Staff Reporter

The licence cost f114.1 million payable over 15 years. The first instalment has to be paid in advance. O2 already has 3G licences in the UK Germany and Netherlands.

Retailers are missing out on the profit potential of selling downloadable content such as ringtones and logos says a new Mintel report commissioned by mobile content provider M4 on the usage patterns of mobile phone users.

The report says demand for downloadable content including ringtones logos screensavers and games will increase tenfold by 2004 and will be potentially worth 1.5 billion. Of 2000 people interviewed 80 per preferred to buy downloadable content from retailers rather than from the internet or off-the-page dealers.

M4 managing director Steve Hughes says the report highlights the revenue potential in selling downloadable services.

Retailers have been slow to take up downloadable content because they have been unsure about the revenue potential. Few content providers have put together a package that appeals to retailers and offers them a retail margin.

Operators encourage retailers to sell services. But they do not give the retailer anything in return.

The report comes as accessory distributor Dextra launches its new range of downloadable content services which are claimed to allow dealers a 30 per cent margin from 5.99 packs.

Dextra says its aim is to make retailable mobile content packs more available in distribution routes and for high street retailers.

The new packs cover musical artists Eminem and Destinys Child and offer five pieces of content from a choice of ringtones icons and colour backgrounds for the Ericsson T68.

Future releases of artist packs include Blue Atomic Kitten and Oasis.

T-Mobile dealers who previously had One 2 One shop frontage signs have been told they cannot have an equivalent solus T-Mobile sign. Instead they must offer other networks to customers.

T-Mobile is more or less telling us that it is going to open up its own shops and that it doesnt want to be associated directly with (Cont P8) dealers said George Christos director of London-based dealer Tagrose.

T-Mobile told us to get rid of its branding. All we can have over the shop is our name. We cant say we are a T-Mobile specialist or anything like that. We were shown artwork of a company sign that had nothing apart from our company name on it.

When we asked about the fact that we are service centres as well we were told there were to be no exceptions.

It makes no sense to remove the branding. The company is passing up a massive opportunity all across the country. All I can presume is that now it has its own stores T-Mobile wants to differentiate completely from anything else in town. One of my shops is at the end of Vauxhall Bridge in London.

The One 2 One signage that has been there must have given the company tens of thousands of pounds of free advertising a year.

We are opening more stores anyway so we look at it this way.

T-Mobile has made its choice; well do all the networks at any new stores we open.

Philip Edwards manager of Airphone Communications Doncaster store says:

The rebranding is ongoing.

T-Mobile has changed all our point of sale inside the shop. Weve been told well have to get rid of any external branding.

At the moment we dont know what to do with the signage above the door. As far as I know all we can have is Airphone Communications Ltd.

The downside is without the network branding people wont really know what we sell. It could damage our business. Well have to wait and see.

The only reason I can think for them making us get rid of the external branding is to stop people coming to us for upgrades.

If customers see us with T-Mobile above the door of course theyre going to come in and sort out their upgrade with us.

Another dealer who asked for his his name to be withheld for fear of retribution from T-Mobile told Mobile News:

What T-Mobile is up to scares me. It set up a T-Mobile dealer conference on the premise that it had a lot of exciting news for us. The only news it had is that it wants us to take its signs down.

The only way we are allowed to have a small T-Mobile logo on the shop front is if we offer at least one other network in addition to

T-Mobile.

What is the logic? Where I am in London. I dont want to do another network I dont need to do another network.

Yet if T-Mobile is the only thing you sell the only branding you can have is a small sticky-out sign. To qualify for T-Mobile branding I must use another network to demonstrate some independence.

T-Mobile is actively working to lose its presence on the High Street. Its losing its presence at the cutting edge where people make their buying decisions.

If its does drop the independent channel theres no way it can open up another 200 or 300 shops immediately to run alongside the remaining Pocket Phone Shops. Its sales will drop.

It wont have the presence. It wont be able to get back onto the High Street in the short to medium term.

And all at a time when Hutchison 3G is presumably eyeing up independent dealers. When it gets to the point that a dealer cant voice his fears in public because he is genuinely frightened of persecution that shows how bad the situation has become.

T-Mobile denied that there had been any such ban on signage and said it would be delighted to have its branding on the front of stores – provided they are owned by authorised dealers.

