This policy comes in a letter from Cellnets general manager for distribution Peter Gibbard in a reply to a letter written to BTCellnet managing director Peter Erskine by Ron Miller of Norfolk Telecoms.

Gibbard wrote:

We will not be offering price protection to distributors and retailers adding that independent retailers re an important source of new business to BTCellnet and have an important role to play. We are most certainly not abandoning them but at the same time we cannot force any retailer to sell BTCellnet products at a particular price. Similarly BTCellnet can not refuse to supply retailers with whom we have a contractual relationship.

Miller remains unmoved:

Im not impressed in the slightest in his reply. Hes missing the point that it is his own BT Shops which are selling at prices below the net price that we have to pay for equipment. He seems quite happy to shrug his shoulders and see us sell his product at a loss.

Miller says he is now boycotting BTCellnet phones as a protest against the network not offering price protection.

Miller wrote to BTCellnet managing director Peter Erskine saying:

We were devastated to see BT advertising Pay & Go and U packages at 49.95. We have stocks on these items but have had to withdraw them to sell at the new figure. One 2 One have always given us price protection and so we stock and sell those products with complete confidence said Miller.

If BT are going to drop us in it we have no choice but to take the product off our shelves and your company is denied the revenue from calls to and from Cellnet phones.

If our plight is repeated up and down the country perhaps it might make you think you ought to take more care of the specialist dealers on whom you depend when there is not a BT shop in a town.

My company is struggling to survive in a market with the ever-reducing prices on all products. If BT wants to finish off the independents and sell through the supermarkets or multiples then carry on with your present policies of leaving us to carry the losses resulting from your trading and pricing practices Miller tells Erskine in his letter.

Erskine passed Millers letter to Gibbard.

The operation is being headed up by ex-BTCellnet deputy commercial director Tom Alexander who will be based in Trowbridge.

Virgin Group is converting several of its Our Price stores into Virgin Mobile-branded outlets. Another 220 Our Price stores will stock Virgin phones alongside music CDs games and videos.

Virgins 85 Megastores will also sell the phones and 4.5 million Virgin Atlantic passengers a year will be offered mobiles on board. Phones will also be sold directly from the Trowbridge call centre as well as over the internet.

All customers will be offered a handsfree earpiece. Details of phones tariffs distribution and marketing will be revealed later this year.

Our vision is for people to book air and rail tickets find information buy music and financial services and whatever they choose on-line and on the move said Virgin founder Richard Branson.

This joint venture will offer a value-for-money mobile multi-media experience Branson added.

One 2 One matches our own philosophies and business practices which makes us ideal partners.

We know their infrastructure. Their high-capacity network will provide us with the level of quality and service we must deliver.

Said One 2 One managing director Tim Samples: this joint venture is not only a natural fit but is also testament to the way in which we have built our network.

UniqueAir has 430 employees and approximately 291000 customers some 70 per cent of whom are connected to the Vodafone network.

David Jones remains Managing Director of Vodafone Connect. He also becomes Managing Director of UniqueAir.

UniqueAir MD Peter Edwards resigned his position but will remain at the company to ensure a smooth changeover. As Mobile News went to press neither was available for comment.

Commenting Peter Bamford Chief Executive of Vodafone UK said UniqueAir is one of the leading independent service providers and will form a valuable part of the Vodafone UK business portfolio. We have had a successful relationship with UniqueAir for many years and will be integrating the business into our UK distribution structure.

John Neill Group Chief Executive of Unipart Group Companies added The decision to sell UniqueAir was not easy but we were convinced that the company would have a more secure future as part of a global mobile telecommunications company. A fundamental part of our decision to sell to Vodafone was their commitment to maintain the Abingdon site and provide continuing job opportunities to our people.

In an unconnected deal announced on the same day Vodafone UK Ltd confirmed that it had awarded an exclusive contract to Unipart Group of Companies under which Uniparts Demand Chain Management Division will supply a wide range of warehousing distribution and logistics services for all mobile phones and accessories sold by Vodafone in the UK.

The five year agreement is expected to involve sales in the region of 125 million and under it Unipart will undertake the receipt of handsets and accessories from manufacturers stock control and storage picking and packing and the management of distribution sub-contractors to deliver the phones to businesses home addresses and retail outlets.

One senior independent service provider (SP) told Mobile News Weve been expecting an announcement for some time so it doesnt come as a surprise. It does however reduce still more consumer choice in the marketplace.

Continued the SP Im pretty certain you can count on the fingers of one hand the few remaining independent service providers who have a material influence on the market. We are very concerned with the current state of affairs and have been furiously lobbying the Government in the shape of the DTI and Oftel.

Despite a 57 per cent increase in turnover from 18.36 million to 28.84 million and overall connection volumes up some 45 per cent on a like for like basis and excluding acquisitions pre-tax profits were down from 1.51 million in 1998 to a less than satisfactory 531000.

Much of the market growth was unforeseen and unplanned fuelled by a new product – the pre-pay handset. This product was responsible for the industrys first real and substantial drop in margin as people bought pre-pay phones to the detriment of higher margin contracted business.

