving Source : Kantar

to SIM Only and budget

providers, Optus stands to do
relatively well, through
wholesale connects.
 People Wand Their
Telcos To Treat Them
Fairly
 One of the Key Unmet Needs In Telco is Fairness
Fairness is the biggest unmet need in Australian telco around 3 times as important as innovation like content

After the basics of price and Below : Q : What Do You Want Most ? A Phone Company Which ..
reliability Australians want
their phone company to treat
them fairly. There have been
These are the
some examples of the desire for
basics
fairness expressed in customer
needs throughout this pack.

So what ? After the basics,

people want their
There are many examples of phone company to
behaviors undertaken by the treat them fairly.
phone companies which would
appear unfair to the average
user. Unforeseen charging for
data is just one. Fairness is around 3 times as important as entertainment in
plans. We will return to this later in these slides.
We suggest how fairness could Source : WhatPhone Survey
contribute to strategy in the
Implications section of this
deck.
Optus and Telstra Have
Content Strategies.
They Appear Flawed.
 Analysis Current Tier 1Andy Penn: Content
Strategies : By 2020 For:Acquisition
30% of the mobile market will
& Retention
be driven primarily by price. (May 2017)
As seen in the press, both Telstra and Optus are using content to attract and retain customers

Telstra and Optus are

focused on content /
entertainment in plans for
both retention and
acquisition as users seek
budget SIM Only plans.
Optus spent $160m over 3
years for the EPL rights.
How do you monetize content plays
The telco giant hopes that
like this?
offering unmetered access to
premium live sports will convince a) Getting more customers coming
customers to stick with its plans, across to us,
b) increasing loyalty and higher spend
which are typically more expensive from our existing customers and
than those of its rivals. c) the sort of brand image, the halo that
we get, beyond just being a pure telco.

So what ?

Parallel data (see next

slides) suggest that this may http://www.smh.com.au/business/media-and-marketing/telstra-offering-free-
live-nrl-and-afl-streaming-to-entice-mobile-customers-20150509-ggy2vu.html
http://www.adnews.com.au/news/qanda-optus-ceo-allen-lew-assesses-
impact-of-premier-league
not be the most effective
strategy.
 Analysis Not Many85% ofUse
People Even
or the
Wantmost techOnsavvy
Content Their age groups dont
Phones
watch TV on their phones
Only 10% of Australians want free video access on their phones

Below : Proportion of Australians who Want These Services In A Phone Plan.

The reality is there are some
niche content properties which
do appeal. The problem is that
Tier 1 telcos are trying to solve a
problem for their entire
customer base with a niche Only 10% of people want
solution. free video streaming in
Its worth noting that selling their phone plans.
video in plans involves
explaining what data free (zero
rating) means which might be
the hardest job in telco at the
moment.

So What ? Source : Source : Australian Edition :

Deloitte Global Mobile Comsumer
Survey July 2016
The proportion of people who
will watch free video streaming
on their phones is quite small.
 85%
Evenof TheEven
BiggesttheSports
most Are
tech savvy age groups dont
Niche
Analysis
watch
The AFL is the most watchedTV on
sport their Around
in Australia. phones
40% of people regularly tune in

Below : Do You Regularly Watch These Sports ?

There are some niche content Even the AFL is a (big)

properties which do appeal to niche. Less than 40% of
Australians. people watch it. OVO used V8 Supercars

Proportion of people regularly viewing the sportc

to target fanatical fans
You will note the EPL is not on on mobile at an
this chart. affordable price.

So What ?

There are some Australians who

are passionate about some
sports. For this fact to wok to
the advantage of phone
companies, they need to Source :
http://www.roymorgan.com/finding
identify customers / prospects s/5488-sports-viewing-on-tv-
201403140213
who both like these sports AND
who will watch them on their
phone.
 Even The Biggest Sports 85%
Analysis
ofHave
Do Not EvenThe
theBroad
mostAppeal
tech savvy ageTelstras
To Retain groups dont
Huge Base
watch TV on their phones
10% of people will watch sport on their phone. 40% like the AFL. Telstra may retain 4% ( = 15% x 40%) of their base with this content

Figuring out the proportion
of people who will be
retained by content offered
free on phone plans involves
multiplying those who are
interested in the sport, by
those who will watch it on
their phone.
So What ?
People who :
Notionally, approximately 4%
Watch AFL a lot = 42% of Australians are likely to be
x swayed in their choice of
phone company by free AFL
video on their phone plan.
Want free video = 10% Telstras base is around 50%
of the market. A Value Add
which appeals to 4% of the
SO : People who want the population is not a good tool
AFL + free video for retaining the majority of
their base or attracting new
customers to Telstra.

