The future for low-cost mobile plans is grim – Red Bull Mobile shuts down

Red Bull Mobile customers in Australia recently received notification that they could soon no longer re-charge their mobile account, sounding the death knell for the brand in this market.  So what does this mean for the state of the low-cost mobile market in Australia?

When my wife received the message that her mobile plan could not be renewed it was clear to me this was the end of Red Bull Mobile, but as a broader question what does it mean for all the low-cost carriers in the market?

To understand what drives the future cost of mobile plans you need to know about ARPU.  ARPU stands for “average revenue per user” and with the recent influx of super-low cost brands in Australia the ARPU has been driven lower and lower across the country.

Putting up all these mobile phone towers, adding network capacity as we all use more and more data and adding new network features like 4G doesn’t come cheap – in the end, someone has to pay.

In the USA the ARPU is at or heading toward the $60 mark.  So how is it we think we can afford for the industry to support $30 low-cost plans.  It simply can’t.

I don’t know what the future for Amaysim, Kogan, Aldi and others is – they are all operated as MVNO’s – (Mobile Virtual Network Operator’s) and that does appear to be a reducing breed.  Amaysim is operated on the Optus network while Kogan and Aldi are on the Telstra network via MVNA (Aggregator) IspOne.

Prices won’t suddenly go up, but financial pressure on the operators of the MVNO’s and brands will be increased as their carriage contracts come up and are perhaps renewed.  EFTM understands Telstra was close to considering opening its wholesale network to other operators alongside IspOne however all the recent publicity over their arrangements with Kogan have caused the company to take a back seat and let the market settle.

The next 24 months will be an interesting, and likely quite a disruptive time for the low-cost mobile market.  Expect carriers to change plans, new offers and perhaps more will fall by the wayside.

Right now, with the uncertainty I’m hearing in the market, when people ask me who they should go with for cheap mobile plans, I’m struggling to recommend any of the traditional players.  BOOST seems to be the best option.  Boost isn’t actually an MVNO, it is a retail brand of Telstra, so you’ve got the mobile network operator itself behind the brand.

If you’re savvy and happy to swap and switch carriers time to time because you know how easy porting (taking with you) your number is, then there are still great deals happening month to month on Kogan, Amaysim, Aldi and others.  Check them out, switch around – but be aware – the honeymoon may end at some point for low-cost plans all together, so don’t say we didn’t tell you so.