Continues Weatherill As announced in May the Group is in dispute with one of its service providers. This relates to commission arrangements on customer bill spend the records for which are controlled by the relevant service provider and not ourselves.

The company has undertaken a strategic review of future operations including the reorganisation of operating divisions and a reduction in costs of approximately 700000 compared with 1998/1999. It intends to focus on key elements of customer service and satisfaction. An industry source close to the company indicated to Mobile News that much of the proposed savings would come from staff rationalisation. Jeff Lucas recently appointed as Marketing Director is already understood to have left the company as part of the cutbacks. Both Lucas and JWE were unavailable for comment as this issue closed for press.

Concludes Weatherill An interim dividend of 0.65p per share was paid to shareholders on 6 April 1999. In view of the overall result for the year the Board has decided not to recommend a final dividend. The Board considers it unlikely that an interim or final dividend will be proposed in respect of the current year.

The judge upheld complaints from Orange and One 2 One that the Government was acting illegally in trying to force existing networks to carry traffic on behalf of new players. If the government is unsuccessful in its attempt to overturn the ruling it may have to significantly lower forecasts of the amount of revenue it is likely to raise from the licence auction.

Potential bidders for the new licence including a consortium headed by Carlton Communications and another led by Dolphin have indicated that they must be allowed access to existing network infrastructure in order that they may establish profitable businesses.

DTI minister Helen Liddell said We are determined to promote competition for third generation mobile phone services. This will be good news for consumers and will help make the UK the best place for e-commerce in the world.

Increased competition will mean lower prices and a faster rollout of innovative services. Without roaming a new company will be at a significant disadvantage to existing operators added Liddell.

The Government has launched its appeal because it wants to put into place fair conditions for both existing operators and potential new entrants. The Government expects roaming to take place on a commercial basis.

But according to Government insiders it is important that if agreement cannot be reached then the director general of telecommunications should be able to step in and determine a fair and reasonable rate for both parties. Existing operators will not be at a disadvantage because their spare capacity will be used by roamed traffic enabling them to receive extra income.

Commenting on the DTI appeal One 2 One said that The Government has sadly once again missed the point of both our case and the judgement of Mr Justice Moses.

The network continued We support increased competition in the mobile market because it is in the best interests of the consumer. Thats why we argued that the Government should auction off five third generation licences.

This case is not about increased competition said One 2 One. Its about regulatory certainty. If mobile operators are to invest millions of pounds into the UK economy they need to know that ministers will follow the rules laid down by Parliament. Three weeks ago the High Court found that they had not.

Concludes the network Mr Justice Moses made plain in his comments last month that he did not think an appeal had any chance of success. It is therefore sad that the Government has taken a decision that will almost inevitably delay the auction of UMTS licences and the introduction of this important new technology to the UK.

There is no reason to delay the UMTS auction process. If the Government had followed the correct procedures from the beginning of this process the issue would not have had to be resolved in court said One 2 One.

The supermarket now owned by American food giant Walmart has complained to Oftel claiming that the move is evidence of anti-competitive behaviour by the network operators who are concerned about a massive surge in connections occasioned by recent massive reductions in retail prices.

Tesco who were the first supermarket to slash the cost of all its pre-pay handsets to 49.99 are believed to have sold 100000 handsets since the price reduction whilst Asda are reported to be selling some 4000 units a day.

Sioned Rees-Thomas Asdas home and leisure business director said Having turned mobile phones into everyday items BTCellnet and VodafoneAirtouch now want to re-introduce higher charges and put the low-price genie back into the bottle.

Continued Rees-Thomas We thought the networks were prepared to see mobile phone users get a better deal unless the regulator acts fast we may be wrong.

A spokesman for BTCellnet said We totally refute the accusation that increases in the cost price of pre-pay handsets supplied to them is unjustifiable. We also refute any implied accusation of price-fixing.

He continued Wholesale pricing of pre-pay phones supplied to supermarkets has been based on providing highly subsidised handsets and an assumption about potential call revenues to recoup the cost of that subsidy.

From September 1 BTCellnet is changing the mix of its wholesale pricing. It will no longer be subsidising pre-pay handsets; instead it will supply handsets at cost price to supermarkets said the BTCellnet spokesman.

He concluded We monitor our wholesale pricing on an ongoing basis. This is a commercial decision to reflect current market conditions. We will keep our wholesale pricing structures under review and make further changes as necessary.

A VodafoneAirtouch spokesperson confirmed that the network has reduced commission payments to distributors for Pay as You Talk. We regularly vary our subsidy payments; it is normal business practice to do so. Any change in the level of subsidy and the timing of these such changes is based on prevailing market conditions the spokesperson told Mobile News.

The network does not deal directly with Asda though Vodafone Connect of course does. Said the spokesperson Vodafone Connect has passed on the subsidy reduction to retailers. It is up to the retailers what they charge for the product.

Added the spokesperson Traditionally we have done business according to the gross pricing model. But Pay as You Talk has been available for two years; it is no longer an entry product. Demand for it shows no sign of abating. As a network we have to be responsible in the way we conduct business and that our customer services and operational capabilities are in place.