Video sport on a mobile is = 4.2%

currently very niche and not
a good way to retain half Source : WhatPhone Estimate

the market.
 85% of Even the most tech savvy age groups dont
AnalysisThe Right Sort Of Video Content Might Be Great For Acquisition
watch
The 2.3% of V8 (or similar sports) fans who are TV on their
passionate phones
about it may be prepared to move to a new telco based on this fact

On the other hand, phone
companies for which 2.3% of the
market would be a good level of
acquisition could do well,
especially if, like OVO, they
target multiple niche sports and
acquire the rights at a
reasonable cost.
So What? :
Lesser known sports with
People who :
On the other hand :
Watch V8 a lot = 23% Notionally, approximately
x 2.3% of Australians are likely
to be swayed in their choice
of phone company by free V8
Want free video = 10% Supercars video (or similar
sport) on their phone plan.
For an MVNO, this can be a
SO : People who want the cost effective acquisition tool.
V8s + free video

= 2.3%
passionate audiences could be
cheaper ways to attract new
customers to a brand. E.g. OVO.

Used correctly, this could be a Source : WhatPhone Estimate

useful acquisition tool.

 Analysis Andy Penn
What Strategies : By
Could 2020Companies
Phone : 30% of Employ?
the mobile market will
be driven primarily by price. (May 2017)
The ideal strategy would be a cheap way to differente, which was of more value to consumers than content in phone plans

This is Porters classical view of Below : Porters Classical View Of Strategy

telcos strategy situation.
Tier 1s, as weve seen, are
focusing on broad scope (mass
market) differentiation using
mobile entertainment content.
MVNOs are shown at the
bottom of this quadrant. Some Belong recently launched a
have (sometimes extremely) low SIM Only product suite which
costs and are differentiating by has a fair way of managing
being the lowest cost provider. data. Its more valuable to
TPG seem likely to pursue low consumers than
cost broad offering. Lower cost entertainment in phone plans
and operational efficiency could and cheaper to implement,
be an opportunity for Vodafone. especially since theyve done
So what ? it from launch.
The ideal would be a low cost
method of differentiating your Source : https://www.mindtools.com/pages/article/newSTR_82.htm
telco product in a way that was
valuable to customers. (See
implications slides, next. )
Belongs launch hints at what
others may do.
 Whos The Fairest Of Them All ? : The Simplest Way
Analysis Predictions
To Say Fair Data is to offer Unlimited
TPG are uniquely placed to launch unlimited

TPG will launch in Australia Below : Porters Classical View Of Strategy

in early 2018. They will Q : What Phone Plan Feature Would
have built a metro network You Like To See ?
and will need to build a
From an earlier slide. 10% of
customer base quickly.
people want free video. 35%
The biggest unmet want unlimited data.
customer need is not free
video in a plan, its
unlimited data.
This service is hard for
MVNOs to offer because
they are charged by the GB
and do not own the
network. TPG will own their
own network.
The simplest way to
articulate fair data
management is to offer
unlimited data.
 TPG: Unlimited Plans
Analysis Predictions
TPG may launch unlimited data on a handset plans at $50 per month. This could help them attract half of the customers they need
(they only need about 4% of the market to break even.) The ripples for the industry will be noticible

TPG Only Need a Tiny Share about 4% of the

TPGs strategy has been Below : Key Facts TPG Unlimited Plans
customers available to them to break even
released to shareholders.
They will be.
Bundling their new
mobile services with
fixed services. TPG
Have no existing need
customer revenue to only 4%
protect.
http://www.asx.com.au/asxpdf/20170412/p of the
df/43hgrdhpfm7jq0.pdf