Patrick Barrow head of external communications said: No authorised dealer is being denied branding. There is some delay with some of our branding but as far as a ban on stores is concerned this is not something we are aware of.

As long as a store is an authorised dealer there shouldnt be a problem. We would love everyone to know that these stores are

T-Mobile stockists.

The 500000 claw-back row between Orange

Rocom disputes Oranges claim of around 500000 in claw-back over irregular connections made by Rocom dealers.

Rocom says Orange employees OKd the deals. But Orange maintains that the ultimate responsibility for the connections is down to Rocom.

Rocom chairman Bob Old says he is not aware of any legal action by Orange.

We are yet to be advised of Oranges intentions. The amount owed is much less than the figure being bandied around and is reducing by the day. We owe Orange money. But that is offset by ongoing connections and the commission owed to us. Its simply a case of agreeing a final figure.

The amount is becoming so insignificant I cant see that it would be worth Orange going (Cont P2) legal. It might not even be worth resisting. Well have to wait and see concluded Old.

Meanwhile Orange has put Rocoms account on hold though Rocom still has Orange stock it is connecting.

Rocom is not ordering any Orange kit and has not done so for some time. Any company that finds itself in a debt position with Orange has its account on stop. That has been the position with Rocom since last October said Orange head of sales Stuart Henry.

See interview P32.

CellStars US parent company last week decided to shut its UK Argentina and Peru distribution businesses due to heavy losses.

The UK division went into the red due to falling margins and bad debts totalling hundreds of thousands of pounds from defunct companies such as Odyssey and The WAP Store.

CellStar chief financial officer Robert Kaiser said:

We have been disappointed with our performance in the UK. Improving our position in the UK would require substantial investment which we are not willing to make in that market.

CellStar will now focus on Asia Mexico and the US which it hopes will perform significantly better than the UK.

A CellStar US spokesperson told Mobile News:

It has been extremely difficult for a US company to be (Cont P2) competitive in the UK and develop key relationships. We have tried but we have not been able to compete with the local UK-based distribution companies successfully.

There is a valid argument that we should have closed down the UK business earlier. Now that mobile phone penetration is high among consumers and there are fewer new subscribers there is not enough business to go around. We were not profitable in the UK. We were number five or six. We needed to be number one or two to be successful.

Unique Distribution joint managing directors Rob Lees and Angus Dawe said:

It wasnt a surprise. With the maturing of any market you are always going to get consolidation. CellStar will not be the last distributor to go this way. What I say to dealers is that when this happens the companies that remain in the industry become stronger. How many others will go is something we cant predict. There will be more.

Companies like CellStar and European Telecom probably had too much money invested in them to provide suitable returns in a developed market. One thing people can learn from this is that box-shifting isnt going to be enough to keep distributors afloat. Distributors have to add value for the dealers.

Lees added that there are still opportunities in distribution.

Overall prospects are good. There are 40 million handsets out there that are going to be replaced over the next two years. More will be required as new technologies are rolled out. The sort of thing that has happened with CellStar was inevitable given an exploding marketplace.

With CellStar being part of a multinational the UK operations were always going to be judged against other markets that werent experiencing the sort of slowdown that we are experiencing in the UK.

Fone Logistics managing director Ian Gillespie said:

It is disappointing to see another distributor going this way. It is something that has been on the cards for a while. Everyone knew that the market was suffering and that there were going to be these sorts of developments.

It is good news for the surviving distributors but I am sure everyone feels sorry for the people who will be losing their jobs.

Avenir Telecom UK managing director Geoff Walters echoed the thoughts of his counterparts saying:

It will be survival of the fittest. Networks do not want box shifters. They want to deal with companies offering a total solution. CellStar was hit for huge amounts of money when people like Odyssey went down. It seems it has been struggling since then. There will be one or two more that go. A change had been on the cards ever since it announced that it was undergoing a review of all its businesses. It is a very unfortunate situation.

One individual close to CellStar who declined to be named revealed how the company slid from profitability into decline:

The problem for CellStar being based in the US is that the Nasdaq stock market concentrates on the return on capital employed not just profits. The shareholders demand a 20 per cent return on capital employed thresholds. For every 1 million invested the shareholders expected at least a 200000 profit per year. Until the end of last year the company performed above that level. Maintaining those figures was getting harder.

