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Optus loses revenue trying to drive customer loyalty

Adam Bender | May 31, 2013
Bill shock revenue was "a drug that you could have relied on," says Optus chief country officier, Kevin Russell.

"It's bad business if you get bill shock," said IDC analysts Dustin Kehoe. "No one likes to be shocked for a bill and the amount of money they pay is extortion."

Optus's Russell said declining revenue in the mobile industry has perpetuated the practice of relying on breakage revenues.

"As an industry, our revenues are now declining slightly, quite steadily," he said. "And I know that the market certainly is maturing. I also know that we have big investments, whether it's spectrum or 4G infrastructure. And I know to get a return on those investments that we will have to get more money from existing customers."

"What I think's happened is we've been chasing customers, we've been driving down headline pricing, we've seen our revenues come off and we've gone, 'What do we do?' Well, we're going to have to have higher rates for breakage, and we're going to have more fees to prop it up."

However, that practice is not "sustainable" because it makes customers unhappy, Russell said. "The revenues that come through from that type of activity doesn't make sense. I estimate that in any year, about half of all customers at Optus will go through their caps and will break."

"If you've got unsustainable revenues that are upsetting your customers and their loyalty, I think you have to address them head on."

 

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