Optus cuts ties with Woolworths Mobile

Optus cuts ties with Woolworths Mobile

Summary: Supermarket retail giant Woolworths is the latest to be culled in Optus' reduction in the number of resellers on its mobile network

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TOPICS: Telcos, Optus
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Woolworths will cease selling mobile services on the Optus network from October 1, 2013, as Optus again culls the number of resellers that can access its network.

In yet another sign that the mobile virtual network operator (MVNO) market is shrinking, Optus has confirmed that it is ending its agreement with Woolworths.

Woolworths launched its prepaid mobile service through Optus just over two years ago, offering an AU$2 SIM card with AU$29 or AU$49 recharges for 45 days or 5GB of data.

Optus confirmed to ZDNet that it is in the process of ending its agreement with Woolworths Mobile, and that customers would no longer be able to purchase a SIM from October 1.

"Existing Woolworths Mobile customers can continue to recharge in-store and online for another 12 months. After this time, customers can recharge by purchasing an Optus recharge voucher," an Optus spokesperson said.

"Customers who have a Woolworths Mobile prepaid product will continue to receive all the same great value and benefits that Optus customers have."

A spokesperson for Woolworths said that the supermarket giant was exploring its options.

"We are currently reviewing our options to ensure we can continue to offer a great value prepaid service to our customers. For the next 12 months, existing customers will not be impacted by this change and can continue to use Woolworths Mobile, with all the same benefits, features and inclusions."

The announcement comes as Optus and Vodafone have both recently moved to reduce the number of MVNO resellers on their respective networks, which has led to the demise of brands such as Red Bull Mobile, and Crazy John's. The decision to terminate Optus' deal with Woolworths comes in stark contrast of comments made by Optus CEO Kevin Russell in August that Optus had recently signed new agreements with around 20 of Optus' MVNO partners.

Both telcos were understood to have rejected approaches from former ISPOne reseller Kogan Mobile.

Vodafone CEO Bill Morrow told ZDNet in August that the MVNO market would now struggle in Australia, unless it could differentiate itself on value outside of low-cost data plans.

"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," 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.

Topics: Telcos, Optus

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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4 comments
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  • The government should step in to stop this

    In many countries around the world, governments get agreements from mobile operators to keep a certain number of virtual operators running.

    This happened recently in Austria, where the Three network, which merged with Orange, was forced to agree to having many virtual operators use its network.

    Ironically, in Australia's case, it is also the Three network which merged with Vodafone, but the government did not force the merged entity to keep a mandatory number of virtual operators running.

    So now the main mobile operators are killing off the virtual operators. This is not good for competition. It is not good for the people. It will result in higher costs.

    The story quotes Vodafone as saying that data is the key. However, you'll find that virtual operators offer more data for less money than the network operators such as Vodafone.

    If people want to stop the closure of the MVNOs (virtual operators), they probably should lobby their politicians. Otherwise it means higher costs for both mobile calls and data.
    Vbitrate
  • Just a dose of reality

    In spite of their fancy name, MVNOs are nothing but glorified reseller. Since their pricing reflects the underlying deal with their carrier, there really is little opportunity to offer any real competition. It was the stupidity of ISPOne to defy this reality that led to their demise.

    MVNOs may create the illusion of competition, the reality is that they do not. My Aldi mobile service cannot be cheaper than what they pay Telstra for their cut down wholesale 3G service. Telstra could retail that service at the same price as Aldi, cut out the middle-man (i.e. Aldi), and make more money in the process.
    BRC-4c5c4
    • MVNOs are cheaper

      Have a look around. The virtual MVNOs offer cheaper rates than the main carriers.

      There are some reasons for this. Some don't get access to the highest speed of the network (eg 4G). Some MVNOs don't subsidize handsets, which may be just what many customers want. There are various ways they can make it cheaper.

      It would be preferable if there are more real network carriers, but the MVNOs still provide a valuable service.
      Vbitrate
    • competition, but not as you know it.

      MVNO's have a useful role, they allow the carriers to extend the life of their legacy assets (ie 3G) and maintain the premium attraction of their main brand.

      MVNO's do assist in competition, but perhaps do not have a major role. They do provide a downward price pressure on the premium brands, particularly when multiple carriers are providing legacy services for MVNO's. Ultimately though, it is still up to the carrier to determine the access prices, so the effect on competition is limited.
      sen7ient