iCrapPlan

Mark Pesce and Stilgherrian are talking about starting their own telco. More power to 'em, I say, but I suspect they're in for a rude shock. Running a telco isn't as easy as it looks. The big telcos make it look harder than it is through beurocracy, but it's still hard.

They talk about creating an MVNO -- a white-label mobile operator using someone else's network. The problem is that the deals you get as an MVNO without much volume just aren't very good, which is why there aren't any out there offering particularly good plans. I use an MVNO myself (and work for another) run by an ISP who I don't use, becausde their plans just happen to match my usage profile: not many calls, a moderate amount of texts, and lots of short calls and texts between me and my partner, which are free. I can guarantee you Exetel aren't making a lot out of me.

The basic problem with the MVNOs is that the wholesaling operator doesn't want to canibalise their high-profit areas. They'll structure the deal so that you can't offer deals attractive to their most profitable customers.

Mark is annoyed that all the iPhone plans come with piddling amounts of data, and punitive over-quote data rates. But if you get one of their "data" deals, where you plug a USB thingy into your laptop you can get mobile data at much better rates. I'll explain why they do this below, but the big secret they don't want you to know is that those things are just mobile phones. I've heard that with some providers you can actually stick them in a phone and use them, even for voice.

Virgin also offers a "fixed" broadband wireless service over the Optus network with pretty generous voice and data plans. Quite an attractive deal, except for the problems that are being reported with it. You can't use it in a mobile context though, which would massively help them in terms of planning their network upgrades.

So why do telcos have different data prices for handsets and data cards? The reasons are segmentation and mobility. With data cards, they can sell you another service on top of your mobile plan -- you'll notice the most attractive deals require you to also have a mobile with them. Another of the secrets they don't want you to know is that you can use your 3G mobile for internet access on your computer via Bluetooth. It works just fine, except for the punitive data prices on your mobile SIM.

The other issue is mobility. Despite the fact that with a mobile data card, you can travel down the highway using it, most use it in a familiar context. Sitting down somewhere and not moving. This makes it quite a bit easier to plan for, whereas if everyone was whizzing around from cell to cell using prodigious amounts of data, it'd get quite hard for them.

You have to remember, this is an industry used to making 25c out of something that costs them, effectively, nothing. SMS uses spare capacity on the network yet makes them a fortune. They see data as the next cash cow. If they started offering phone+data plans, they think they'll lose all the people using those data cards switching to just using their phone.

Another part of the problem is that users want a "free" or subsidised phone. Where do you think they claw back that money? So the real solution for you would be to buy the phone outright, and sign up for one of the more attractive non-iPhone plans. Possibly even with 3, assuming you're not going to be using data outside the capital cities.

PS: Mark and Stilgherrian, get in touch when you've realised that you can't be a telco without a billing system and customer service setup. And that both such things are very hard. Then I'll clue you into some of the other hard parts. But good luck. If you make it happen, I'll be one of your first customers.