CellStar had to write off large amounts of bad debt when a number of its customers went into liquidation. The company also suffered because of theft and lorry hijackings. This sends overheads up because insurers hike up premiums.

Distributors including CellStar have also been hit by fraud a lot of which goes unreported. In the end the board in the US decided to step in. It will probably invest in areas such as Asia where the shareholders will get a better return on their investment.

The letter sent on May 14 read: Unfortunately having reviewed your trading over the past 12 months we believe that your future business would be best placed through one of our distribution channels.

Dealers were also told that the move was a result of Vodafone reviewing current business trends within the industry and that the company was focusing on developing business through our key dealers.

When questioned about the sacking of the dealers Graham told Mobile News: The dealers who we have terminated have between them made less than 100 new connections in the last six months. Under our new dealer reward scheme these dealers would probably have been worse off. They may well be able to find a more attractive deal through an independent distributor where they might get the higher upfront payment that they want.

Graham says Vodafones new dealer reward scheme offers a lower initial upfront payment and instead is back-weighted providing greater rewards for increased ARPU and decreased churn.

He continues: Some of these dealers are now making (Cont P2) connections to Vodafone through indirect distributors and are satisfied with these arrangements.

Ken Williamson one of the sacked dealers is proprietor of Northern Ireland-based dealership Digi-Fone. He complains that in his 16-years in the mobile phone industry he has never experienced such betrayal.

I think Vodafones attitude is awful. I have been a loyal partner and have put a fair amount of business its way.

By forcing me to go through a distributor I am losing money. From now on I will be recommending my customers to change to another network.

Williamson is also angered because of Vodafones announcement that it would be holding dealers commission payments for 90 days. In his case this was over 1800.

Graham replied: This is standard practice when any dealer is terminated. We hold back monies for 90 days so that any clawback can be deducted within the usual period before giving the dealer the balance that is owing.

Telecom South is a virtual service provider (VSP) to Anglo buying airtime and then rebranding and repackaging it to its own corporate customers and other dealers. Its understood the debt has occurred because Telecom South has stalled on payments to Anglo for the airtime.

Anglo business development director Alan Barry told Mobile News:

We are in dispute with (Cont P2) Telecom South over payments that have not been made under their virtual service provider agreement. We have been left with little alternative but to suspend the service of some of their customers. The matter is now in the hands of our solicitor. We have tried to resolve the matter amicably.

A Telecom South director explained: We have had difficulties with Anglo Communications although it has helped us resolve some of those issues. We are not in any financial difficulties. Any business relationship goes through its ups and downs. I cannot comment on claims of outstanding debts.

A Vodafone spokesperson said it was urging both parties to resolve the situation as quickly as possible for the sake of the customers.

We are aware of a dispute between Telecom South and Anglo Communications.

We have urged them to resolve this and hope they reach an agreement as soon as possible.

Thousands of Telecom South customers have had their phones disconnected. Anglo had to reinstate many of the SIM cards because they belong to a number of health authorities.

One NHS trust which had its service interrupted three times has terminated its contract with Telecom South and switched to Sheffield service provider Your Communications.

Epsom & St Helier NHS Trust manager Simon Owen said health workers phones were switched off putting peoples lives at risk.

We have had phones disconnected leaving doctors nurses and health workers without any service. We warned Telecom South it would be liable for any death or injury caused by its negligence.

The Telecom South director said:

I am aware that some customers phones were switched off. But I dont know the reason why and how.

More than 100 Carphone Warehouse customers say that days after buying a phone they received aggressive and insulting cold calls from people claiming to work for Premierline. The caller sometimes says he is part of The Carphone Warehouse or was given the users number by the company.

The so-called Premierline staff tried to sell products in an aggressive and rude manner. Several (Cont P2) people contacted said the caller demanded bank details. Others say they were called up to six times a day.

There have been allegations that the so-called Premierline staff made threatening and sexually abusive remarks when customers refused offered services.

Matthew Todd a director of Premierline says:

We believe that ex-employees who were released from the company are consequently contacting customers or potential customers. That is where we believe these threatening calls are coming from.

We have contacted Trading Standards in Swansea and they are looking into the matter. If any customer feels that they have been mistreated I am happy to give my direct number so that I can set the record straight.

One customer who wishes to remain nameless told Mobile News: A couple of days after my wife and I bought our phones she received a call from someone saying they worked for Premierline. He asked her if he wanted to take out insurance with his company.

