Phones 4U connects on average around 70000 consumer contracts per month according to sources close to the networks. Phones 4U is understood to have agreed to deliver in the region of 35000 consumer contract connections per month to Vodafone.

During 2006 Phones 4U is thought to have delivered most – about 30-35 per cent – of its connections to 3 a much higher proportion of 3s new monthly subscriptions than delivered by The Carphone Warehouse.

Phones 4Us agreement with Vodafone would appear to put 3s numbers under threat.

3 denied that the Vodafone deal would affect it. A 3 spokesman said: 3 does not believe that the Vodafone agreement with Phones 4U will impact its business with the retailer. If there was to be an impact it would be felt equally across all the networks. But as a brand 3 has a different appeal to Vodafones.

Phones 4U and Vodafone said that targets would be met by working to increase footfall to Phones 4U outlets rather than cannibalising connections across other networks.

Vodafone director of commercial operations Ian Shepherd said that the number of Vodafone subscriptions guaranteed by the deal would not vary much from the kinds of numbers Phones 4U has connected for it in the past.

It is not going to require Phones 4U to unduly skew its business in our favour he said.

Around 90 per cent of the business done by East Anglia dealership Digital Phone Company is on Vodafone.

Its managing director Phil Rider said: Carphone has opened stores in most of the towns that we have a presence. This decision by Vodafone gives us an edge.

Vodafone puts just one third of its consumer contract connections through the indirect channel and most dealers said its exit from Carphone would have little impact on their businesses in strictly financial terms. But they warned that neither Carphone nor Phones 4U could claim to offer impartial advice any more.

Carphone cant offer all networks and Phones 4U is committed to hit targets on Vodafone so it cant [be impartial] either said one dealer.

Dealerships connecting either Vodafone consumer or business customers via a distributor can still connect to Vodafone despite the Phones 4U deal being billed as an exclusive third-party retail contract in other press.

Vodafone classifies independent multiple retail differently to the dealer and distributor channel. The high street multiple retailers have connected Vodafone via its consumer business unit. The demise of The Link and the cancellation of Carphones pay-monthly sales contract means that Phones 4U is the only third-party multiple retailer that can now connect Vodafone contracts.

Distributors connect Vodafone via its enterprise business unit which offers a far meaner remuneration package than its consumer business unit for consumer connections. The exception to this rule is Dextras airtime business which still connects Vodafone through Vodafones consumer business unit.

Dextra receives better commercial terms on Vodafone consumer connections – it is able to offer around 50 more per box. Vodafone denied claims last week that it is looking to re-negotiate its airtime contract with Dextra to run it through its enterprise business unit along with the rest of distribution.

Vodafone director of commercial operations Ian Shepherd said: The Dextra agreement reflects the balance of consumer business we are doing through Dextra. There are no plans to alter that agreement.

Hugh Symons part of Carphone connects Vodafone through its enterprise business unit like all other distributors and is unaffected by the Carphone decision.

Hugh Symons business manager Bob Sweetlove said: We have a different legal contract with Vodafone to Carphone. This is an internal decision by Vodafones consumer business unit.

Labour parts and transport costs will be met in full according to inservio global business manager Gerard McCarthy.
Originally an integral part of the BenQ business inservio was spun out as a stand-alone company in April this year prior to the insolvency.
Inservio is currently sharing the BenQ site in Bracknell. It is likely to come out of administration in December and move to a new location.
McCarthy said: Negotiations are taking place as we speak in Munich but it is looking positive that warranties will be honoured after December 31.
BenQ Mobile s UK managing director Philip Rambech said: Putting an acceptable solution in place is of paramount importance to us. We are working to provide a good level of service. going forward and I m confident we ll find an acceptable solution.

Vodafone s channel strategy suddenly looks clearer. It still has uses for the independent channel it says but it wants dealers to focus on the parts of the market that it cannot reach namely the small office-home office (SOHO) sector generally defined as business contracts of between one and 10 handsets.
Vodafone has a miniscule share of the independent channel less than 10 per cent. O2 has a slightly larger share and the remainder of the business put through the channel is split between Orange
T-Mobile and 3.
At the same time Vodafone has a 46 per cent share of the enterprise market in the UK. O2 is the only network with a comparable chunk. Within the enterprise market it has a 55 per cent share of the corporate market a 41 per cent share of the small-to-medium enterprise (SME) market and a 31 per cent share of the SOHO market.
We want to grow our share of the SOHO market that s the market we can grow significantly and it s the market in which the independent channel has its hooks explains Vodafone s Kyle Whitehill director of its UK enterprise business unit.
We want to work with dealers to grow that share. That is the plan. That s where we will build capability it is a complicated world of devices and IT support and all of these things and business customers need someone they can trust and talk to. The good quality independent channel is best positioned to serve.

