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I wanna be your friend: mobile prepaid and the rise of nominated numbers

For a low level user, the cheapest Australian plan costs the user around half the price of the least expensive New Zealand plan…

Interested in this topic? Contact our pricing specialist Dr Nina email usMatthews

See our updated analysis of the 2010 mobile prepaid rates.

In the interest of fostering friendly trans-Tasman rivalry, for the last three years Network Strategies has been comparing mobile prepaid deals offered by Australian operators to those offered in New Zealand (previous analyses were undertaken in February 2006 and March 2007). In our comparisons we have found that New Zealanders are consistently paying far more for services than Australians.

For a low level user, the cheapest Australian plan (from Vodafone) costs the user only $18.64 a month, around half the price of the least expensive New Zealand plan, also from Vodafone, which comes in at $37.13 per month. For a high volume user the difference in prices is even more extreme, with the cheapest Australian plan costing $52.77 per month, compared to the cheapest New Zealand plan at $188.32 – over three and a half times more expensive.

The cheapest plans for each operator, and the resulting monthly spend for a low user (one who makes 30 calls and sends 33 text messages per month), for 2006 to 2008 is illustrated in Exhibit 1. We have included the 3G operator 3 in our 2008 analysis, now that 3G services are being offered through prepay on other operators also.

Exhibit 1: Monthly spend for a low prepaid user from 2006 to 2008 [Source: Network Strategies]
Exhibit 1: Monthly spend for a low prepaid user from 2006 to 2008

A similar comparison of monthly spending is given in Exhibit 2, but this time for a high user (someone who makes 140 calls and sends 55 text messages per month).

Exhibit 2: Monthly spend for a high prepaid user from 2006 to 2008 [Source: Network Strategies]
Exhibit 2: monthly spend for a high prepaid user from 2006 to 2008

Comparing the variation in the monthly cost of prepaid plans between 2007 and 2008 shows that for the high volume user Telstra has become more expensive in the last year due to the removal of its prepaid cap plan. Otherwise both the above graphs indicate that very little has changed in the last year in terms of monthly spends, for these usage levels (which are based on the OECD baskets of mobile usage). Herein lies the problem: these standard baskets are reaching the limit of their usefulness for undertaking thorough consumer comparisons of mobile prepaid plans, due to the continually evolving characteristics of these plans.

So what is changing that we can’t quantitatively analyse with the OECD usage baskets? The major theme that we have noticed is the rise of the nominated numbers. This enables you to nominate certain numbers to become your “friends” list, for which there are special rates for calling or texting. Variations on the nominated number theme are offered by three of the five operators that we studied, and the way they are implemented are so diverse that it is especially difficult to compare the value offered by each. This can be seen in our attempt to summarise the various offerings below in Exhibit 3 (note all prices have been converted to New Zealand dollars and rounded to the nearest dollar).

Exhibit 3: Features of various nominated number offerings (all prices in NZD) [Source: operators’ websites]

Feature Vodafone NZ BestMate Telstra Friends Telstra Freedom Optus MyTime minutes Optus MyTime money
Dedicated plan/add-on Add-on available for one specific prepaid plan for an extra fee Dedicated plan Dedicated plan Included as a bonus with certain plans for no extra cost Included as a bonus with certain plans for no extra cost
How many nominated numbers? 1,2 or 3 5 5 5 5
Cost $6 fee per number per month Must recharge $43 for one month usage Must recharge $32 for one month (or $54 for 50 days/ $108 for 100 days usage) Number of bonus MyTime minutes awarded depends on recharge amount e.g. $32 recharge gives 100 bonus MyTime minutes, $108 recharge gives 200 bonus MyTime minutes. Expiry time of MyTime minutes depends on original prepaid plan Number of bonus MyTime money awarded depends on recharge amount e.g. $32 recharge gives $32 bonus MyTime money, $108 recharge gives $108 bonus MyTime money. Expiry time of MyTime money depends on original prepaid plan
What do I get for my money? Unlimited free talking/ texting/ video calling to nominated numbers $280 worth of calling/ texting/ MMS to nominated numbers Free calling/ texting to nominated numbers MyTime minutes can only be used for calling nominated numbers MyTime money can only be used for calling nominated numbers
Do my friends need to be on the same network as me? Yes No Yes Yes Yes
What does it cost to change my friends? $3 per number $1 per number $1 per number Free Free
How often can I change my friends? Once per month 10 times per year 10 times per year Twice each recharge Twice each recharge

So what is the attraction of these nominated number deals? From an operator’s point of view perhaps it lies in one of the most common features shown in Exhibit 3 above: that your nominated numbers must be on the same network as you. This is the case with four of the five plans (including the somewhat dubiously named Telstra Freedom plan). Only Telstra’s Friends plan allows nominated numbers from any network.

Or is it an attempt to appeal to the social networking demographic? One interesting aspect of these offerings, however, is that your chosen “friends” do not have to be reciprocal, and there is no indication of having to request whether that person in fact wants to be your “friend”, which could leave the way open for unwanted attention. If your “friend” decides they do not want to be the recipient of your unlimited calls and texts, do they have the option of dumping themselves from your nominated number list?

All of these offerings may cause more confusion for customers trying to make an already complicated decision. So, just how do you choose which nominated number deal will be the best value for money? Well if you’re in Australia, perhaps if you like to change friends regularly then Optus with its free changes would be appealing. Otherwise to find your best deal there is no getting away from the need to compare the rates based on your own usage patterns.

Notes for analysis of monthly spend:

  • prices include GST (at the rate relevant to that country) and are in New Zealand dollars
  • Australian prices were converted to New Zealand dollars using Purchasing Power Parity (PPP) rates sourced from the OECD
  • all plans were current as June 2008
  • the prices for each operator represent the plan resulting in the lowest monthly spend
  • OECD mobile baskets of usage for a low user and a high user were sourced from the report: Revised OECD Telecommunications Price Comparison Methodology.

July 2008


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