When she said she didnt want him calling anymore he said Im not doing anything f….. g illegal whats your problem? My wife then hung up. The same number called again.

I answered the phone and he said Tell your wife to s..k my c..k. I asked him where he was calling from. He said Im from Carphone Warehouse. Im your worst nightmare.

Accountant Neil Worsley said: I started receiving calls less than 24 hours after buying my phone. They knew when I had bought it how much I had paid for it and when my insurance standing order was being paid. They told me that Carphone Warehouse was ripping me off. I called Carphone Warehouse who assured me they hadnt given out my details.

A Mr Cindy from Leicester was also inundated with calls he says: I only had the phone for a couple of days when the phone calls started. They told me to give them my bank account details and that I could sign something later on. I told them I wasnt interested but they kept calling. It got to the point where I wouldnt turn my mobile on.

Zoe Croaker and her twin sister also bought phones from The Carphone Warehouse. Within an hour of connecting they received calls from people claiming to work for Premierline.

I told them I was happy with my current insurance. They wouldnt take no for an answer. They called me for about 30 minutes. Then I got around six or seven calls a day. They said Vodafone had given them my number.

Andrew Cole received a call from someone claiming to work for a company called Secure-Line. After telling the sales person he didnt want insurance he was told: F…g people like you get on my f…g tits.

After hanging up he received a second call in which the same person told him that he would come around and cut your throat.

Premierline said it had no knowledge of Secure-Line.

Both The Carphone Warehouse and Vodafone stressed that they have never given out customer details against their wishes.

Vivian Boateng (19) faces a total of 17 charges of theft valued at 6975 between January 28 and March 30. One of the thefts is alleged to have taken place at The Orange Shop at 89 Oxford Street. The total amount includes Just Talk vouchers valued at 895.

ETs phone repair business

Service Xpress has been picked up by Phone fix part of Peter Jones Phones International Group.

Administrative receivers Price-waterhouse Coopers said the sales have preserved around 70 jobs.

Global will initially continue to trade under the ET name and says it has the support of T-Mobile and major handset manufacturers. Global is privately funded and backed by holding company Mobishop Asia which is one of Oranges leading distributors in Hong Kong.

Drinkwater will be managing director of the new organisation

Plans for a second store in the Bluewater shopping centre in Kent are at an advanced stage. But no date has been set for the opening.

Phones 4U and Nokia have shared the costs of planning and opening the stores but Phones 4U takes all the store profits. Nokia senior marketing manager Matt Ogden says Nokia is keen to partner with a number of major high street retailers in order to increase its retail presence in the UK. He assures independent dealers that Nokia is not out to steal their business.

This is just another development in the retail strategy we launched in 1998. It is nothing new he told Mobile News.

Now that times are a bit more difficult than they were having the Nokia brand on major UK high streets will be good for the industry. There is more than enough room for good-quality independent dealers in the market.

We are not trying to compete with them. We are focusing on prime retailing RA grade sites similar to our store in Regent Street London. Few independent dealers have stores in those locations. I dont see we are taking business away from independent retailers. We havent decided on an exact number of (Cont P2) store openings. The long-term vision is to have a Nokia store in every major city within the UK.

Our first Nokia store in Regent Street was a tie-up with The Carphone Warehouse. We have worked with them to open other stores since then.

The decision to work with Phones 4U was taken because we want to work with as many of our direct retail partners as possible. It will help us build up a close working relationship with them so that they can get closer to the Nokia brand.

Working with different retailers means we dont put all our eggs in one basket. It helps spread the risks. We have spoken to other retailers about the concept and they might be coming on board. There is no massive store roll-out plan in place. We would like to work with other retailers because we have a lot to learn about retail0.

Phones4U managing director Anthony Catterson said:

We are 95 per cent of the way through our real estate strategy part of which is to establish a dominant presence in our key trading areas. The partnership with Nokia develops incremental business for Nokia and our network partners in locations where we already have a very strong Phones 4U presence.

We can develop our profitability in partnership with world class companies such as Nokia0.

Ogden says the stores will be a place for customers to experience the Nokia brand.

We are trying to move away from the normal style of retailing. We wont be focusing sales on price. We will let the brand do the talking. It will be a different experience for consumers. We will be looking to sell a complete package including digital services and Club Nokia