A letter sent out earlier this month by Vodafone business partner senior manager Jason Rigby tells the unnamed SPs their licences will not be renewed unless they increase their business and meet agreed connection targets.

Vodafone service provider contracts are due for renewal at the end of the year.

Vodafone will use the opportunity to consolidate its base of 32 service providers.

In his letter Rigby said:

Following a review of your account Vodafone considers that you are failing to comply with the terms of the business plan in that you are failing to meet the connection volumes to which you committed and as a result you are also failing to meet revenue targets…

Vodafone requires you remedy the situation without delay … If you have not remedied the position and are not back on line with your business plan by 31 December … Vodafone will exercise its right under clause 5.2.1 of your service provider agreement (Cont P2) not to enter into a further SP agreement with you following expiry of the current agreement on 31 December 2003.

Vodafone is considering changes to its service provider agreement to ensure SPs toe the Vodafone line with regards to virtual service providers (VSP) and GSM gateways.

Vodafone says service providers with VSPs on their customer base are in breach of their licences.

Vodafone also wants to remove all illegal public GSM gateway traffic from its network to comply with the decision of the Radiocommunications agency to ban commercial use of fixed GSM gateway equipment.

A redrafted SP agreement could give the network greater power to terminate SPs who allow GSM gateway and VSPs connections.

The Primus 650 an entry level mono-screen handset will be available across all four GSM networks and Virgin Mobile. The handset is sold SIM-free and unlocked at 89.99 and comes in a range of colours.

Primus expects to have another two handsets in the market before Christmas one of which may have a colour screen.

Initial emphasis is on the low-end talk and text segment of the market according to general manager Lisa Hazelden.

Its challenging entering a market with so many established players but we are confident that we have a strong product portfolio (Cont P2) she added. There is a gap for a robust value for money SIM-free handset. A large group of people just want to talk and text.

However Hazelden stressed the Primus brand would not be cheap and nasty.

It will be value for money but also very stylish and ideal for the fashion-conscious. There is a large market out there for upgrade and second handsets.

We are also focusing on the way the handsets are being presented. As the phones are sold unlocked and SIM-free customers can choose the network and payment method that best suits them.

The change was announced at last weeks OBS conference in Birmingham to 30 OBS members. Dealers have three months to meet the new targets or face expulsion from the programme.

The new connections target replaces the previous figure of 100 connections to Talk 120. The drop of 25 monthly connections is intended to make the programme more business-focused.

Dealers will also have to keep churn below the channel average. Orange will check figures after 12 and 18 months. A quarterly development plan will be set by an Orange business manager and the dealer will have to attend a quarterly training course.

Orange will continue to pay its value growth bonus on customers connected two years ago.

The OBS scheme was set up two years ago with 14 retailers. It now has 30 members and will continue to grow until it has business specialists to cover the country. (Cont P2)

Unique Distribution is believed to be the first UK distributor to pay 8000 a year to join a new Internet database called Secure Trader Network (STN).

Designed to protect traders from missing trader fraud STN launched at the beginning of the month and is targeted at traders who trade at least 20000 handsets a month.

Most of the 8000 annual membership fee is paid to VAT and tax specialist firm Barnard Atkins which checks audits and vets each STN member four times per year.

Once an STN member is approved they can use STNs online software to trade handsets. Stock is scanned and IMEI numbers logged.

Freight forwarder Hersh Patel who helped set up the system said:

The checks we make are far in advance of what Customs and Excise require. This is the only system that will help you check beyond your immediate supplier.

Two of the men will be sentenced on October 28. At least 250 second-hand phones and seven computers were seized by police in an operation codenamed Nemesis.

The manager and employee of the Tooting phone store Asif Mohammed 27 and Mohammed Sedek 21 were charged with conspiracy to reprogram mobile phones.

Mohammed was additionally charged with conspiracy to handle stolen goods while Sedek was charged with reprogramming mobile phones and possessing equipment for the purpose of reprogramming mobile phones.

Mohammeds brother Wajid 25 who worked in the Wandsworth store has been charged with conspiracy to reprogram mobile phones and conspiracy to handle stolen goods.

The two Mohammed brothers appeared in court last week and were bailed to return to court on October 28. Sedek has been remanded in custody. A fourth London man is also wanted in connection with the offences.

The raids were carried out as part of the third phase of the Metropolitan Polices Safer Streets campaign.

Operation Nemesis began in September 2003 and saw officers visit two mobile phone shops in the Wandsworth area.

