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).

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.

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.

The pay crisis had fuelled speculation that the company was in danger of folding (Mobile News August 9).

Vanguard CEO Nick Wiley said:

Staff were all paid in full last Monday. The banking situation is now resolved. Dealers were due to be paid on Friday (August 20).

It now has 3.2 million customers worldwide.

Globally Hutchison Whampoa put on 2.5 million new customers over the past six months with 697701 in July averaging 22500 per day based on a seven-day week.

(See next issue for full story and analysis).

MYMO (My Mobile) is a three-button cat-shaped mobile phone aimed at five to 10 year-olds. It can dial five pre-programmed phone numbers and is available online for 69. It is billed as a security mobile that buys parents peace of mind.

Communic8 is trying to get the handset supported and branded by O2 the network that has expressed the most interest in the product.

A spokesman for O2 said: We dont market to children in accordance with the Stewart Report. If its marketed to parents as a phone for children that is different.

But John Carr Internet consultant for the national childrens charity NCH and a spokesman for the Childrens Charities Coalition for Internet Safety (CHIS) said:

MYMO certainly has to be careful in terms of marketing (cont P2) and advertising. Everybody will be watching where it advertises. We dont want to see it in any magazines comics on MTV or around Disney productions and things like that. It cannot exploit any child-parent pester power.

A spokesman for MYMO said: Its being marketed to parents and guardians as a security product. We are aiming coverage at parents. We realise we cannot direct our marketing at children.

Communic8 has had to drop a tracking service from its product at the point of sale because government guidelines say it should be sold as an opt-in service only.

MYMO is currently looking for distribution partners.

Dealers said they were amazed to receive the e-mail from Gary Acors Ericsson head of technical and support for the UK and Ireland last Tuesday reports Sherelle Folkes.

The e-mail read: Following the termination of our contract with Celestica as our GSP partner we recently contracted your service location via a Letter of Intent. This LOI was valid for a period of three months from 1 June 2004.

As part of the continued review of our service structure we regret to have to inform you that your accreditation as a Sony Ericsson Service Location will not be extended outside of a proposed one month notice period to expire on 30 September.

Acors softened the blow by thanking the dealers for their services and offered them the chance to be Flash Point centres:

We propose to offer you the status as a Flash Point in order to continue to offer customers an onsite software update solution. There will be no compensation paid by Sony Ericsson for this service but you will receive referrals from our call centre and be able to charge for out of warranty software upgrades. In addition to this we will arrange for collection from your location free of charge any Sony Ericsson product that requires a further level of repair.

Mark Finlayson managing director of Southampton-based Next Communications said Sony Ericsson had shown a callous disregard of the proper way to treat people.

Three years ago when Sony Ericsson set up the deal with Celestica it said it wanted to have the best service in the industry – its undoubtedly had the worst and this is entirely down to Sony Ericsson and its top-level management.

Jimmy Shenston of Cellular Services in Brighton said he was disgusted that Sony Ericsson thought it was acceptable to treat such longstanding clients in this way.

They are absolutely heartless. What a rotten bunch of eggs they are. We have been with them for over 20 years. But I have always distrusted them and hated their attitude towards service centres. (Cont P56)

Shenston said the Flash Point offer would be of no benefit to his business.

Sony Ericsson always treated us as convenience outlets for its own gain he said. It showed nil respect towards us and treated us like children. I dont know why I have stayed with the company.

To top it all it is asking us to continue to do services for it for free by becoming a Flash Point centre. I am just a service centre – I only repair Sony Ericsson and Nokia mobiles so this is affecting half of my business.

He went on: Luckily the Nokia side will keep me going. I have spent money on spare stock that I will not be able to shift in 30 days – what does Sony Ericsson expect me to do after that; just chuck it in the bin?.

Shenston is now urging customers to boycott Sony Ericsson.

David Wylie general service manager at Vanguard added: This was not something I would have expected from a player of Sony Ericssons stature. I find this whole situation very disappointing. It has come as a bolt from the blue.

Customers will be greatly inconvenienced. It wont have too much impact on our business but it is a contract we would rather have kept. Sony Ericsson is the only manufacturer that comes close to Nokia on service. Now Nokia is the clear leader.

Richard Dorman marketing manager for Sony Ericsson UK and Ireland conceded that he could understand why the e-mail may have seemed harsh but that it wasnt intended to upset anyone.

I can understand why the service centres may think its heartless he said. But the difficulty we had was in trying to notify them all at the same time. It was a case of trying to avoid Chinese whispers.

We thought that by sending an e-mail everyone would get the information at the same time instead of sending a letter or telephoning each individual concerned. We will be following up the e-mail with letters.

Gary Acors will be getting in touch with all of the individuals concerned to clarify any concerns and answer any questions. The measures were part of a programme to give customers the best possible service.

This is not down to the performance of these service centres. We are trying to create more alignment within the customer group. Occasionally things go wrong with handsets and we want to make the process when that occurs as clear-cut as possible.

Next month we will be launching a free postal service where customers can send their handsets to a central service centre for free. It will also be posted back free of charge.

The new tariffs will sit alongside existing VideoTalk plans but are aimed at people who want a simplified plan.

The tariffs are: Talk and Text 200 ( 20 a month for 100 voice minutes and 100 voice minutes) Talk and Text 600 ( 30 for 500 voice minutes and 100 texts) and Talk and Text 900 ( 40 a month for 750 voice minutes and 150 texts).

All the tariffs are available with 3s existing offer of half-price line rental for the first three months of contract.

Vanguard was one of four companies that had a contract with Unipart Technology Logistics to provide installation services for Vodafone.

Vanguards installation contract with Vodafone has been terminated as a result of a fall-off in demand for in-car installations confirmed Unipart and Vodafone. Vanguard was not available for comment.

The final termination of Vanguards contract with Vodafone was described by Unipart as fairly imminent.

A spokesperson for Unipart said: Following the government legislation on car kits there was a spike in demand which has since levelled out so we have had to reduce the supply base.

NCS Hyde Park Corner and Toad Group will now be doing the installation business for Vodafone. The decision to terminate the contract with Vanguard was purely a commercial decision based on demand. It wasnt to do with Vanguards performance.

In a statement Vodafone said: It was due to an overall reduction in demand and an overall decision was made to consolidate the vendors as a result. Thats why they missed out. We had to make a full assessment of what everyone has to offer.

Vanguard has had a run of bad luck in recent months. In July staff wages were held up due to a change of bank.

In addition there has been a string of managerial defections from the company.