Value over data: Vodafone's bid to redefine 'premium'

Vodafone’s new plans push extra services and added value over larger data allowances. But if it doesn’t sell this point properly, it could backfire badly.

There is no denying that there is a gap in the upper section of Australia’s telco market for premium mobile plans with generous data allowances. The likes of Telstra and Optus only supply a couple of gigabytes of data with their most of their higher range plans.

So, when Vodafone, the telco that is perhaps trying the hardest to win back consumers through crowd-pleasing tactics, announced that it was releasing new ‘premium’ plans, one would assume they are trying to tackle this weakness in the market. Well, apparently not.

Vodafone’s new plans bank on the idea that consumers would opts for extra services and other value adds rather than larger data allowances. It’s the opposite approach to that of the virtual operator space, where many players are trying to offer comparatively large data caps for significantly less cost to tempt consumers off the major players.

Starting at $65 per month –including a handset repayment – customers get infinite voice and text messages, but are hamstrung with only 1.5GB of mobile data on a 4G mobile plan. The plans range up to 5GB per month on a $100, and if that’s not enough Vodafone customers can also pay for a data pack, which starts at 1GB for an extra $10 per month. They’re available with any Vodafone plan.

Analysts were critical of the deals. Informa telco analyst Tony Brown said the plan’s data allowance to be surprisingly limited given that industry's ongoing focus on mobile data. Telecommunications consultant and analyst, Tony Simmons agreed, adding that he can’t imagine a situation where consumers would really need “infinite” voice and text messages - other than in the small to medium enterprise space.

But here’s the add-ons that Vodafone thinks you’ll opt for instead of more data:

  • Express access to local phone-based customer service if there’s a problem.
  • The ability to make as many calls or texts as you like while overseas in the US, UK and New Zealand (both in the visiting country and to Australia) for just $5 per day.
  • They plans are not limited to consumers. The telco confirmed that SME’s can also take-up a Red plan with no repercussions or disconnections from Vodafone. Though companies may want to double check whether they qualify as a SME in Vodafone’s eyes before they rush onto this deal.
  • And if you bring your own device, the price of the plan goes down by $15 per month and has no lock-in clause.

Perhaps the real hidden bonus with its premium offering is that Vodafone’s still considering ways to add to it.

Aside from adding more countries to its roaming agenda, over the course of the trip, Morrow hinted that he’s keeping a close eye on the US telco market, in particular, T-Mobile.

To put this comment in context: T-Mobile is in a similar position to Vodafone, in that it’s seeking to win back customers from the US telco duopoly of AT&T and Verizon.

In order to do this, T-Mobile recently rolled out a rather radical strategy: it announced that it would allow its customers to upgrade their handsets on a six-month basis, rather than locking them into a two year contact. Now, T-Mobile customers just pay a reduced down payment to upgrade rather than waiting for their existing plan to expire.

The plan makes sense given that new handsets are coming out the woodwork every couple of months, and in a vote of confidence on the move, AT&T recently adopted the tactic as well.

There’s nothing to say whether Vodafone will act on Morrow’s musings, but the move makes sense.

Vodafone’s looked into excess data charges, it’s chipping away at international roaming costs; being contractually locked into using old devices is one concern that Vodafone is yet to conquer.

Along with its other perks, a device plan play, could give Vodafone a serious advantage against Optus and, more importantly, Telstra. And as for targeting the virtual operator space, it’s arguable that consumers are just as concerned about accessing the newest technologies as they are about data allowances.

That being said, none of this padding matters if Vodafone’s network isn’t up to scratch. And Vodafone knows it.

The company’s chief marketing officer, Kim Clarke clarified that if Vodafone’s refreshed network, which is still a work in progress, didn’t cover a consumer’s home, office or place that they “play” then they were advised to seek other providers.

According to Clarke, rather than lock customers in, Vodafone would rather let them choose an alternative. It’s a move towards transparency and honesty that Vodafone hopes will address the negativity around its brand.

Time will tell whether this strategy of short-term pain for long term gain makes a dent on public sentiment. But if Vodafone is able to rehabilitate its network ahead of schedule then the gains might come sooner than expected.

Perhaps the more immediate concern will be communicating the added value of its new plans. Many consumers will likely look at the headline figures and immediately question what their getting for their money.

Vodafone’s redefining what the term ‘premium’ means in the telco space, but if it doesn’t sell this point properly, it could backfire on them.

Harrison Polites travelled to New Zealand as a guest of Vodafone Australia and Virgin Airlines Australia.

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