Segmentation
Its segmentation into two separate business units consumer and enterprise two years ago pigeonholed the distribution channel in a way that it was unaccustomed to and appeared to confuse Vodafone s strategy.
Distributors with the exception of Dextra s airtime division have been forced to put consumer connections through Vodafone s business enterprise unit ever since with such poor remunerative terms that Vodafone has practically vanished from independent retail.
The complication has been that there is cross-over between consumer business and SOHO connections within most distributors. That is blurred and a lot of distributors deal with all types of business. It is a complicated customer marketplace says Whitehill.
But it appears that the distribution channel is just now coming around to Vodafone s classification system and distributors are being forced to choose between consumer and business connections. They are also being made to align themselves more closely with Vodafone to meet its key performance indicators on substantial volume targets in return for longer-term contracts and commissions (see box right).
But despite the rash of headlines in recent weeks regarding the termination of supply contracts with The Carphone Warehouse and Fone Logistics as well as the axe that hangs over Hugh Symons and MoCo Distribution Vodafone s plans to overhaul distribution date back to the segmentation of its business.
Whitehill says: It worried me a couple of years ago when I looked at the distribution market because it has changed enormously from what it was six years ago when it was acquisition led into a market that is all about retention.
We are asking businesses to align and to do that they have to get retention cracked. If distributors and dealers want to work with us they have to be able to provide a good service and to be able to keep customers. Our partners have to get concrete around the customer offer. Some have already grasped that like Yes Telecom which has low churn and high ARPU.

Alignment
Vodafone will run service providers Isis Telecommunications and Aspective both of which it acquired last week in the same hands-off manner that it controls Yes Telecom. But its purchase of Isis and Aspective differs from its interest in Yes insofar as it bolsters Vodafone s service of the corporate and SME sectors which it already dominates. Isis typically handles fleet contracts of around 2000 BlackBerrys points out Whitehill.
And although Whitehill compares both businesses with Yes for their nimbleness and service levels its interest in them is down to its desire to become a one-stop communications provider above and beyond straight mobile in line with Vodafone boss Arun Sarin s mobile plus vision.
The dealer and distribution channel on the other hand has the kind of local knowledge and contact with small business customers that Vodafone cannot replicate itself which explains its purchase of Yes earlier this year and its newfound closeness to a select bunch of quality distributors including Anglia and Avenir.
Says Whitehill: The indirect channel has strong partnerships. It knows its customer base extremely well and has the ability to serve local businesses in a way that we as a network cannot. Small businesses like what they are doing. That s what we talked to [Yes managing director] Keith Curran about 18 months ago. At the same time that relationship has to be wrapped in good service local contact and care.

Better terms for chosen few
Vodafone is asking its partners in retail and distributors to align themselves more closely with it. It is offering longer-term contracts and price books for their loyalty and the delivery of high-volume quality business connections.
Fone Logistics was on a 90-day rolling contract with Vodafone typical of network distribution contracts when Vodafone pulled the plug last month. Such deals will be extended for its distribution partners going forward.
Vodafone signed a year-long contract with Phones 4U in October at the same time that it cut its post-pay ties with The Carphone Warehouse. Phones 4U is understood to have agreed to deliver Vodafone around 35000 consumer connections per month.
Vodafone s Kyle Whitehill director of its enterprise business unit says that it will offer its partners better terms and more security in return for closer alignment next year.
It is absolutely our intention [to offer more support to the partners that we ask to align with Vodafone]. Two years ago we said that we didn t want the independent channel to be nervous about changes in our strategy every quarter. We want to build longer-term contracts with partners and to have them rely on our support says Whitehill.
At Vodafone I plan on a three-year cycle and make a very detailed one-year business plan. We re not there yet with our independent partners but that is what we want in terms of contracts and commissions. That is the goal.

