There are fewer more challenging tasks than evaluating a mobile phone plan. 
 
Story Brett Winterford Illustration Dean Gorissen 
 
Mobile phone plans are notoriously complex, with extras and options in bold font attached to pages of terms and conditions in fine print - the culmination of which can either save you significantly or cost you exorbitantly. 
 
The bad news is that there is no silver bullet to save you money on bills. There is no single plan or carrier that rises above the others in value terms. Mobile telephony is expensive in Australia, as those carriers that have invested in covering our vast territories demand a strong return. 
 
The good news is that a well-informed decision can save you significantly, particularly if you have a thorough understanding of your organisation’s current and future needs. 
 
DO YOUR RESEARCH 
The mobile phone is very much a consumer device – a personal statement as much as a tool of business. 
 
As such, says industry analysts Gartner’s research director Robin Simpson, many organisations don’t actively manage their mobile phones as a fleet in the same way they might manage cars or personal computers. 
 
“Phones are purchased through the purchasing officer or by individuals themselves on an ad hoc basis and calls are expensed through filling out an expenses form,” says Simpson. “There is no real formal tracking of devices and no appreciation of how employees are using them.” 
 
Without a central point of management for mobile phones and billing, there is rarely one person able to make well-informed choices around mobile plans. 
 
Costs can blow out, devices can be purchased on the basis of consumer-tech features irrelevant to the business and a lack of policy can lead to misunderstandings between management and staff over what constitutes fair use when the expenses form comes in. 
 
When choosing a plan, it is important that there is a person who has studied the last six months of mobile telecommunications invoices – with an awareness of the average spend of users, the type and length of calls, what times those calls are made and the use of other services such as SMS and call diverts. 
 
“What we advise is that until you have a clear understanding of who is using what device in the organisation and when, you don’t have any good metrics to talk to the telcos about to negotiate better rates,” says Simpson. 
 
So agrees Terry Halward, a telecommunications stalwart of several decades, who now works for Expense Reduction Analysts – a consultancy devoted entirely to helping a firm cut down on variable costs. 
 
“Even for an individual user with 24 months at an average of $100 a month, it’s close to two and a half grand you will spend over the course of a mobile contract,” Halward says. “Surely that is worth a little analysis!” 
 
HANDSET POLICY 
Mobile plans are intricately linked with the handsets provided with them. Mobile phone carriers tend to promote the device above the plan, as it is a far more attractive selling proposition to market a flashy piece of gadgetry than to talk rates. 
 
When choosing handsets, its important to remember that nothing comes for free. The costs of the handset will always be built in to the plans and call charges. 
 
As a general rule, the carriers will use the lure of better handsets to commit users to higher minimum spends. 
 
From a cost perspective, this should not drive the decision when there are handsets available on cheaper plans that can do the job. 
 
When a business commits to a given monthly spend on mobile telephony with a carrier, most plans offer what is loosely termed a technology fund for the purchasing of handsets. 
 
This means that for every x dollars a business commits to per month, a given (sometimes equivalent) amount of money will be offered by the carrier to spend on the handsets used under that plan. 
 
Technology fund options vary wildly. In many of Telstra’s plans for example, the structure is fairly rigid – phone choices are limited at lower minimum spends and wider at higher ones. Hutchison 3’s business plans offer handsets for nil, with the price of the device reflected within the call rates. 
 
Others allow flexibility to cater for the different device needs of employees. Using Vodafone’s business plans, a small business can provide their own handsets or sign to 12 and 24 month contracts to be granted a technology fund. A business that commits to a $999 per month minimum spend with Vodafone, for example, shares $5000 worth of included calls between 10-25 users and also access to a $5000 technology fund which can be used across a wide range of handsets. That might equate to five Blackberry-equipped phones, or eight to 10 standard phones. 
 