The Mobile Telephones (Re-programming Act) 2002 came into force a year ago. It became illegal to re-programme mobiles without the manufacturers permission. It also legislates against possession or supply of equipment to carry out such reprogramming.

The act allows police to crack down on individuals who fuel the trade in stolen mobile phones.

The operation was led by detective inspector Dave Manning from Wandsworth CID. He said:

The people involved in the illegal business of reprogramming stolen mobile phones serve only to increase the misery generated by street robbery. The arrests today should send out a clear message to anyone involved in this kind of activity in Wandsworth – you will be caught and you will be brought to justice. Robbery will not be tolerated in this borough.

Commander John Yates who is in overall charge of the Safer Streets operation said:

This operation has successfully targeted those criminals who continue to fuel the trade in stolen mobiles. We have warned people before and this should act as a clear message – anyone in the business of re-programming mobile phones can expect a prison sentence of up to five years.

He also claims Phones 4U let him down because it didnt take his complaint seriously and didnt contact the police to follow up his case.

The incident started when Magnus received a letter from former Caudwell Group service provider

Singlepoint on August 26. (Cont P2) The letter congratulated him on moving from his 25 a month tariff to a 50 a month tariff.

However Magnus claims he did no such thing and contacted both Singlepoint and Phones 4U.

After visiting his local Phones 4U store in Reading he was told by the store manager that an account in his name had been set up by a Phones 4U employee at the London High Holborn branch on August 22.

According to Magnus High Holborn manager Andy Lee said the employee who committed the alleged fraud had left.

A few weeks later Magnus received a bill from Phones 4U for the fake account although he thought the account had been cancelled and was being investigated.

He contacted Phones 4U fraud manager Paul Bailey who assured him the retailer would be assisting police.

Phones 4U risk investigator Dawn Ramsay later told Magnus the company doubted that the former employee had committed any crime.

She suggested that any fraud could have been carried out by a customer.

It didnt feel like they took my complaint seriously at all. I definitely wont be shopping there again said Magnus. Phones4U said it was going to pursue the matter and contact the police yet the Metropolitan police told me that they hadnt heard from the store.

A spokesman for Phones 4U said:

We deeply regret that Mr Magnus feels he has suffered distress as a result of this incident.

After thoroughly investigating this incident Phones 4Us risk team found no evidence to suggest that the member of staff concerned had ever acted in a fraudulent manner prior to this occasion.

The member of staff concerned left the company immediately after the incident was discovered. Phones 4U followed established procedures throughout the investigation which include liaising with the police from the earliest opportunity.

Couzens was responsible for all areas of LGs marketing including mobiles. Bernards newly created role will allow him to concentrate specifically on driving LGs UK mobile phone business forward.

Bernards remit means he will report to Chan Park managing director of LG Mobile.

His job will be to plan brand and introduce promotional initiatives to support a range of handsets due to be launched here in the autumn and early 2005.

We have spoken to HM Customs and have agreed to give them one month to respond he said.

We expect a court hearing in the first or second week of October.

A Customs spokesperson confirmed that the Government had been in correspondence with lawyers representing FTI:

This is a matter between customs and FTI and we cannot comment any further.

Traders have expressed disappointment at the contents of Customs Notice 726. This is the long-awaited code of practice designed to help traders avoid joint and several liability.

Customs has set up helplines for traders to check VAT numbers and registration details.

One trader said the (Cont P2) helpline did little to restore his confidence in trading.

The helpline only checks VAT numbers. We cant get any information on the supply chain and whether the people beyond our immediate buyers and sellers are legitimate. Im still very cautious about who I am buying from.

But European Telecom financial director Jim Mann said he was reassured by the new document.

If you are trading legitimately you have nothing to worry about. Customs is clear and we are supporting them.

But FTI chairman Mark Cook said the document was full of loopholes.

You could drive a bus through it. Customs says it will have to go before an independent tribunal before it issues joint and several liability notices. But the tribunal is made up of Customs personnel. Thats not independent. This new code of practice is no more and no less than the draft statement of a few months ago.

Unique Distribution managing director Angus Dawe said his lawyers were still looking at the document.

Ill encourage anything that removes fraud and gives us an environment in which to trade he said. The lawyers are looking at it and we will ensure we comply with it 100 per cent.

The meeting came a day before Customs won a significant VAT & Duties tribunal decision which gives Customs the legal right to deny repayment where the transactions do not amount to economic activity (see story this opposite).

More than 400 people packed a meeting room at Lancashire Cricket Club in Manchester to form a new pressure group called the Federation of IT Equipment Distributors (FITE) to demand Customs and Excise rethink its new laws.