They need to gather around

market
just 500k customers to available
break even on their to them
network. to break
http://www.smh.com.au/business/media-and-
marketing/tpg-to-build-own-mobile-network-after- even.
12b-spectrum-splurge-20170404-gvd6xr.html

There are around 32m SIOs

in Australia as of June 16 :
https://www.acma.gov.au/~/media/Research%20and%
20Analysis/Report/pdf/ACMA%20Communications%20
report%202015-16%20pdf.pdf
Some Potential
Implications
 The Ideal Strategy ? Making Telco Products Fairer For Consumers
Analysis
Helping customers manage their usage is a valuable way to make things fairer from a customer point of view. T
here are a number of data value adds which MVNOs can build quickly.

These data management ideas Below : Some Data Management Ideas To Make Things Fairer From A Customer View Point
are expensive to do for
incumbents especially things
These are Refund
like automatically optimizing unused
easy to data
plans. The ARPU reduction theyd Unlimited
build and data. Data
sustain applies to all customers gifting
highly Share Mobile
while each year, only a few will Broadband
valuable to
churn if they dont do it. Thats a Bundle Over

Customer Value
customers. Automatically
Multiple
problem which will linger for the devices $10 auto
Theyre move
added
Recommend
Tier 1s and a version of the customer to
data
best plan in
likely to be most cost
Throttle to
User can set
carried to
app
conundrum expressed in The effective plan 3G customer has
built first by free 3G at threshold. next
to choose it.
Innovators Dilemma. data E.g. month.
smart Data vault bundle downgrade
So what ? limit connection Dynamic
MVNOs.
Data management facilities are to 3G at pricing
cheaper
Data vault Set hard 80% of
Blackspot
an acquisition opportunity for stop data bundle data
notification.
already has use limit on
overnight.
MVNOs, especially those with postpaid
been.
small customer bases.
Ideally the fair data schemes
Complexity of implementation Source: WhatPhone analysis and
employed would encourage https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
usage. E.g. The first GB when you
reach your limit is free. Thats
essentially a marketing change
that drives usage and feels fair.
 Analysis Predictions
Implications for the tier 1s :
A focus on retention, not acquisition appears more worthwhile than the content approach

The tier 1s are about to Focus on retention not content :

enter a difficult time. Its harder for tier 1s to retain customers when the market is
Tier 1 customers dont
SIM Only and trending towards budget providers.
understand their data
needs. Theyre getting Free included video is a niche and so not an effective way to
charged overage which is manage retention of such substantial customer bases
eroding trust and thats a
self exacerbating problem. Make the management of data fairer to build trust :
Content is likely not the Provide data management tools
best way to retain such a Theyre cheaper and more effective than content
large base. Have a plan for what youll do when TPG launch unlimited data
As the market moves to
SIM Only plans and is
prepared to consider Telstra and Vodafone invest more in MVNOs :
smaller phone companies, To be fair, Telstra just launched Belong probably for this very
Telstra stands to lose a lot. reason
Optus owns the MVNO
space now (see slide 24) so
wont be hit as hard.
 Implications for Smaller Phone Companies :
Analysis Predictions
It seems MVNOs are likely to grow fast in the next 2 years. Offer fair data products and minimize costs. Have a backup plan and
negotiated wholesale pricing as contingency in case TPG launch unlimited.

Also focus on data management tools & marketing fairness

Its 3 times as effective as alternatives (slide 26)
Negotiate an Unlimited Data deal and check legals.
Keep this in a drawer.
Smaller phone companies
are likely to experience Accentuate lowest cost advantage:
rapid growth between now Some Australian MVNOs have very low cost bases
& 2020. We know 2 MVNOs with less than 10 people working in them
Data management is cheap
to do, MVNOs can execute Educate and reassure to reduce user feelings of risk in moving to
it faster and more cheaply lesser known brands
than big phone companies
Yes, you can keep your phone number
and could build a brand out
of the trust me promise. Use advertising to reassure the m MVNOs use the same
network
Offer try before you buy transfer your number later
Analysis Predictions
More Information

More depth + less PC content on to these ideas will be added to my personal blog :
https://aitkenblog.com.au/

Coverage of all of these trends and more to help people find the right SIM Only plan
Whatphone.com.au