Kogan Mobile customers could be shut off due to legal dispute

A LEGAL dispute between Telstra and its only Australian wholesaler could mean Kogan Mobile customers will be left out in the cold.

KOGAN Mobile and Aldi Mobile customers might be shut off from their phone service due to a legal dispute between Telstra reseller, ispONE and Telstra.

ispONE is Australia's only Telstra wholesaler and onsells parts of the telco's network to both Aldi and Kogan Mobile customers.

Kogan Mobile today sent customers an email which has been cited by news.com.au, warning them that their service may soon be shut off due to the dispute.

The email reads: "We have fought hard for the Australian consumer - there have been endless negotiations and even the occasional visit to the Supreme Court to protect our customers' interests and ensure that our customers continue to get the best deals. However, there are forces at play in the Australian telecommunications market that are beyond our control, very powerful and impossible to ignore.

"You may be aware that we procure our mobile services for part of the Telstra 3G Network through Telstra's sole and approved distributor - ispONE. ispONE is the only company in Australia that wholesales Telstra's Prepaid 3G Services and is essential to the operation of our and any business through that network. Telstra's Prepaid 3G Network is not integrated with any other wholesale platform, other than ispONE's.

"Kogan Mobile has recently become aware of the following:

• Telstra is in dispute with ispONE, Telstra's sole distributor of prepaid 3G mobile services and Kogan Mobile's essential supplier;

• Telstra has taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE this is very likely to impact Kogan Mobile's own customers' services (through no fault of Kogan Mobile) ..."

Read Kogan's full email below.

ispONE sued Telstra in the Federal Court yesterday after Telstra threatened to "terminate" its supply of 280,000 prepaid mobile services, claiming ispONE had failed to pay its bills. ispONE countered Telstra's claim arguing that Telstra is the one who owes it money after it failed to properly disclose the price of data for its prepaid mobile services.

The parties are locked in remediation and if they fail to come to an agreement, they will be back in court at 2.45 this afternoon (AEST).

Kogan has contacted Telstra begging them not to end its contract with ispONE and encouraged its customers to do the same.

However, news.com.au has been alerted that CEO and founder Ruslan Kogan in the meantime has been sniffing around to find another network on which to run Kogan Mobile.

Ruslan Kogan, contacted one of the big three telcos to ask whether it could arrange a wholesale agreement for its prepaid mobile services last week, but was rebuffed, news.com.au has learned.

Kogan Mobile declined to comment.

The latest legal dispute comes just months after the online retailer turn telco took ispONE to court claiming it breached the terms of its contract, leading to customers being booted from the service for allegedly using their phone too much.

ispONE meanwhile sent an email to some of its commercial partners and small business customers alerting them that it is undergoing a rebrand and that it would soon be relaunching as "iboss", tech website EFTM reported.

ispONE plans to rebrand as iBoss according to an email sent to commercial and small business partners today.

It promised to offer the same service and the same team behind the scenes.

"As part of this restructure you will notice that your invoice today is sent from "iboss international pty ltd," the email read. "As our new brand, iboss will continue to deliver the sophisticated billing platform and modular telecommunications products that already enable you to achieve your business goals."

"Please bear in mind that we are sending you this information in commercial confidence".

In a statement to news.com.au, ispONE said that it "always endeavours to keep its wholesale partners well informed of the business and activity and developments within the marketplace.
"The recent communication, sent in commercial confidence, informed wholesale partners of an organisational restructure and rebrand initiative that is part of an ongoing strategy that has been in development for the past 18 months.
"The rebrand is not related to the legal issues currently undergoing mediation".

Yesterday in a statement Telstra welcomed "the court's decision to consider this matter further over the next 24 hours provided that ispONE pay into court $300,000.

"As the court has heard we are a creditor of ispONE. Over a period of several months we have given them every opportunity to develop a repayment plan for their debt but to date we have been unable to reach a satisfactory agreement. We will continue to defend the claims raised by ispONE at tomorrow's hearing. We have contingency plans in place to limit the impact on end users."

However it says it had nothing further to add.

We will post more information as it comes to light.

Full Kogan statement:

"13th August 2013

Dear Kogan Mobile Customers,

Thank you for joining us on the journey to make mobile access in Australia more affordable. We entered the mobile industry in order to increase competition and give consumers more choice and better value. Since starting Kogan Mobile, we are proud to now serve more than 115,000 active customers.

We have fought hard for the Australian consumer - there have been endless negotiations and even the occasional visit to the Supreme Court to protect our customers' interests and ensure that our customers continue to get the best deals. However, there are forces at play in the Australian telecommunications market that are beyond our control, very powerful and impossible to ignore.

You may be aware that we procure our mobile services for part of the Telstra 3G Network through Telstra's sole and approved distributor - ispONE. ispONE is the only company in Australia that wholesales Telstra's Prepaid 3G Services and is essential to the operation of our and any business through that network. Telstra's Prepaid 3G Network is not integrated with any other wholesale platform, other than ispONE's.

Since day one, Kogan Mobile has complied with all its obligations to its service providers. We keep our agreements. We have paid every invoice on time or early. Like our customers, we expect our service providers to deliver what they have been paid for.

Kogan Mobile has recently become aware of the following -

•Telstra is in dispute with ispONE, Telstra's sole distributor of prepaid 3G mobile services and Kogan Mobile's essential supplier

•Telstra has taken steps to terminate its contract with ispONE. If Telstra terminates its contract with ispONE this is very likely to impact Kogan Mobile's own customers' services (through no fault of Kogan Mobile)

•ispONE has commenced proceedings against Telstra in the Federal Court and obtained a short term injunction to restrain Telstra from terminating its contract with ispONE The Federal Court ordered Telstra and ispONE to attend mediation. Although not party to the Federal Court proceedings, Kogan Mobile is permitted to (and will) attend the mediation

Kogan Mobile is doing everything it can to protect its customers.

We are monitoring these developments closely, as they may affect the continuity of our prepaid mobile services. We will provide a further update when further information comes to hand.

You may also wish to contact Telstra directly, and ask Telstra what it intends to do in respect of its wholesale prepaid mobile business and customers' mobile telephone services if it achieves its goal of terminating its contractual arrangements with ispONE.

Kindest regards,

Kogan Mobile"

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