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Vodafone has abandoned plans to ditch its new cheap data plans on December 31, after a stunning response to the 5GB for $39 per month offer since it was rolled out as a year-end special on December 7. The company says the plans are responsible for a threefold increase in data connections.
In a move that represents the first crack in Australian carriers' stubborn defence of outrageous data prices, a spokesman for Vodafone said yesterday that the $39 plan would "roll into next year" and the company "will ensure we remain competitive" in the market."

We've drawn a line in the sand on data prices," PR spokesman Dominic Hilton-Foster told me today, "and those plans will be continued after the new year." He said the company will look at its prices later in the year, in the context of new offerings from its competitors. Hutchison's 3 network, Optus, Virgin and Telstra have all cut their data prices at least temporarily, in a direct response to the Vodafone plan.

According to Hilton-Foster, Vodafone was "pretty happy" about the level of response to the new data plan, which includes either a free Mobile Connect USB modem or E800 Expresscard ($299 RRP), on a 24-month contract. "It's very clear that these prices have hit the sweet spot with customers," he said.

Vodafone Australia's data marketing manager, Tim Cowan, described the 5GB plan as a breakthrough which "ends the traditional view that mobile broadband is the exclusive domain of business customers". It replaced Vodafone's earlier "high-volume" plans of $79.95 a month for 2GB, and $69.95 for 1GB.

But telecoms analyst Paul Budde - who predicted earlier that Vodafone would have problems discontinuing the new packages - sees it as a long overdue acknowledgment that local mobile companies have been "getting nowhere" with recruiting mobile data customers.

"Mobile operators have been trying portals, offering content deals etc., and completely failing," he said, "because the consumer simply will not accept the current open-ended charging regime.
"They're not prepared to sign up for something when they have absolutely no idea how much they will pay for it. We've all heard shock stories of people being hit with bills of $900 or $1800 a month, and people are very worried about using these portals." CONTINUED




 While he described Telstra as the worst example - "their prices are so outrageously high" - Budde says that all the mobile operators have been protecting each other. "They haven't wanted to rock the boat because they're terrified of losing $1 to $2 billion in annual SMS charges. They've seen what's happened in Japan. There's no SMS business there, because everyone sends mobile emails.

"The other threat that's on their mind is once people can go to the Internet, they can use Skype and other VoIP services. That’s the other money element. The amount of revenue that the operators get from calls is gigantic, and if you bypass the mobile phone system through Skype, the price difference is so huge, compared to fixed calls. They are scared to death that they will lose a significant part of their revenue.

His survey of the European mobile scene indicated the first cracks in that market only a year ago, with Vodafone's voluntary agreement to cut outrageous roaming charges.

He says that with Optus and Vodafone announcing national HSDPA (High Speed Download Packet Access) coverage by the end of next year, the industry faced major competition to grow the market. The whole mobile market is about money, not about data. "This business is totally price driven. If you price yourself above the others, you are going to miss out." He said that the last 10 years had seen only marginal changes in the mobile market, and if operators were serious about entering the mobile data market, something has to be done."

The iPhone and Google's Open Handset Alliance has also put pressure on the Australian market. With a 3G version of the iPhone expected in the next 12 months, Australians would be faced with the realisation that they simply would not be able to afford to use the glamour devices in the same way as American owners. AT&T's monthly plans for iPhone customers starts at $59.99 - but that includes unlimited data, 450 minutes of voice traffic, 200 SMS messages, and 5000 minutes of voice traffic on nights and weekends.

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