Staff Reporter

3 has been luring new customers with half-price line rental on all pay-monthly tariffs for the first three months of contract whether acquired directly or indirectly. These discounts are now open to upgrade customers reports Sherelle Folkes.

Our half-price line-rental offer has proved popular with new customers said a 3 spokesperson. So were extending this to customers who are upgrading on a new contract. They are as important to us as new subscribers.

Andrew Culverhouse director of Barnet-based Time2Talk said the initiative was a great step forward.

We have been saying for ages that the networks need to change their mindset. They have to even up the balance between what they do to get a new customer and the little they do to keep their old ones.

Historically the networks have never offered upgrade customers the same deals as new connections.

Culverhouse doubted that other networks would follow 3s lead however.

How much of 3s trends have the other networks replicated? They have not offered anything like Video Talk 500 or Talk 750 despite the fact that those tariffs have won 3 loads of customers. It seems that they have just been sitting back and letting 3 get on with it.

Paul Leonard managing director of Essex-based dealership Sprint Communications also gave 3s upgrade offering the thumbs up.

Customers are always aggrieved that they pay their bills to the network for 12 months only to see the better deals going to new customers. It just encourages them to churn to another network he said.

Leonard went on: The dealer channel has always said that the networks needed to change their attitudes. Its great that 3 realises you have to look after the old as well as the new. 3 will get great results from this. It may even recover some of the customers it has lost.

Comment boss Phil Gardiner made the disconnections over the past four months.

In East Anglia network coverage can be poor he said. Vodafone and Orange have always had the lions share of connections but 3s offering was so attractive that we had customers who wanted to connect. They knew 3 did not have 3G coverage in this area but that coverage defaulted to O2.

But Gardiner said customers found the network wasnt defaulting to O2 so were unable to use their phones for long periods.

Gardiner claimed the situation became so intolerable that customers wanted to scrap contracts. He says he was met with considerable resistance to this from 3.

3 didnt want to know at first. But then it admitted it didnt have the coverage and was prepared to release people from the contracts.

Gardiner believed that one of the possible reasons is that O2 customers take priority over 3 in the area. O2 denied this was the case however.

The agreement allows 3 customers to make calls using O2 where 3G service is not available. There is no service priority to O2 customers over 3 customers said a spokesman.

The arrangement with 3 does not provide automatic handover to the O2 network. If a call starts on 3 but coverage becomes insufficient to complete the call it will not automatically hand over to O2. The call would drop and the customer would need to redial. (cont P2)

Gardiner has transferred the customers on to new contracts with Vodafone and Orange.

A 3 spokesperson said:

In certain circumstances where a customer is experiencing problems with video calling 3 would work with the customer to resolve the issue.

3 has also upset dealers with the unreliability of its registration and payments systems.

Ellis Dunning founder of Talksense in Borehamwood said 3s automatic registration system crashed three months ago and the network was registering connections manually. The knock-on effect is causing problems.

3 said it would register one of our customers and tell her the transaction number said Dunning.

The customer decided not to take the contract because 3 took so long getting back to us. We assumed that the phone was not connected. But last month the customer found she had been charged three months rental on a phone she never used. Its not our fault and its not hers.

We cant really have a go at 3 either because it paid us commission. But we could have done without the bother of the transaction even with the commission.

If we he had been informed by 3 within the 14-day cancellation period we would have been able to prevent the problem.

We have to pay the customers contract cancellation fee and will still be out of pocket despite the commission payment.

At the time of going to press 3 was unavailable for comment on the issue.

Vanguard CEO Nick Wiley admitted to Mobile News that the July payroll had not gone through because the company was moving to another bank reports Sherelle Folkes.

We are not in any financial trouble said Wiley.

I can give full assurances that we are not in or about to enter into liquidation. We have money. But it is stuck in the ether.

We cant get it into our staffs accounts until everything is sorted with our new bank. I am working on sorting it. Staff should be paid imminently.