The Carphone Warehouse has been signed up as its first customer and will range the CPW-603 wireless headset.
Iqua will work with Data Select s accessories division Accessories Select headed up by former Nokia UK accessories chief Neil Henderson to build its UK presence within multiple retail network retail and the dealer channel.
The deal was signed ahead of a two-day tour of Data Select s key accounts.
Data Select MD George McPherson said: Iqua has a very innovative and interesting range of wireless accessories which can quickly develop a significant footprint in the UK.
With the Nokia heritage among its founding partners and distribution experience there is also a broad industry knowledge evident in the products.
Pankakoski said: We were impressed by the proactive approach of its Accessories Select team and wide distribution network. We are confident of developing a solid presence in the UK market.
Data Select is stocking Iqua Bluetooth headsets and hands-free kits among other accessories.

Jon Ottar Birgisson will now lead the UK business. Ottar Birgisson will be supported in the UK by group international director Barry Colman and vice president of sales and marketing Phil Drake.
Strax MD for Europe the Middle East and Asia Birgir rn Birgisson who co-founded the company in 1996 is now based at the company s new offices near Cologne Germany.
Drake said that US-based Strax will retain the more& brand alongside the Strax name in its trading activity.

Orange said last month that its offering backed by commission payments for dealers would be made available by the end of the year through selected distributors.
Contrary to reports one source said: Broadband installation CDs have been available since August but most distributors aren t interested because it isn t compelling for the dealer or the customer& There s no margin in it.
Midland and Mainline have been able to offer the service since early July.

Orange faces the possibility of strikes by staff in its retail stores during the run-up to Christmas following the imposition of a new commission structure.
Under the new regime shopfloor staff have seen commission earnings slashed by up to 60 per cent while some store managers bonus payments have risen threefold.
With the commission structure reportedly now starting at minus four per cent staff are concerned that Orange will claw-back bonus payments from them if their month-on-month performances are significantly below target. Individuals could also be penalised regardless of their own performances if the overall performance of their stores is down.
Stores must score more than 59 per cent in Orange s monthly Mystery Shopper programme and reach 89 per cent of their sales target before a penny is paid out in commission.
The new scheme has already
led to an exodus of top salespeople with more planning to leave in the New Year.
A five-year veteran from a top 100 store in the North West said: In the past I ve been fiercely loyal to Orange but I ve had enough. I ll be leaving in January and three other members of staff in the store are planning to quit too.
My commission earnings have come down by at least 300 a month while my store manager s bonus has gone up threefold. He s taking home between 1500 and 2000 a month in bonuses. I m earning less than 200 but I m selling just as much.
She added: The first time we heard about the changes to the commission was when we read about it on the notice board. We no longer get anything for selling insurance text bundles or any other value adds. We have to jump all sorts of hurdles before we can earn a penny.
Morale can t get any lower. The company s given us so much per head for a Christmas party but we can t spend it until January. That way they don t have to pay for any temporary staff.
Another member of staff working at an Orange store in Kent said: The new structure is basically unfair. I know of a lot of staff that are actively looking for a new job.
A recent defector to Carphone Warehouse claims that senior management at Orange has sent a letter to all branches warning of the consequences of a strike.
Said the mole: Orange has become a greedy company. I accept that it has to make a profit but surely not at the expense of losing its best staff to the competition?
An Orange spokesperson told Mobile News We are not aware of any rumours relating to strike action and have not sent any internal memos. We encourage a culture of total engagement with our staff and have recently conducted an Employee Listening survey.

The European Commission backed the proposal by HM Revenue & Customs (HMRC) in June. However EU member states Germany France and Austria warned EU ministers earlier this month that a reverse charge in the UK could create other types of fraud.
Alias Dass of Dass Solicitors said: It will just have a starburst effect. The fraud will pass into the retail sector. Retailers will collect the VAT from the customer put in dud returns for a year and then shut up shop. And they ll drive footfall by offering better prices because there s no VAT.
The other thing is that VAT fraud will appear elsewhere. It has started to appear in the trade of other high value goods and just go to other EU member states. It s an Elastoplast not a solution.
HMRC claims VAT fraud cost around 1.9billion in 2005.