Kogan Mobile details ISPOne's alleged betrayal

An affidavit from Kogan Mobile submitted to the court against ISPOne, and obtained by ZDNet, has revealed that Kogan Mobile attempted to reactivate its suspended customers, and that ISPOne had suspended more than originally reported.

The launch of Ruslan Kogan's mobile service has been marred by criticism from customers who were blocked from recharging their prepaid services because they were said to be using too much data or too many phone calls in a short timeframe.

The prepaid offering to customers included unlimited calls, SMS, and MMS, and 6GB of data over either 30, 90, or 165 days on Telstra's 3G network, but Kogan Mobile said that around 200 customers had been blocked from recharging their service because they were in breach of ISPOne's acceptable use policy for using more than 400MB of data in a single day, or making too many phone calls in a short period.

Kogan took ISPOne to court on Wednesday, alleging that the Telstra mobile wholesaler had breached the master wholesale agreement between the two companies for the provision of prepaid mobile services. Kogan has alleged that it did not directly suspend its customers; it was the company's wholesale provider, ISPOne, that was responsible.

In an affidavit obtained by ZDNet, Kogan executive director David Shafer revealed that Kogan Mobile was aware that ISPOne was suspending customers before January 22 this year, and that this was done without the company contacting Kogan Mobile beforehand. Shafer said he emailed ISPOne founder Zac Swindells and sales director Luke McNeill, informing the pair that no Kogan Mobile customers were to be suspended without prior written consent.

McNeill allegedly responded by stating that ISPOne would not communicate with Kogan customers without written authorisation, and that no services had been suspended proactively by ISPOne.

Shafer claimed that at last reporting, of the 102,647 Kogan Mobile customers, ISPOne had flagged 2,000 Kogan customers for breaching the company's acceptable use policy, despite the company originally telling Kogan Mobile that only 600 accounts had been flagged.

In a meeting between Swindells, Shafer, and Kogan founder Ruslan Kogan on March 15, Shafer alleged that Swindells admitted to flagging 600 accounts for breaching the policy "in the heat of the moment" after Shafer had told him that suspending customers was unauthorised. Swindells allegedly then said that he would remove the flags.

By March 18, Shafer said Kogan Mobile had determined that 2,000 accounts had been flagged, and 211 customers had been prevented from recharging their services by March 22. By April 5, a total of 600 customers had their services suspended by ISPOne.

Shafer said Kogan Mobile staff have access to the ISPOne database, and should have been able to reactivate the suspended services — and while the company attempted to reactivate customer services, it could not "unflag" suspended users in the database to allow them to recharge their prepaid accounts.

Media scrutiny, complaints on telecommunications forum Whirlpool, and at least 19 complaints to the Telecommunications Industry Ombudsman (TIO) since the suspensions began have all pointed to brand damage for Kogan, Shafer said.

"In addition to the damage to Kogan Mobile, I believe that the wider Kogan business brand has also suffered significant reputational damage as a result of ISPOne's repeated, unilateral disconnection of prepaid mobile services of Kogan Mobile's customers," he said.

Publicly, Kogan has sent out AU$50 vouchers to customers who were suspended by the service. The Victorian Supreme Court on Wednesday placed an injunction on ISPOne, preventing the company from suspending any more Kogan Mobile customers unless the account is in breach of the service suspension policy. ISPOne must also lift the suspension on the 600 services that it has already blocked, and Kogan Mobile is seeking the delivery of 50,000 micro SIMs and 15,000 nano SIMs that it already had on order, but which ISPOne has failed to deliver.

Despite the controversy, Shafer said that the Kogan Mobile service has proved to be popular. The company is selling between 600 and 1,000 SIMs per day.

ISPOne and Kogan Mobile have both declined to comment, as the matter is before the courts.