“A handset policy needs to relate to the kind of job an individual has,” says Simpson. “A senior executive can get away with the push-email of a Blackberry. A logistics worker might only need SMS. Outbound staff might need lots of data bandwidth, great coverage and a full-function device.” The advantage of a flexible technology fund is that the business can grow or shrink without being penalised. The customer, says Vodafone’s Martin Chadband, “won’t be paying for any SIM cards they aren’t using nor any termination fee like they would on a tariff-based plan”. 
 
For those with a fixed technology fund, Halward advises not to spend the entire amount right away, as some handsets will need replacing and roles within the organisation will change. 
 
He also advises to look for a common end-date for plans across the fleet. 
 
COVERAGE 
Another key aspect of choosing a plan is coverage. Generally speaking, it is on the issue of coverage that the incumbent mobile providers maintain healthy market share in the business sector at the expense of cheaper rivals. 
 
Coverage should be the most important factor in a purchasing decision, argues Telstra Business executive director Phil Wise, in order to conduct business with confidence. 
 
“Mobile is supposed to deliver you your customers, wherever you are,” he says. Telstra relies to a large degree on uncertainty around the coverage of its smaller competitors. Organisations that insist on always-on connectivity will pay a premium for the peace of mind. 
 
In time, this uncertainty is likely to be less of an issue as new operators invest in strengthening their own infrastructure or buy access to a greater number of towers. “Generally we do have very good coverage, but there will always be black spots for any network,” says Chadband. “This year [Vodafone] are spending another $300 million on coverage alone.” 
 
For those customers concerned about coverage, Halward offers an easy solution. He says insist on asking the account manager at any potential new carrier for a pre-paid SIM card to test the coverage. “It’s not unreasonable to ask for $30 of pre-paid credit,” he says. “You can put the SIM card in your existing devices, and for a week or so test the coverage when in the office, when at home, when at the office of suppliers and key clients and make sure it works for you.” 
 
All the carriers Charter surveyed for this feature said they would be happy to provide a test SIM to any new potential business customer. 
 
PLANS 
Mobile telephony providers have often overlooked the small business market when formulating plans. 
 
At the top end of town, the purchasing power of the large enterprise allows its buyers to negotiate simpler, per-minute rates across large fleets. 
 
“The closer you get to consumer plans, the more complex the plans become,” Halwood says. “There are more options, caps, hidden extras. Generally, the more complex it is, the more potential for smoke and mirrors. You have to do more work as a small business to determine whether you are getting value for money.” 
 
For many SOHO and micro businesses, a lack of other options have attracted them to use consumer plans instead, even if the features and pricing wasn’t geared towards business use. 
 
Simpson says that the likes of Telstra and Optus have “never really targeted the small business area properly”, but both have of late started to take the small business market more seriously. 
 
The incumbent’s Telstra Business division has formulated mobile plans for sole proprietors, micro businesses with 2-4 staff and small businesses with 5+ staff. Optus also kicked off its SMB business just over two years ago for customers with less than 200 staff. 
 
“It was born of a recognition that small business is a big market that has its own needs and requirements,” says Mark Williamson, director of sales at Optus. At the other end of the market, consumer carrier 3 is “starting to realise that small business and SOHO can take advantage of their plans, particularly on price,” Simpson says. 
 
Michael Cheshire, general manager of business sales at 3 says that the carrier has since identified that a high proportion of its consumer customer base is actually small businesses taking advantage of the aggressive pricing on data in 3’s higher-end plans. 
 
“The small business market will be an area of focus for us over the next 12 months,” he says. 
 
The other major player is Vodafone. “Vodafone has got a lot more serious about cap plans that fit a small business rather than a consumer,” Simpson notes. Vodafone was one of the first among the mobile operators to realise the value of aggregated spend across a small fleet of mobile phones. 
 
Aggregated spend allows a business to aggregate a shared pool of call minutes or call value over multiple users. 
 
Vodafone has six different business cap plans, for example, in which minutes can be shared among employees. The plans were introduced in 2004, says Chadband, to account for the fact that small businesses tend to grow and change in terms of staff numbers. 
 
