Amaysim hopes to shake up US mobile market

Australia’s Amaysim is preparing to bring its low-cost mobile virtual network operator (MVNO) model to the US, the company’s CEO has revealed.

Amaysim, which today turns three years old, now has 500,000 customers in Australia, making it the largest MVNO in the country, the company’s CEO Rolf Hansen told Computerworld Australia. Amaysim became profitable two months ago and is on track to make $100 million in revenue in the fiscal year ending June 2014, he said.

Now, the company has set its sights on expansion both at home and abroad.

Hansen and the other co-founders of Amaysim came to Australia after the success of an MVNO in Europe called Simyo. Here, Amaysim has undercut the prices of major telcos.

For about $40 monthly, customers can get 4GB of data with unlimited calls and SMS messages on the Optus network. Compare that to the leading carrier Telstra, whose cheapest BYO plan is $50 and includes only 1GB of data and $600 in call value.

Hansen cited a similar opportunity to beat the prices of US carriers. “The average smartphone invoice in the US is $92.50,” he said. “That’s the most expensive on the planet.”

Mobile data pricing: Australia vs. the world

The CEO also believes that Amaysim’s pure e-commerce model will make it successful in the US.

“There’s 189 million online shoppers in the States and there’s no single brand there offering a distinct e-commerce based proposition,” he said.

“That’s bizarre because it’s the land of Amazon, Apple [and] Expedia ... All other industries have gone full-blown e-commerce. The wireless industry is a bit of an inefficient, lagging industry.”

Hansen noted that a barrier to entering the US in the past had been the wireless industry’s use of two different wireless technologies — GSM by ATT and T-Mobile and CDMA by Verizon Wireless and Sprint Nextel. The CDMA technology does not use SIM cards, preventing customers from taking their existing handsets to other networks.

However, with new 4G services all of the telcos have gone with LTE technology that uses SIM cards.

As an MVNO, Amaysim would ride on an existing national US operator’s network. While multiple MVNOs in the US are on Sprint — including Boost Mobile and Virgin Mobile before they became wholly owned subsidiaries of Sprint — Hansen said Amaysim has reached out to all the carriers.

“Sprint has certainly deployed a strategy of saying, ‘Whoever you are, if you bring 5000 customers I’ll sign you on,’” he acknowledged. “We’ve obviously been in touch with all carriers.”

As it has done in Australia, Amaysim would initially take a selective approach to acquiring US customers.

“You’d be foolish to think you can blitz the nation with Super Bowl campaigns and become a national brand overnight,” he said.

“The beauty about a market like the US is you create the market you want to address. You can pick your Australia within the US ... You can absolutely be a national brand without ever advertising in New York.”

Hansen said Amaysim has not set a date for moving into the US. “It’s all in flux. It all depends on maturity [and] set up. We’re entrepreneurs and we’re moving fast if we see an opportunity. We’re still at the stage of sizing it.”

“But we usually don’t muck around if we think [a market is] ready for the picking.”

In addition to the US, Amaysim is also eyeing expansion into mainland China, Hansen said. “There’s ways of introducing this cost efficient model into the Chinese market at a certain stage.”

Hansen assured us that the company’s international ambitions won’t see Amaysim losing focus on Australia. Amaysim plans to its headquarters in Australia, setting up an American office of about 50 people, he said. The CEO added that he has just become a permanent resident and personally intends to stay in Sydney.

“Australia is a beautiful asset that is growing very fast and we’ll definitely not take our hands off it. But we’ve organised ourselves in a way where we can now continue to deliver great customer service and value to Australians, but also hopefully helping other people on the planet getting the same experience.”

Next page: 4G coming to Australia?

Page Break

4G possible in 2014

Hansen, who last year said 4G is no “slam dunk”, said he continues to believe the higher speed services are not yet “a true mass-market proposition.”

However, there is no technical barrier precluding Amaysim from selling 4G services over the Optus network, he said. “It’s more so a commercial decision.”

“We think sometime in 2014 could be the time for us to look into it and to switch into it. We’re looking at different options of whether we change our plans and go into tiered data or whether the one-size-fits-all is the way to go.”

4G in Australia: The state of the nation

“We’re not rushing into it because we’ve got such a tremendous run on 3G right now. What we think is, for most Aussies for the next 12 to 18 months, 3G will still be the dominant choice because of handset availability.”

Before then, Amaysim is exploring the possibility offering periodic repayment style smartphone deals through a partner, Hansen said. As a BYO company, the telco has so far missed out on customers who are unwilling to pay a large amount upfront to buy a smartphone outright, he said.

Customers don’t like being locked into contracts, but do like having the option of financing devices over a 12- or 24-month period, he said. “That’s something that could be on our list,” he said.

Amaysim has no plans to sell devices directly, Hansen said. The company has a partnership with phone seller MobiCity and would find another partner for the financing offer, he said.

While Amaysim is closely watching the rollout of the NBN, Hansen said the company has historically avoided selling fixed wireline broadband services because of the high cost and complexity involved.

“We are wireless people and I see in the future a player like us could have quite a targeted role ... of offering wireless broadband versus getting bothered about fixed line.”

Amaysim this year has steered clear the of turmoil and consolidation in the wider MVNO sector. This year has seen the collapse of low-cost providers Kogan Mobile and Woolworths Mobile, as well as the acquisition of Live Connected by Vaya Wireless.

A sale of Amaysim is not in the company’s immediate future, said Hansen. Rather, the company’s focus over the next year will be on driving greater awareness of the company through increased advertising and improving its apps and online customer support, he said.

“We’re far away from any fire sale situation here because we are still growing so fast ... I want to ride that wave for a while.”

Follow Adam Bender on Twitter: @WatchAdam Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Copyright © 2013 IDG Communications, Inc.

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