We are not just selling a phone in a box. Customers expect to receive a high level of service. Distributors and retailers would be displeased if customers did not receive the level of service they expect. We are committed to providing that quality of service.

Concluded the spokesperson It is up to our distributors to decide on the level of bonus payments and commissions they make available. Only they can decide how they conduct their business.

Mike Liverton is Sales Director of Anglia Telecom which sells all four networks pre-pay offerings. He summarised the current position. One 2 One is not moving towards gross pricing but their prices have gone up. The lowest retail price point for a One 2 One pre-pay package is 89.99 so their product is between 15 and 17 more than their competitors.

Orange have stayed at 69.99 but they have gone over to gross pricing which leaves their net price at 35 Liverton told Mobile News.

This taken with the changes announced by VodafoneAirtouch and BTCellnet is good news for dealers believes Liverton. As a distributor we have always handled airtime propositions. We are used to handling gross commission based transactions.

Pre-pay has enabled anyone who was prepared to shift boxes at a very low margin to get involved in this industry.

It also challenged the market to shift phones for very little profit so encouraged anyone who felt like it to deal in cash. These people need not be VAT registered and need have no commitment to providing an ongoing service. Recent announcements by VodafoneAirtouch and BTCellnet means that the way pre-pay comes to market can now be controlled added Liverton.

Historically everyones been conscious of market share but it has gone beyond that now. The networks have realised that they dont want market share at any cost and pre-pay was costing them too much said Liverton.

The networks were faced with the problem of how to handle the situation and with the focus on price fixing legislation what they have done is a method of managing the way the product is handled managing the cost of the product and controlling the eventual cost of the product on the High Street.

They have come up with this mechanism which allows them to exert some control without necessarily putting the final retail price up.

Dealers by and large are quite pleased with the turn of events because they see an end in sight for the market being ripped from underneath them believes Liverton.

However he adds Its a nightmare for us though because we do not have an adequate level of supply. We are trying to maximise the return we get on the product we do receive.

Reflects Liverton We are now going to incur additional costs in the way we get the product out and in the way we attribute the commission to the dealers account when that product is connected. We then have to manage the way that we integrate that and normal contract business. Fortunately the platforms are in place to do all that.

Concludes Liverton The networks win because they take the money from us. They are enhancing the subsidy to justify a higher invoice price. They are covering themselves whilst we have to pick up the cost.

The up-side is that hopefully the non-specialists will suffer because we have the mechanisms in place to cope with the move over to gross pricing whilst they do not.

The supermarkets will either have to start from scratch or simply not bother.

Webb reports to chief executive ted Beddoes another ex-Vodafone man. Beddoes worked at Vodafone in its earliest days as head of engineering setting up the then new cellular network.

Webb left Vodafone two months ago amid rumours that he had been fired by Vodafone UK managing director Peter Bamford.

Beddoes who held both the group chief executive officer role and that of the UK MD whilst establishing the Dolphin network will now concentrate on his role as CEO of Dolphin Telecom with responsibility for all of Dolphins European operations.

Said Beddoes:

We have produced the first network to be launched with national coverage. Weve overcome many significant challenges. What we now need in the UK is an even greater focus on the needs of our customers to capitalise on this achievement. Mike Webb can make this happen and I am delighted to have him on board.

Webb was at Vodafone for six years. Before that he worked for Black & Decker for 14 years developing the companys brand in

Europe.

I fully expect Dolphins unique product to give it a significant edge when we start really getting to grips with the corporate mobile communications market. None of the other mobile operators have successfully broken away from their communication for individuals roots. Dolphin has a very different service and I am really excited by its potential said Webb.

Manxs package is the Siemens C10 5 call voucher and leather case. European Telecom will provide Manx with logistic support procurement assembly special leather cases and after-sales support.

European Telecoms service and repair subsidiary ServiceXpress which has just received Siemens accreditation will handle after-sales service.

An important factor in deciding to work with European Telecom was the fact they are able to offer a one-stop solution. Not only are they able to build assemble and distribute the volume of products necessary but they have the capabilities to provide after-sales support said Manx Telecom director of customer services Mike Cook.

Cellcom head Paul Cohen said the proceeds made this an exceptionally profitable investment.

Before joining Brightpoint Torstensson had worked for Ericsson and previously had been general manager of the Mobile Phones and Terminals Division of Ericsson and head of Ericssons mobile phone business in North and South (Cont P2) America. At Brightpoint he presided over the closure of the companys European divisions and closed down the complete disposal of operations in the United Kingdom including the sale of its airtime reselling business (Mobile News July 12)

Brightpoint president Mark Howell described Torstensson as an excellent leader of our strong management team in our Europe Middle East and Africa division who built the management team and developed and implemented the strategy that the management team is continuing to execute.

Torstensson said:

I am very proud of the accomplishments of our management team. While I am disappointed that I will no longer be directing this team I look forward to working with them in this new role.

The opportunity to lead this market region for Ericsson allows me to fulfil a long-term goal.