But one of Vanguards employees revealed:

Everyone is worried. The money is almost a week late. No one has been able to give us a conclusive answer.

There are continuing rumours the company is in trouble. It has changed banks three times in the past 12 months.

Wiley insisted that staff had been informed of all developments concerning the change in banking:

We have spoken to staff to put their minds at rest. I cannot comment about other bank accounts because it was before my time he said.

Pay problems dont seem to be Vanguards only troubles.

Steven Ikin Vanguards fiinance director resigned last week to become financial director at mobile content provider Mobile Entertainment Group which is run by Tony McDonagh former group marketing manager at Vanguard.

In addition Harrogate installation company Co-Star Electronic Components has closed its account with Vanguard.

Wiley responded: Co-Star has changed its view in terms of the credit position we have with it. We are in dialogue about this at the moment.

Manchester call centre Quay Contacts was putting around 100 connections a day through Vanguard but ceased dealings with Vanguard last Monday and has now signed up with rival distributor Hugh Symons.

Vanguard has had a controversial couple of years. It received an 8million boost 20 months ago after selling 49 per cent of its business to a UK private investment group.

As part of the cash injection the company appointed a new chief executive Paolo Fidanza.

Fidanza had extensive experience in the automotive and telecommunications sectors and had worked with Lotus Cars in both Europe and the US.

He left after just a year after a re-financing deal fell through and has now returned to Italy where he has set up broadband venture Atitel (Mobile News July 26).

The move is a book-balancing response to the Competition Commissions edict that call termination charges must substantially reduce from July.

Orange is mounting its own campaign for a judicial review to challenge the legality of the order as are the other three networks.

Oranges revised subsidy policy comes a fortnight after Vodafone also said it would be cutting subsidies and dropping dealers unable to write profitable business (Mobile News February 10).

The reduction in call termination charges will create a significant revenue hole for this year and the future said Orange sales director Stuart Henry.

We have a number of alternatives for increasing revenue and decreasing costs. We need to remove the handset subsidy entirely. We have minimum costs to serve and we now believe there ought to be a minimum cost of ownership to he consumer. added Henry.

We realise there will be some nervousness about the significance of such a move. So our initial (Cont P2) move will be to remove a minimum of 40. But we need to remove more not later than the end of Q3. We would be looking to do something in August. Retailers and manufacturers may absorb some of the hit by reviewing some pricing but it will probably mean an increase in handset costs of 50 to 60 if not more. Distributors may pass on subsidies to the dealer but volumes will decline. Ultimately the whole business is going to shrink.

Henry echoed the remarks of Vodafone distribution boss Stephen Brewer by also describing the Competition Commission ruling as a major landmark in the UK mobile communications industry. (See Comment).

The subject line was O2 Gateway Contingency and was sent from zaheer.afzal@o2.com. It replicates until the recipients mailbox fills to capacity.

An O2 spokesman agreed the e-mail did not originate from an O2 e-mail address but had been spoofed by a third party. Spoofing is the act of forging the header information on an e-mail so that it appears to have originated from somewhere other than its true source.

This is not the first time the independent channel has been hit by the spam e-mails. In June 250 dealers and distributors received between 200 and 20000 junk e-mails that appeared to be from O2.

O2s fraud and security department advised victims that it was working to identify the originating ISP.

The network stressed it would not be offering any compensation to those affected. It sent an e-mail to dealers stating: Although we sympathise having suffered similar inconvenience we cannot admit liability as this is a malicious action that has been taken by a third party whose identify we are still investigating.

An O2 spokesman insisted the network was doing all it could to make sure this wouldnt happen again.

We are right in the middle of negotiations to get the company re-financed Dawe told Mobile News. We have recognised for some time that Unique Distribution is under-capitalised.

He added: Given the size and scope of the company without more capital we cant do what we need to do to ensure maximum growth. We need some exterior help in getting finance.

