Staff Reporter

This follows pressure from Vodafone and Midlands distributor Project Telecom who convinced Customs that such a policy would have caused chaos in the industry.

It would have meant distributors paying VAT on handsets at full price even though they were given away and sold for nominal amounts.

We and other retailers would have had to pay VAT on income we never received. In some cases we would have had to pay VAT on double our turnover said Gael Clarke of Project Telecom in the Midlands.

Customs bosses had a draft document ready to go. Local VAT officers had already threatened mobile phone distributors with crippling assessments.

This was an industry issue. If Customs had brought in their new policy many smaller retailers would have gone out of business she said.

Backed by Vodafone Project Telecom and its accountants Deloitte & Touche met with senior Customs policy makers. Vodafone also wrote to the Treasury and Department of Trade and Industry.

Although they initially appeared to have made up their minds Customs have in this case demonstrated they were genuinely concerned with the commercial impact of their policy said Clarke.

In a recent VAT case against Thorn EMI Customs and Excise argued that free mobile phones provided by Radio Rentals should be treated as gifts. This would mean paying the full VAT on the original cost.

Customs & Excise lost the case. But they have been trying to assess dealers for the same amount of VAT by attributing a value on the action of the subscriber signing a contract and assessing this as the difference between the phones real cost and the price paid by the end-user.

Customs & Excise has now confirmed that the original interpretation of the Thorn case Judgement that free or discounted phones are not gifts would stand and that they would only seek to collect VAT on the actual selling price.

A trade source says Cellnet was given every opportunity to avoid this embarrassing failure but were unable or unwilling to complete.

Apparently DX sales managers have been told to terminate their Cellnet accounts and are receiving new Nokia kit direct from Orange.

DX spokesperson Paul Drury said:

DX policy is to offer an impartial service. When it came to reviewing the network that would provide our corporate communications DX asked a number of companies to quote for the business. It was Orange which came up with the best solution for the companys current needs. We are delighted to enter a deal with them that initially involves just 55 phones. To put it in perspective however DX last month connected more than 20000 new customers to all four networks. The relationship with Cellnet is as strong as ever.

Added Orange sales director Gareth Jones:

Orange has an improving relationship with DX Comms and as such it is natural that Orange will be part of their business portfolio because of the strength of our business offering.

He told Mobile News:

I wanted to leave. I had been there six years and had become very tired. They offered me something else and a few options but nothing I thought was suitable or challenging.

I needed a rest and time to recuperate. Im not doing anything in November and December except having a rest and getting fit. They (John and Brian Caudwell) have been incredibly professional and gentlemanly and Ive got nothing but good things to say about them.

A statement from the Caudwell Group Board added:

We are very grateful for the contribution John has made to the development of the distribution business during his time and wish him all the best in the future.

Another two dealers have had their positions of Good Standing restored following successful appeals to the FCS Board.

The six banned dealers are Pankaj Pabari (Lexus Telecom 163 Green Street London) Anjad Mahood (Sunrise Communications 163 Killinghall Road Bradford) Mohammed Ateek Rashid (Talking Phones Communication Centre 233 Hollins Road Oldham) Gail West (Town & Country Trading t/a The Fone Factory The Green Guiseley) William Adcock (Direct Phones 2a Lady Lane Leeds) and John Newton (Elite Business Systems Mansfield 141 Nottingham Road Mansfield).

Elite Business Systems (Mansfield) has no connection with with Orange distributor Elite Business Systems in Northampton. Trading between the two companies stopped in May after Elite Business Systems (Mansfield) broke the terms of its license to use the EBS name.

Dealers restored to Good Standing are Christopher Edmund-White (Solent Cellular 170 Forest Road Liss Forest) and Zahoor Ghafoor Ahmed (Crystal Communications 322 Alfreton Road Nottingham).

From this month a Crime Prevention Scheme rule closes one major loophole that might enable dealers to escape its effects.

The Rules have been strengthened to now make it significantly more difficult for those not in Good Standing simply to carry on trading under another guise said James Malcolm manager of the Scheme.

A new clause now requires that the FCS Board be satisfied that any new person dealing in cellular phones from premises identified in a Notice of Breach of the Rules is not connected with the dealer (or any named individual) who is the subject of such notice.

Service providers and distributors must ensure that all new dealers proposing to trade at any address subject to a Notice of Breach apply to the FCS Board which must then be satisfied that no connection exists with the previous occupant. Provided this is so agreement will be given quickly.

New wording in the rules makes it more clear precautions must be taken and records kept for all phones in the possession of a dealer including those in for repair or other reasons said Malcolm.

Coghill brought a private prosecution against the Welsh shop which sold him two phones. He claimed they should have been supplied with a health warning.

But magistrates at Abergavenny said he had failed to prove that mobile phones did not comply with Government-approved safety constraints.

The service rewards new and existing dealers with an extra 10 towards their marketing fund for every new business connection they make – taking the total to 25 per connection. In addition Mainline is offering 5 marketing fund rewards on every B2B upgrade.

Included in its new Blueprint for Business menu is an option for dealers to convert part of their marketing fund into cash to be used as sales incentives for staff.

Duarte will be responsible for strategy formulation and implementation responsibility for market research and analysis.

Formerly a partner in the Paris office of management consultancy Arthur D Little Duarte worked on business strategy issues in the telecoms industry.

The move comes just a month after the departure of 3 chief operating officer Gareth Jones who has yet to be replaced.

A 3 spokeswoman said that the network has yet to decide whether the role would be filled.

All the networks are based in North America. These figures compare with 165 million UK text messages in just the first 24 hours of 2006.

According to Informa Telecoms and Media senior research analyst Kester Mann the continually glacial take-up of MMS is price. The average price of a 30K MMS message is $0.37 (21p). This is over four times the average global price of an SMS.

Mann said: Pricing is fundamental to the success of MMS. Subscribers are still unwilling to pay the comparatively higher tariffs for MMS – until the price ratio with SMS narrows traffic volumes will remain low.

The network says it also has the fastest growth in customer usage up by just under 20 per cent from 96 minutes per month to 114 minutes over the last year.

Increased annual revenue per customer is 2.5 per cent up from 376 to 385 on the comparable half-year period last year.

Market share is claimed to be up from 14 per cent of net new connections last quarter of April to June 1998 to 27 per cent the last quarter of July to September 1998.

Churn has reduced from 31.6 per cent to 28.5 per cent on the same comparable half-year period last year. Turnover increased by 104 million helped by 850000 people signing up to the First scheme.

Around 65 per cent of all connections go through Cellnet service provision division with BT handling the corporate sector and providing High Street presence. Vodafone posted a pre-tax profit increase of 476.9 million up 60 per cent for the six months to September 30.