Subsidies the new battleground

HAVING only just recovered from the upheaval associated with the implementation of mobile phone number portability, Australia’s mobile carriers are set to lock horns in the New Year with the abolition of handset subsidies.

Believed by some commentators to be the two biggest events in the history of the mobile industry, the phasing out of subsidies marks a maturation of the industry in Australia.

Vodafone, Telstra and Optus have announced an end to subsidising handsets, which made possible zero dollar mobile plans. Under such plans the cost of the handset is contained within a lengthy contract. In January the carriers will begin to offer deals where the call charges and handset costs are separate.

Telstra corporate affairs manager Chris Newlan said the exact nature of the plans hadn’t yet been finalised, but it would include financing options for new mobile customers.

“The abolition of the subsidies doesn’t mean customers will have to pay for handsets up front,” he said.

“Telstra is considering a range of financing options to ensure customers can purchase a mobile phone.

“What it means for customers is simpler contracts, which separate the call charges from the handset price.”

The carriers are following a global trend whereby mobile phone markets in the US, South America, Asia and parts of Europe are phasing out subsidies as mobile phone ownership has increased dramatically in recent years.

“Mobile phone subsidies have served their purpose in ensuring more Australians can own a mobile phone,” Mr Newlan told Business News.

Approximately 65 per cent of the population own a mobile and that has eroded the consumer and business case for mobile subsidies.”

The big three carriers believe the market is reaching saturation point, with consumers who were planning to buy a mobile phone having already done so.

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