Industry sources cited Carphone Warehouse as making a bid. Others reckoned a consortium of Spanish businessmen headed by ex-European Telecom managing director John McFarnon was in the frame.

However Carphone Warehouse boss Charles Dunstone said his company was not involved. McFarnon also categorically denied he had anything to do with any Unique bid.

But Dawe did not rule out any potential buyers. The finance could be in the form of a venture capitalist trade buyer finance houses banks or a consortium coming in and joining the board he said.

We recognise we have to so something quickly because of the current market conditions. Rumours are flying around and we would like to quash them but all I can say right now is that we are very close to announcing something.

Some dealers saw an injection of capital into Unique as a logical step.

One said: If Unique wants to catch up with 20:20 Logistics it will need a financial leg-up. 20:20 is so far ahead of all the handset distributors because it has got the financial muscle of the Caudwell Group behind it.

A company like Unique with some extra financial weight behind it could be serious competition for 20:20. Dawe has the relationships in place he just needs more capital and I think what he is doing makes logical sense.

But one trader who dealt with Unique saw other reasons behind the move.

Unique Distribution was set up primarily as a trading company. But when the joint and several liability problem arose it had to remodel itself he said.

It did a few fulfilment programmes. But the company was giving too much of its profit away to its investors. It has some good contracts but there is no margin in them so it is hard to see what anyone will pay for them.

It works on less than a one per cent profit margin and theres no way you can run any business on a margin that small. Customs and Excise owes Unique 2.7 million but its unlikely to hand it back.

Intek managing director Manny Hussain alleges Caudwells recruitment agency Cornerstone Resourcing is leveraging Inteks dealings with other Caudwell Group companies to attempt to recruit Intek staff.

The 20-chain dealership decided last Tuesday to sever ties with 4U Ltd Dextra 20:20 Logistics and MPRC. Hussain has also vowed to encourage other independent dealerships to do the same.

Intek connects Vodafone and

T-Mobile through 4U Ltd. This month 4U Ltd began training Intek staff. Hussain then found that three of his sales team had been approached by Cornerstone which offered them 60k salaries to leave Intek. Staff have so far declined the offer. (Cont P2)

If the Caudwell Group maintains that all the elements within it have the right to do business how they choose then it must accept our right to take the decision to protect our business. I would encourage any similar company to protect its position he said.

Its unfair to expect a small company such as Intek to help build up elements of the Caudwell Group and then be directly damaged by that Group because of its actions.

Hussain agreed that it was unrealistic not to expect his staff to be approached by recruitment agencies but said he asked 4U Ltd to confirm it was not involved in the recruitment of his staff pointing out that 4U finance director Craig

Gibson is also a director of Cornerstone.

This could be seen as a conflict of interest. Elements of the Caudwell Group have access to our staff for training and account management.

4U did not dispute the fact that

Cornerstone had approached my people. A director of 4U and Cornerstone said he could not stop Cornerstone or any other Caudwell companies from doing their jobs.

Hussain requested written assurances from 4U Ltd that it would not be party to Cornerstones recruitment strategy.

He said: Were not asking for rock-solid guarantees. We want confirmation of its ethical and moral stance on this kind of practice.

Craig Gibson told us that if we let Cornerstone carry on negotiations with my three members of staff they would try not to pursue other Intek staff in the future. But taking my three top people would cause damage.

Gibson said he would not put anything in writing nor give us a commitment that our staff would not be approached in the future.

Its no good saying that hes stopped chasing them without saying that he wont try to do so again in the future. We cant stomach that.

Our staff have been approached a number of times. After complaining to (4U managing director) Paul Smith I was told it would stop.

We have an issue of giving

Caudwell companies access to our company and staff because they refuse to state their moral and ethical stance on approaching our staff for recruitment purposes however they come to possess the data.

But Smith told Mobile News that even though 4U Ltd was independent of Cornerstone it could not put in writing the assurances that

Hussain was demanding.

