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Beyond limits: Kogan Mobile under fire

Date

Ben Grubb

Zoom in on this story. Explore all there is to know.

Outspoken technology entrepreneur Ruslan Kogan is under fire over his new mobile plans after disconnecting customers for sending too many texts or making too many calls on supposedly "unlimited" plans.

Kogan chief Ruslan Kogan.

Kogan chief Ruslan Kogan.

When Ruslan Kogan launched his prepaid mobile phone service in December, tens of thousands of people signed up for deals touted as having "unlimited" calls and texts with either 2GB or 6GB of data.

But many of those same people are now finding it may have been too good to be true.

Neil Gill from Queensland with his girlfriend.

Neil Gill from Queensland with his girlfriend.

Mr Kogan's firm, Kogan Mobile, has been disconnecting the services of prepaid mobile customers who Kogan believe have made too many calls, sent too many texts or used too much data.

Since launching, the service has gained about 100,000 prepaid customers, a meteoric rise likely driven by the fact many of Kogan's other technology products are bundled with a Kogan Mobile prepaid SIM.

In December, Mr Kogan said the mobile market was "ripe for disruption".

"Providers are taking customers for granted and confusing the s--- out of customers," he said. "Things like $49 for $500 worth of calls – what does that even mean?"

Now the tables have turned. The question facing Mr Kogan today: What does "unlimited" mean?

As a result of his company's use of the word, Mr Kogan has been given a torrid time by customers and the telco industry this week.

"Going H.A.M [Hard as a Mother F-----] fighting telco industry goliaths," he wrote on Tuesday. "I wish I could explain how these dinosaurs operate. POSITIVE: Got a story for my grandkids."

Those disconnected, such as Neill Gill in Queensland, were told via email that they were using Kogan's services for business purposes, despite that not being the case in many situations.

Mr Gill said he didn't use data on his $29 prepaid plan, but did like to use the service to "have a yak" to his girlfriend – who lives an hour away – and his father, who lives in Western Australia.

Each call Mr Gill made lasted at most about 1.5 hours, he said.

Little did he and others know, however, that talking too much on the phone, sending too many texts or using too much data would result in their service being disconnected by Kogan.

The communications regulator, the Australian Communications and Media Authority (ACMA), is now under pressure by the Australian Communications Consumer Action Network (ACCAN), the peak body that represents consumers on telco issues, to investigate Kogan Mobile's plans.

Elise Davidson, spokeswoman for ACCAN, said ACMA had clear guidelines in its telecommunications consumer protections code that Kogan appeared to be breaching.

If a telco is found to breach the code, hefty fines can be placed on a company.

"ACMA have been really clear that words like 'unlimited' and 'cap' can't be used in advertising if the product actually does contain limits or the cap is a minimum spend," Ms Davidson said.

"Kogan calling plans 'unlimited' is something the ACMA will probably be looking at," she said.

Separately, Ms Davidson said from March 1 all telcos were required to provide a one to two-page document called a "critical information summary" that outlines exactly what is included in a plan.

Kogan did not appear to have one and could be breaching ACMA's code, Ms Davidson said.

"I think [Kogan Mobile's] idea that people are using the product for business because their usage is too high is arbitrary and is not a great way to establish a relationship with new customers," she said. "If someone uses their phone and downloads a lot of data that doesn't necessarily mean they are running a business - they may just have a very active social life."

The same applied to those making a lot of calls or sending a lot of texts, Ms Davidson said.

"The bottom line is a customer would reasonably expect that if they have 6GB of data or unlimited texts/calls they can use it how they want over the period of time stipulated," she said. "To put these kinds of restrictions in place – not letting people know they are going to be cut off until they recharge, for example – that's just bad customer service."

The Telecommunications Industry Ombudsman (TIO) said it had received "a small number of complaints from Kogan consumers" who said their service had been suspended. The Ombudsman wouldn't give details about the total number of customers who had complained.

It referred Fairfax Media's questions about enforcement of the Telecommunications Consumer Protections code to the ACMA, which said it was "actively monitoring compliance".

