Australia Post's push to become a telco stalls

Australia Post's plans to become a mobile virtual network operator (MVNO) stalled earlier this year, when a planned "bake-off" between Telstra, Optus, and Vodafone did not go ahead.

The government-owned postal company has been looking to diversify its business away from traditional mailing services for a number of years as mail volumes decline as a result of an increasing number of bills and communications being sent online.

At the end of 2011, Australia Post recruited Optus' former head of regulatory affairs, Maha Krishnapillai, and since then, it has been widely tipped that Australia Post would become a mobile operator. Although Krishnapillai has made a number of appearances at telecommunications conferences and events since joining Australia Post, he has said that Australia Post won't be going out and building new telecommunications networks. He has said that the company will look to leverage its trusted brand and retail footprint across Australia to offer broadband and mobile products.

It had been reported that Australia Post would look to launch its mobile product in the first half of this year; however, this appears to have stalled. ZDNet can reveal that the postal giant approached Telstra, Optus, and Vodafone this year as each vied for Australia Post's MVNO business, but the proposed showdown fell through when Vodafone pulled out.

Vodafone Australia CEO Bill Morrow told ZDNet that Australia Post had been one of a few MVNOs to approach him in the last few months, seeking to use the Vodafone network.

"I've had quite a few requests for people to come in as MVNOs, and quite frankly, I turn them away," he said.

Australia Post was no different, he said.

"We refused to participate. [Australia Post] wanted to do a bake-off with the three carriers, and when we pulled out and said we're not interested, they dropped the whole approach," he said.

A spokeswoman for Australia Post declined to comment on the organisation's MVNO future.

"Unfortunately, we're unable to comment on any future plans," she told ZDNet.

A Telstra spokesperson said the company could not disclose its discussions with Australia Post.

"The nature of our business means we are involved in all sorts of conversations with all sorts of people and parties but because of the commercial nature of many of those conversations we don't discuss much of that publicly," the spokesperson said.

Optus have been asked for comment, but had not responded at the time of writing.

Australia Post's attempted push into the MVNO market comes at a time when the industry has seen a number of players drop out, including Red Bull Mobile, Savvytel, and, most recently, Kogan Mobile.

After Kogan Mobile's reseller ISPOne was placed into administration, the reseller's deal with Telstra came to an end, meaning Kogan Mobile was forced to find a new telco to resell its services. Morrow confirmed that Ruslan Kogan had called Morrow seeking to switch Kogan Mobile over to Vodafone's network.

"I was polite and respectful, but no way," he said.

It is understood that a similar approach to Optus was rejected, and Kogan Mobile yesterday said that it had attempted to enter a commercial arrangement with Telstra, but the terms on offer were not remotely commercial or competitive.

Morrow indicated that the future is bleak for MVNOs.

"The whole Kogan thing is another indication there's a whole shift in the marketplace. MVNOs are probably not going to be a big part of the future," he said.

"I think there's a different form of competition, over-the-top-type applications that are going to enter in, but MVNOs I think are going to start to taper off quite significantly."

This is the natural result of Australians shifting from using voice and text to data, he said.

"We've moved to much more of a data [era], and data on the network is much more demanding from a cost point of view, so the model has changed. MVNOs can't survive on just a voice- and a text-only-type offer," Morrow said.

"The price you would have to pay to get onto the network to use it to get that fair distribution puts them out of the market."

Josh Taylor travelled to New Zealand as a guest of Vodafone Australia.