Manny asked us to give him a written assurance that this would never happen again. Thats impossible to do said Smith.

Theres no way of guaranteeing that a member of Cornerstones staff wont pick an Intek name out of the phone book by chance.

He would not be flexible in what he was demanding. There is no way of predicting a member of Cornerstone wont approach one of his team. He asked us to stop Cornerstone poaching his staff.

We phoned Cornerstone and asked them to stop because it was jeopardising our relationship with a good business contact. They agreed.

Cornerstone poaching the staff of 4U Ltd customers is detrimental to 4U. There never will be a conflict of interests between Caudwell Group companies.

But Hussain said: When I suggested to Craig Gibson he should go to the board of the Caudwell Group to get a response he laughed and said Intek was just a 20-chain store and that his company was the Caudwell Group.

Smith responded: You cant legislate for personalities clashing. Perhaps thats what has happened here.

In this way a contract customer could take advantage of a June promotion which offers double texts and double minutes for six months.

If the customer is willing to sign up to a new 18-month contract they will get both which is the same promotion offered to a new client.

The initiative builds on the current pre-pay promotion which gives customers who spend 10 in a week an extra 5 credit free.

An Orange spokesman said: We cant talk to you about it yet as we arent ready to announce it.

Meanwhile Orange has angered dealers by changing the commission structure halfway though the month. One disgruntled dealer said it was a very unusual move.

Changing tariffs halfway through the month smacks of concern he said. It must be a real problem for Orange to do this otherwise they would just put the changes in to start on June 1.

Orange has been a victim of its own success and its fine-tuning so it doesnt get the wrong sort of business on its high-value tariffs because that affects its revenue.

But it has brought down the commissions on low-end tariffs and not really explained itself. There are an awful lot of displeased dealers.

Commenting on the changes an Orange spokesman said: We are altering our commission and bonus structure to focus on achieving high value and small business connections and we shall continue to communicate new incentives to our partners as they are announced.

See Sharp End P16

.

Existing customers on all Perfect Fit Pay As You Talk and 3G price plans will be able to talk for an hour at evenings and weekends but only pay for the first three minutes.

The tariffs themselves have also been re-jigged. The Perfect Fit offering now comprises nine Anytime pay monthly price plans instead of the current five while on Pay As You Talk the existing four bundle packs will be replaced by six allocated on a 30-day rather than daily basis.

Vodafone claims Stop The Clock is the first offering of its kind in the UK. A customers first three minutes can come from their price plans bundle.

Stop the Clock liberates customers from the constraints of time when making calls and offers value for money said Vodafone marketing manager Tim Yates. (continued on page 2)

Dealers have reacted positively to a range of new tariffs in the Vodafone business portfolio.

Vodafone has extended its range of popular Sharetime price plans to include Sharetime 500 14000 and 24000 giving more choice on packages with inclusive calls between company mobiles.

Weve always had the luxury on Orange of having larger bundles without restricting the number of sharers but this has always been a problem with Vodafone. Now it seems to be following suit itll enable us to place more business with Vodafone said Phonebox Communications managing director Nigel Harrison.

Businesstime tariffs are aimed specifically at the self-employed. The price plans offer generous inclusive minutes and competitive flat-rate call charges at anytime to any UK fixed or mobile network.

Subscribers receive an Own Boss Mobility Tool Kit – a mobility package containing a Bluetooth headset and in-car cradle and charger.

Other benefits include text message bundles and a direct line to Vodafone UKs dedicated business support advisers.

Sprint Communications managing director Paul Leonard said:

Vodafone is building on the success it has had with its Sharetime tariffs by improving on the portfolio and plugging the gaps.

There are a lot of one-man bands out there who spend an awful lot on their mobiles bills and that kind of customer often gets forgotten he added.

These tariffs will be perfect for people working in trades such as electricians and plumbers.