Vision express

Paul Leonard, managing director, Sprint

There will be a resurgence in certain parts of retail. Dealers need to provide a more focused offering to specific segments of the market. There are opportunities in retail for dealers that can think outside the box. But we are still in the hands of the networks and much will depend on how they treat commission payments next year.
I would like to think that the networks will understand the value of existing customers better in 2007  that their value is equal to the value of new customers. That has been a problem up to now.
The best dealers will still be around next year. There will be a continued thinning out of the industry and, in my opinion, there ‘s too many that are doing too little.
The same thing goes for distribution. There are too many distributors, and we will see them increasingly align themselves with certain networks. They have all been scrambling for the same business and they have to differentiate themselves. Each of them has the chance to survive but they have to pick their allegiances and decide on their strategy now.
The B2B market will continue to be the cash-cow for the networks as far as the independent channel goes. Dealers have to understand their products and services better, and broaden their horizons. Because, ultimately, customers will find it easier to buy voice from an IT reseller than e-mail solutions from a dealer. That needs to be addressed.

Andrew Harrison, UK CEO, Carphone Warehouse

2007 will be a year of opportunity for manufacturers and we ‘ll see the historically smaller players gaining greater scale. Never before has a phone been a more powerful personality statement and the opportunity for handset personalisation and for manufacturers and style brands to work together is enormous. Slim and silver will no longer be enough. Manufacturers will also need to look at styles and fashions that appeal to young women, the youth market and the grey
market.
With the weight of 3G licences still on their shoulders and increasing regulation on termination and roaming rates, networks will be extending their content services and rolling out their own broadband propositions.
Retailers will become bigger and more specialist. They will need to work closely with both the manufacturers and the networks to help them distinguish themselves.
The industry will need to pull together again to address increasingly worrying issues. Mobile phone crime is still a great concern and we can do so much more together to educate and protect our customers. We ‘ll also all have a part to play in promoting. The long-awaited tighter legislation on holding a mobile phone while driving.

Gordon Ballantyne, UK sales director, T-Mobile

The need for retailers to focus, differentiate and specialise will be critical. Change will be driven by two key factors: first, all networks will look to further reduce churn; second, the networks will continue to grow their direct channels. These factors will inevitably affect the market opportunity for the indirect channel.
That is not to say T-Mobile will not focus on indirect  in fact, quite the opposite. But, from a total market perspective, we expect pressure to be applied to this sector.
There is likely to be consolidation in distribution. Key players need to gain critical mass and differentiate in terms of service to stockists. Networks will look to reduce the number of distributors they trade with and seek deeper relationships with fewer players. There remains a role for the ܘeveryman ‘ distributor, though not in the same number that exists today. T-Mobile is currently reviewing its distributor strategy and will seek partners that can deliver quality, reach and an ability to gain critical mass in the data markets.
As consolidation takes place, dealers need to identify the emerging markets not yet adequately served by the multiples. T-Mobile is committed to the dealer sector and will seek new partners that can offer scale, great customer service and product knowledge to sell data products. B2B should remain a key focus for the indirect channel.

Andrew Boden, managing director, Mainline

Over the next 12 months, the focus in the mobile phone industry will continue to be on quality  of connections, dealers and distributors. Dealers that don ‘t deliver will be dropped by distributors and will disappear. The dealers that remain will select distributors based on the value they provide. This will include commission, products, service and support.
This will hurt distributors that have survived on high volumes and small margins. The commitment required to support dealers will require not only a different business model but also a different business culture. Distributors need to be more creative in their product and service offerings. That will prove difficult for some and put their futures in doubt.
Several distributors have been grabbing poor quality by fully supporting cashback  irrespective of dealers ‘ sales records, business integrity, quality of connections or fraud potential. They ‘ve exposed everyone to high risk  to the point that the reputation of the industry could crash and burn. That kind of short-term strategy could come back to haunt them.
There ‘ll be more alignment as networks seek greater returns on investment and reduce the complexity and demands of the channel. Ultimately, we ‘re likely to see mergers or acquisitions within the distribution channel.