“It’s a very good idea to have an aggregated call spend across the fleet,” Halward said. “That way, if any staff are on leave or sick or if there is any reason why they aren’t using their mobile for a month their spend can be used by others within the organisation.” 
 
All the major mobile operators now offer some kind of aggregated spend plans for their small business customers. 
 
“When you have several staff, some tend to be big spenders and some small,” says Telstra’s Wise. “If you are a partner in an accounting firm that does on-site audit work, you tend to spend quite a bit of time on your mobile. But if you are the office admin person who barely leaves the office, you don’t. We allow you to share the included calls between all of these staff.” 
 
AVOIDING THE PITFALLS 
Aside from choosing a plan with aggregated spend across the business, Halward says the best option for any business is to try and keep plans as simple as possible and not fall into the trap of being diverted by extras and options. 
 
The main focus when it comes to the pricing plan should be around reducing call rates and flag falls. 
 
Unfortunately, it’s usually only the big business end of town that gets to negotiate purely on these terms. 
 
For the rest of the market, it’s simply important to remember that nothing comes for free. Buyers need to approach plans with the mindset that $100 worth of free calls is not free at all. It is $100 of paid, included calls, at rates that need your full attention. Halward says buyers should cast a wary eye over the multiple free options whether it’s the number of free or discounted calls to other mobile users using the same carrier or free calls within the fleet. 
 
“You need to determine how many people you regularly call that are on those handsets or what percentage of calls are made within your fleet,” he said. “You might spend a lot less on these calls than you realize – sometimes only 5 or 10 per cent. You would be better off negotiating a better rate for calls to mobiles.Simpson also warns buyers to “look at the lifetime of the contract rather than what you pay upfront.”Practices should also be looking to minimise flag fall costs if not avoid them altogether. 
 
“Compared to calls made on fixed lines, mobile calls always tend to be shorter,” says Halward. “Avoiding the flag-fall can give you substantial savings.” Generally, off-the-shelf plans will always include flag-falls – but some will strip it off the plan as a bonus option. Halward also advises customers to avoid paying for calls in per-30 second or perminute blocks. 
 
“Our recommendation is that you insist on being charged on a per second basis, as most mobile calls are short,” Halward says. “Our research shows that it tends to be 10 per cent more expensive if charged on a per 30-second basis. You should only be paying for the calls you are making.” Vodafone, Telstra and Optus all offerselected plans for businesses that include calls billed on a per-second basis. 
 
QUESTIONING CAPS 
Most mobile plans that include a minimum spending commitment tend to be termed capped plans. These plans commits a customer to, for example, a given spend per month (such as $100) so long as they do not exceed a far higher value of calls (say, $500). 
 
These plans often appeal to the costconscious business not for the value they represent, but the peace of mind that comes with them. 
 
“For any small business, your least predictable monthly expense is communications,” says Simpson. “The attraction of the cap plan is the predictable monthly bill.” 
 
Chadband says that capped plans have been received well within the small business market. “It gives certainty of costs each month instead of worrying about analyzing the use of individual staff.” But Halward argues that this peace of mind comes at a price. He believes these plans should not even be allowed to be marketed as being capped, as the minimum spend is by no means fixed. 
 
“In my opinion, that is not a cap at all,” he says. “It’s merely a different way of saying that there is a higher number of included calls. It’s reassurance that you won’t spend any more than a certain amount per month, within certain limits. But what cost does that reassurance come at? You’re paying for it. And what real re-assurance are you getting? Where’s the cap on it? I even think it’s a potential trade practices issue.” He says some of these so-called capped plans have call rates as high as 90c a minute and flag falls of 35c – well above the market average. 
 
Halward says the caps only really provide value if you use most of the included call value and not a second or dollar over. “If you were using all of the available calls, you might be paying 18c per minute, which is a good rate,” he said. “But most people don’t spend anything like that. If they only made $200 worth of included calls, they are spending 45c per minute – and that’s not a good rate at all.”