A sign that Customs was taking FITE seriously was that HM Customs and Excise head of fiscal fraud Tony Walker had flown from London to the meeting.

Conduct

Protesters pointed out that Customs had given missing traders their VAT number in the first place. Thus how could legitimate companies account for the conduct of companies they had never heard of?

Walker sought to offer reassurance for legitimate traders and fired warning shots for those not trading legitimately. He claimed that the proceeds of carousel fraud were being used to fund the sale of heroin outside school playgrounds.

Turning a blind eye is no longer good enough said Walker as he sought to reassure legitimate businesses that they had nothing to fear.

Dr Mike Cheetham of Bond House Systems Limited which has just lost its appeal against Customs right to block a VAT claim said:

How can a legitimate business know an individual is going to become a missing trader before he does? Customs gave the missing trader the authority to become a VAT collector – shouldnt Customs shoulder some of the burden of blame when it all goes wrong?

Walker replied:

Its all about knowing your supplier and everything regarding the transaction. You must take general reasonable commercial steps that will lead you to consider the legitimacy of your supplier and the commercial viability of your supplier.

Support

FITE organiser Frazer Holmes of Barnard Atkins VAT Services said he was taken aback by the support and the show of hands pledging 1000 each to get the ball rolling. (Cont P2)

I think we collected around 250000 at the end of the day. The watchword is cooperation. Customs want to work with us; they are looking forward to having one representative voice with which to deal.

People are coming forward to volunteer their services. But it is first and foremost a members organisation. It will be their federation and it will be non-profit making.

Somebody had to do it. VAT clients of mine in the mobile phone sector didnt feel the existing bodies represented them or their needs.

I dont know how long the money pledged today will last. We are going to be involved in producing consultation documents. It will be expensive.

If we launch a legal fighting fund well be talking about a lot of money. I dont know if the Federation feels it can manage that process. Its up to the members. The people here today have to decide the ultimate direction. My role perhaps will be to help suggest the roads they may follow.

An individual up against a Government body doesnt stand a chance in hell. A large company doesnt stand a chance. A federation of 200 and more companies will make a difference.

Customs got a lot out of today. They will be directing the written answers arising out of todays session to the Federation (full story P16).

Case claims his contract was terminated abruptly by PNC in December last year.

He alleges PNC is in breach of contract because no consultation or attempt to find him employment within PNC took place before taking the decision to make him redundant. Case also claims PNC failed to pay him bonuses due under the terms of his contract. He says PNC also failed honour a payment due to him for the purchase of KJC mobile from himself and co-founder Darren Ridge. PNC purchased KJC in July 2000.

Case says PNC harassed and victimised him by cancelling his status as a signatory on one of the companys bank accounts and instructing security staff to deny him access to company premises. He says an attempt to enter a company warehouse was resisted by force and witnessed by other company employees causing him distress and embarrassment.

Cases claim totals more than 2 million including (Cont P2) 1.7 million for loss of salary bonus and benefits 53000 for unfair dismissal and 260000 compensation for harassment.

In the meantime bailiffs have successfully seized goods worth 17000 from PNCs offices for unpaid rent on two properties that the company is leasing from Case and former KJC managing director Darren Ridge.

The bailiffs recovered the funds at the end of last month. Neither Case nor any PNC director was available for comment at the time Mobile News went to press.

The news comes as PNC has decided to make a U-turn on a decision to sell all or part of the company just months after a boardroom battle that saw shareholder and former chief executive Geremy Thomas appointed as a PNC non-executive director. Thomas had openly opposed the companys plan to sell up claiming he and other shareholders would lose out due to the low share price.

PNC said it had been in discussion with several interested parties but had declined the offers because they were not acceptable. A company statement was issued saying:

These discussions have not resulted in any proposals being made that the directors feel they can accept. The company has ceased taking active steps to promote a sale.

Current trading is in line with management expectations.

PNC claims it has managed to reduce debts by 55 per cent due to some large tax rebates.

An announcement is expected this week. At the time of going to press Vodafone declined to comment. Cellular Operations managing director Nigel Bunter and sales director Chris Jones were unavailable.

Cellular Operations won the Best Service Provider prize at the Mobile News Awards last year and describes itself as the second largest independent service providers for Vodafone and O2.

The company was formed in 1991 by Ford Motor Company and called Ford Cellular Systems.

It went private in 1997 following a management buy-out led by Bunter. Turnover last year amounted to 200 million from a subscriber base of half a million customers including Argos IBM and Ford as well as Ford-owned car marques Jaguar Aston Martin Mazda and Volvo.