Keith Curran, managing director, Yes Telecom

This industry is like snakes and ladders  the networks put money in and you go up the ladder; they take it out six months later and you go down the snake.
The question is: will the networks finally stop encouraging churn next year? There is no such thing as a ܘnew ‘ customer any more. They should just be called ܘnicked ‘ customers because networks keep targeting each other ‘s bases. The crazy thing is that for every customer gained one is lost the other end. That ‘s an awful lot of brake horsepower to ultimately get nowhere.
We will start to see the networks better recognising the true value of keeping an existing customer, as opposed to constantly chasing someone else ‘s. The network that keeps the customers they have as well as enticing others will be the clear winner next year and beyond.
The word ܘpartnership ‘ is used too much in this industry. Usually it just means that the relationship continues to exist, provided the more powerful party continues to win. 2007 will see the industry hit maturity, and we ‘ll start to see partnerships that are genuinely beneficial to both parties  particularly between networks and the key players they identify.
Those that show loyalty and deliver real added value will have their day, finally, and those that chop and change all the time according to the flavour of the month may come unstuck next year.
One thing is for sure: there will be far fewer people in the race at the end of 2007 than there were at the beginning.

John George, managing director, JAG

The dealer channel will no doubt shrink and you will have to be one of the chosen few to be able to deal with all networks. We were refused a direct deal with Vodafone 12 months ago and now Carphone has also been pushed aside. This will no doubt apply to distributors as well as dealers.
Independent dealers will, I am sure, find a willing partner out of the five players, but I ‘m not sure which. T-Mobile is focused on new business and Orange on its federated dealers. 3 will consolidate and return with a strong proposition next year. It ‘s the weakest network in terms of coverage, customer care and handset range, but it ‘s not stupid and it will balance commission payments to negate those issues until it ‘s on a level field.
Next year will be a struggle for the high street as the web sales take a bigger hold. Retailers with high overheads will have to fight harder for fewer shoppers.

Mike Newnham, vice-president of sales, Orange

People talk about consolidation, but the key thing is the value we get. The focus on good volume and good value from channel partners is critical. My focus is on that for 2007.
If you go back a few years, everyone was rewarded purely on a volume basis and that ‘s all that counted. For me, it ‘s about rewarding our partners on an element of volume, which is clearly important, and according to value as well. So performance-managing the channel and rewarding them on the quality of the business they bring us is the right thing for Orange.
It also means you ‘re aligning the ends of the value chain around what is important for the whole industry, really.

Tanny Price, managing director, Avenir Telecom

Market consolidation has recently been accelerated by the ripple effect of a series of bold moves by the networks, retailers and distributors.
As more distributors set their sights on the B2B sector as an opportunity for growth, the next year looks to be fiercely competitive.
Increasing loyalty and spend is a shift that distributors, dealers and retailers should proactively embrace rather than as a knee-jerk reaction to a change in strategy by the networks.
Convergence is finally gaining momentum. This will be the key area of investment, development and potential growth for 2007.
As the networks aim to diversify into online services, we are yet to see whether some may go it alone  for example, like Vodafone ‘s ܘLive! ‘ offering. Others, such as 3, may alternatively continue to develop relations with other providers in order to benefit from market penetration and widespread consistent platforms.
One thing that does look certain is that all of the networks are branching out from being plain mobile providers and moving towards becoming providers of complete communications solutions. And, for distributors, it is essential that we have a supportive role that helps them to facilitate this, particularly within the B2B sector.
I believe that, as other market conditions force everyone to raise the bar, there will be even greater intolerance of unethical sales techniques.
Finally, despite delays from Customs, it is likely that 2007 will see the introduction of the new ܘreverse charge ‘ VAT laws to combat carousel fraud.

Alan Gow, managing director, Virgin Mobile

Next year will see a continuation of the slog between the operators for customer growth as they continue to find it hard to record ARPU growth.
We ‘re all watching to see what happens to 3. It is in a different phase of its growth now. Judging by its statements and behaviour, it looks like a business that is getting ready to sell, although that ‘s been denied so far. And it ‘s gone quiet now, really, despite all its talk about the X-Series.
We are operating in a saturated market now, and a lot of the networks started when growth was plentiful. Each will respond differently. The success story in 2006 was O2. It has done well with retention, but someone else will set the standard in 2007.
I predict that Vodafone will return to Carphone. There are no winners in that battle. It ‘s a lot of noise. At the same time, all the operators are pushing everything through their direct channels and putting increased pressure on independents.
We will roll out more converged offerings and there will be a gradual expansion of our contract channels. Contract subscriptions is an important product for us. There is significant growth there and we can enhance the product offering with converged services around contract.