"We can't confirm or deny if we are investigating this company," ACMA said.

Telstra, the network Kogan states that it uses "part" of, said it played no role in enforcing Kogan's acceptable use policy, which is being used to disconnect customers who use too much.

Many telcos have an acceptable use policy but they rarely enforce it.

Telstra added that it had only one wholesale relationship to resell prepaid mobile services, with ispONE. Though Kogan won't say, it's highly likely that it is reselling ispONE's Telstra service.

A spokesman for Kogan Mobile said the company was "currently resolving" issues raised.

"Kogan will provide a comment before the end of the week," the spokesman said.

with Aleisha Orr

Note: After publication Kogan's spokesman contacted Fairfax to say Kogan did have a critical information summary. It referred Fairfax to the URL koganmobile.com.au/plans/, which has the phrase "critical information summary" on it with some information below it. The phrase is not displayed at kogan.com/au/mobile/, which is the first URL that appears in a Google search when looking for Kogan Mobile's plans. The ACMA's code requires each critical information summary document to set out key information about the service being offered, including "any exclusions or important conditions, limitations or restrictions". The Kogan Mobile critical information summary does not state explicitly that it will disconnect customers on "unlimited" call/text plans if Kogan finds a customer using what it deems as too much of its service.

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134 comments

  • But they're not "PLANS" it is prepaid, and the Terms and Conditions of the prepaid account states that excessive use will void the account...
    People arn't reading the T & C's as usual, then becoming all whingy when things don't go their way...

    Commenter
    sm1vvy
    Date and time
    March 20, 2013, 12:40PM
    • Prepaid has same rules as any other offering under TCP code. You can't hide everything in the T&Cs anymore.

      Commenter
      Ben Grubb, deputy technology editor
      Date and time
      March 20, 2013, 12:43PM
    • How do you determine "excess use" on an unlimited plan?

      Commenter
      peter
      Location
      Chapel Hill
      Date and time
      March 20, 2013, 12:57PM
    • You can't advertise a service as having 'unlimited calls" and then qualify that statement by saying in the terms and conditions that it's not unlimited if it's 'excessive', and not define what excessive means. Is 10 calls a month excessive? If Kogan says so, then yes. .

      Commenter
      Jace
      Date and time
      March 20, 2013, 1:01PM
    • All the telcos have "fair use" policies, outlined in their agreements and mentioned in advertisements. For instance "Free Virgin to Virgin" has always been subject to limits. The ACCC doesn't have a leg to stand on.

      Commenter
      john
      Date and time
      March 20, 2013, 1:45PM
    • The ACCC does indeed have a leg to stand on; it took Optus to court and won over similar advertising claiming "Unlimited" broadband wihtout specifying in the ads the nature of any restrictions on that claim. Sticking it in a "Fair Use Policy" doesn't cut it.

      Commenter
      Jace
      Date and time
      March 20, 2013, 2:36PM
    • Sounds like Kogan is completely out of touch with the reality of how people use mobile data.

      You don't have to be running a business to download gigabytes of data. Just watch or download a couple of movies.

      Commenter
      ET
      Location
      Qld
      Date and time
      March 20, 2013, 2:45PM
    • sorry, but if the advertising says "unlimited" and the small print says (effectively) "limited", then that is misleading and dishonest.

      Commenter
      rook
      Location
      melbourne
      Date and time
      March 20, 2013, 2:47PM
    • unlimited = no limit

      Commenter
      dbareis
      Location
      Vermont
      Date and time
      March 20, 2013, 2:51PM
    • I don't care about T&Cs, if it has limits, then BY DEFINITION, it cannot be unlimited. Virgin2Virgin is different because it is not called unlimited, and they are clear about the limitations.

      The telco choses what they call the plan. Clearly, calling something unlimited is designed to make people believe that there are NO LIMITS on the calls or SMS. If there are, in fact, limits, then the term unlimited is misleading. They can call it Almost Unlimited, or Practically Unlimited, or Nearly Unlimited, but not Unlimited.

      Commenter
      T
      Date and time
      March 20, 2013, 2:52PM

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