This is interesting:
Mobile phones: Crazy John's to quit the Trujillo stable
By Garry Barker
September 8, 2005
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Fuel has been added to the fire at Telstra with news that Crazy John's, the telco's biggest mobile phone dealer, plans to jump ship in 2007.
Crazy John's will start buying its air time from the best wholesale source and serving its own customers instead of handing them over to Telstra.
In industry jargon, this will make Crazy John's a mobile virtual network operator (MVNO).
The company's 500,000 customers provide about 10 per cent of Telstra's mobile revenue.
The founder of Crazy John's, John Ilhan, Australia's richest man under 40, said he was making the move because he was "fed up with Telstra's bullying".
"[Telstra] isn't competitive any longer. We need the flexibility to deliver to our customers what they want so that we can respond better than we now can to the red-hot competition we face."
While Mr Ilhan and his managing director, Brendan Fleiter, say their plans are well advanced, they are not expected to move until 2007, when Crazy John's contract with Telstra runs out.
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AdvertisementMobile virtual networks are flourishing in the US and Europe, operated by companies such as 7-Eleven and Radio Shack in the US and Britain's Carphone Warehouse, the biggest independent mobile company in Europe.
In Australia, the biggest MVNO is Virgin Mobile, which has about 2 per cent of the mobile market.
Early in the development of the MVNO model in Australia, carriers were cautious about selling air time for fear the newcomers would poach customers.
Now that the mobile market is close to saturation and migration to 3G networks is proceeding slowly, carrier attitudes appear to be changing.
Optus and Vodafone are thought to be keen to supply Crazy John's with network capacity in both GSM and 3G. Adopting 3G will make it possible for Crazy John's to supply more services.
Perhaps also influencing Mr Ilhan's view of Telstra is Crazy John's legal action against the company for the return of $21 million it claims Telstra improperly demanded as overpaid trailing commission.
Crazy John's has alleged Telstra's billing system is not accurate enough.
"Telstra is losing market share and our revenue is suffering because of it," Mr Ilhan said. "We have the brand and we have the market segments that make operating our own network the logical move for us."
Market segmentation is an important part of the MVNO model.
Crazy John's already has distinct segments in its customer base. It is very strong, for example, among tradespeople and says it knows what they want and how to deliver it to them.
Companies such as Ericsson now offer online real-time billing services capable of handling automated pre- paid or post-paid mobile systems from hubs in the US, Singapore and Europe.
Using such a service would keep Crazy John's back-office overheads relatively small.
PEO
people telecom limited
