Kogan Mobile's response to Telstra's response

Kogan Mobile's response to Telstra's response

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Yesterday, people may have seen a communication from Telstra responding to Kogan Mobile in relation to Telstra’s disconnection of Kogan Mobile’s customers. We are concerned at the misinformation and confusion that may arise as a result of Telstra’s communication.

Telstra indicated that it is “prepared to enter into direct arrangements with both Kogan and Medion (who supply ALDImobile) on commercial terms”.

This is news to Kogan Mobile, and is music to our ears. The only problem is that we’re not too sure it’s actually true.  

At Kogan, we believe in an open and transparent marketplace. If Telstra is truly prepared to enter into a direct arrangement with Kogan on “commercial terms”, we invite Telstra to be open and transparent with the Australian public by disclosing the rates and terms on which it is prepared to supply Kogan. We have no skeletons in our closet.

The reality is that to date, Kogan Mobile has not received even remotely “commercial”, let alone competitive, terms of direct supply.  Kogan Mobile has done everything possible to protect its customers: if commercial terms of continued supply were available, of course Kogan Mobile would have taken them up, and still will.

We also invite Telstra to publicly disclose whether there is any enabler or platform operator, other than ispONE (now in administration) - Telstra’s sole distributor of prepaid 3G mobile services - that is currently able to provide enablement, platform and billing services in respect of the Telstra 3G Prepaid Platform.

We also invite Telstra to publicly disclose whether it has in any way induced, facilitated, or otherwise participated in or profited from the entry by ispONE into a sale contract in respect of the transfer of its assets (including the sole platform and billing system which is integrated with the Telstra Prepaid 3G Network) in the days, hours or minutes prior to ispONE appointing voluntary administrators.

In its communication, Telstra refers to Kogan’s “decision to no longer provide services” to its customers.  Kogan Mobile made no such “decision”.  As Telstra well knows, Telstra terminated its supply arrangements with ispONE with the knowledge that this would result in the loss of service to Kogan Mobile and its customers.  We invite Telstra to specify in detail what “decision” it believes Kogan could have made to continue to provide services, and which alternate enabler, platform and billing system is able to operate on Telstra’s 3G Prepaid Platform.  

Kogan Mobile keeps its agreements.  We have paid every bill on time or early, and kept every obligation we owed.  Despite this, our growing mobile business was eliminated as a result of “decisions” made by our upstream providers, not us.

Does Telstra envisage that Kogan could have sought to participate in and profit from, the entry into the sale contract in respect of ispONE’s assets in the days, hours or minutes prior to ispONE appointing voluntary administrators, and after Telstra’s own legal counsel publicly branded ispONE as “hopelessly insolvent”?

The fact of the situation is that, not long after a meeting with representatives of Kogan Mobile, the newly appointed administrators of ispONE, Ferrier Hodgson, announced that they have extended a sale process in respect of ispONE’s assets, contrary to a sale contract entered into the lead up to their appointment.

Kogan Mobile raised concerns that this sale contract was entered into in circumstances where:

  1. ispONE was alleged by Telstra’s counsel to be insolvent in public Court proceedings;
  2. ispONE was involved in court proceedings with Telstra in which ispONE sought to permanently restrain Telstra from terminating its supply contract in relation to the pre-paid mobile services;
  3. it seems that no open, competitive process was undertaken for the sale of ispONE’s business or assets in its dying days; and
  4. settlement under the sale contract was scheduled to take place within days of the appointment of the administrators.

We also invite Telstra to publicly disclose the circumstances surrounding how, on the morning of 19 August 2013, minutes before ispONE’s appointment of administrators, ispONE and Telstra signed consent orders dissolving injunctions granted by the Federal Court of Australia, and disposing of a proceeding on foot between ispONE and Telstra, in which Telstra was alleged to have:

  1. breached its contract with ispONE
  2. engaged in unconscionable conduct and
  3. engaged in misleading and deceptive conduct.

Justice Pagone of the Federal Court held that ispONE’s claims against Telstra had a sufficient basis to justify an injunction. In particular, we invite Telstra to publicly disclose what associated agreements, arrangements or understandings Telstra entered into in connection with the dismissal of the Federal Court proceedings brought by ispONE in the minutes before administrators were appointed.  

Finally, Telstra refers to its “leading role in the highly competitive” mobiles market.  In light of that statement, we ask Telstra to explain why it established ispONE as its sole distributor of Prepaid 3G mobile services? Why did it establish terms with ispONE that were seemingly doomed to commercial failure? Why was there only one supply channel to market? And why did Telstra act to terminate ispONE without establishing an alternate channel of supply?

We also invite Telstra to publicly respond to the written communication from ispONE to Kogan, in which ispONE stated:

"We are lacking ... (Telstra) support right now due to the in-market pricing - (Telstra) simply see Kogan Mobile as gutting the market with ispONE support and not willing to support"

Does Telstra accept ispONE's allegation that it ceased "supporting" ispONE due to concerns that Kogan Mobile's retail pricing was too cheap?  

We hope and expect that Telstra will come clean with the Australian public, and Kogan Mobile’s 120,000 customers on these matters. In the absence of public responses to the above questions, we respectfully say to Telstra that it cannot legitimately say that it is “concerned at the misinformation and confusion” surrounding these affairs.

Finally, to Telstra’s Managing Director, Mr Stuart Lee, who authored yesterday’s communication we ask this simple question – if you are truly and sincerely “concerned” about the 120,000 customers using your network via Kogan Mobile, then you ought certainly be willing to disclose to these customers whether your concerns were important enough to prompt you to personally attend a single meeting with Kogan to discuss these affairs, or perhaps even whether you were concerned enough to enter into or be copied on a single piece of communication with Kogan concerning Telstra’s actions which impact all of Kogan’s customers. We believe that the 120,000 customers and the Australian public deserve to know the true depth of your “concerns”.

This response is authored and published by Kogan Mobile Pty Ltd
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