Have Optus just conceded that mobile isn’t competitive?

Optus have announced their iPhone tethering deals. This is where you use your iPhone as a modem to connect your laptop or computer to the Internet wirelessly. They will charge $10 per month for the privilege. Think about it: that is an extra $10 per month to use some of your already paid for usage allowance for data on the iPhone through a computer instead. (Go over your usage charge and it will cost you $0.35 per MB which I think is higher than other providers). Vodafone will allow this without charge. The critical thing here is that this charge is for a service that involves no additional cost to Optus as the network will not recognise data coming direct from the iPhone or passing through it.

Why is it doing this? Presumably because it is worried that the iPhone tethering will cause people not to buy their separate mobile broadband products. But if mobile telephony is competitive, why would it care about that? After all, it would earn no additional above-normal profits from pushing customers over to other products. Add to that, that Optus’ move is a boon to any mobile broadband provider and this is quite a puzzle.

The only explanation that comes immediately to mind that rationalises this is that mobile broadband is far from competitive and Optus and other carriers who charge for iPhone tethering in this way are earning super-normal margins on those activities. I guess this sort of thing will make the ACCC think twice when working out regulation of that sector.

3 thoughts on “Have Optus just conceded that mobile isn’t competitive?”

  1. Do you think they would be charging a fee if they didn’t think the (largest) competitor wasn’t going to make it available at all?
     

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  2. Disclaimer
    Think about it: that is an extra $10 per month to use some of your already paid for usage allowance for data on the iPhone through a computer instead.
    Ummm.. possibly not. Think about this alternative. The monthly subscription fee is probably not modelled on you using your full data allowance (or full amount fo cap minutes etc). It’s probably modelled on an assumption that a typical iphone users will use only x% of their data allowance, and that only a small number of users will reach the full plan allowance.
    However – a customer who uses tethering will almost certainly have a higher average usage (i.e. use a higher % of their plan allowance) than a customer without tethering, so there may be a cost basis for charging these customers more.
    Vodafone choosing not to charge tethering may indicate they have more network capacity than Optus at the moment… or are prepared to run their network at higher utilisation rates.

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