John Barton, sales director, LG Mobile

The scene is set for the top five manufacturers to continue their dominance, with all of those outside of this elite group finding it increasingly difficult to gain any foothold. Further casualties from within this secondary tier are possible.
The tension in the final quarter of 2006 will continue through 2007, as the networks come to terms with the challenge faced by straightforward mobile services from alternatives such as VoIP, coupled with the recognition that some of their distribution partners are also their competitors.
The network response to this shifting landscape has been to drive towards a much greater proportion of sales and retention coming from owned retail chains and direct contact. Vodafone has been explicit in this but so too has O2, and 3 ‘s recent announcements presage more of the same.
It will be the toughest year yet in airtime distribution, as networks continue to become more prescriptive about who they trade with. This will have a knock-on effect in the world of the smaller independent dealer.
As far as handset distribution goes, the difficulty is largely one of offering a service that adds value to both the vendor community and the retailer. This continues to be a challenge, given the low margins available.

Barry Nash, director of sales and marketing, Elite Mobile

One of the biggest challenges for all of us in 2007 will be to appreciate fully, and take advantage of, developing technology.
The ever-changing applications for handsets and the constant introduction of new devices will continue to provide a widening of the one-stop shop capability of the better distributors – important for a growing number of channels, especially the independent dealer sector.
The distributor will continue to play a vital role in the industry, remaining particularly important to the networks as a pipeline to the independent dealer channel and in turn, their interface with the SME sector.
All the far-seeing distributors have been expanding the types of product offering to accommodate and stimulate the changing market.
There have been a number of significant product developments in recent months, especially in music products and fashion accessories. I believe this trend will accelerate in the coming year. But even more significantly there will undoubtedly be a major expansion of, and increased consumer demand for, satellite navigation within handsets, especially with the accelerated growth of 3G services.

Bob Sweetlove, business manager, Hugh Symons

The message from the networks is that the churn machine needs to slow down. We have to change the way we do business and influence dealers to put customers into long-term contracts, where the device may change, but the billing relationship remains in place.
Customers will be prompted to become more entangled with their network operator by virtue of services that they gain real value from  mainly Internet based  and become reliant on. Loyalty will be rewarded with smoother upgrade policies and line-rental discounts the longer they remain. It all adds up to a higher customer lifetime value and better return on investment for the network. There also appears to be a move to move consumer business directly into the networks ‘ own stores or web sites, leaving distribution in the B2B arena.
In this new world there have to be some significant changes in distribution. The networks, recognising that they need to work more closely with fewer distributors, are starting to define minimum standards. Vodafone is taking the most aggressive stance by terminating those it believes aren ‘t up to the job in hand. Almost all the others are sharing their minimum performance levels  ARPU, churn percentage, 14-day returns, bad debt, fraud and so on.
Time will tell which is the best approach. But where does it leave a distributor committed to offer the best choice of consumer and business products? We have to pick the networks we think will be the long-term winners.
The net effect is a distribution market that needs to cope with shrinking volumes, while re-shaping our businesses to address network KPIs. We will be looking at fewer distributors, more segmented by network and customer type, this time next year.

James Brayshaw, managing director, Adaptive Comms

We are at the end of the cycle for mobile phones in their traditional formats. The networks will almost certainly be forced to drive sales of more complex solutions and dealers will have to react or both may face going out of business.
In the same way that networks introduced bundled minutes, we will see a slow erosion in revenues due to the ܘfree calls ‘ price plans.
Vodafone is leading the market in this direction with its Sharetime and Small Business tariffs and, from a different tangent, O2 is pushing the unlimited package. They have already recognised this sea change and have moved to accept it by looking to increase revenue in mobile data.
Admittedly data has had more false starts than a drunken sprinter but the introduction of Microsoft Windows Mobile 5 has been a true breath of fresh air.
It provides a much needed and indeed welcome shake up in what is undoubtedly starting to become a stale market.
In summary my thoughts on 2007 can be summed up in one quick phrase  converged data or bust.

Faisal Sheikh, proprietor, Fone Doctors

Unless something changes, don ‘t be surprised if Vodafone and O2 completely withdraw from the independent channel for consumer connections. Also expect lots more undercutting from the networks as they try to squeeze out the dealer. The channel is rife for consolidation  not necessarily a spate of mergers, but, with The Link brand disappearing, there is an opportunity for dealers to make a mark.
My hope is that dealers will work together within a dealer group, or even a buying association. Hugh Symons ‘ Unity scheme has a good concept to build on. When looking for a travel agent, you know to look for the ABTA and ATOL signs for reassurance. Something similar for dealers could help us fill the void left by The Link. I think this will also get support from distributors, across the industry.
In the UK, we ‘re in the unusual situation of having five very distinct, strongly branded networks. T-Mobile has been a massive hit this year  not so much for Flext but because of Web ܘn ‘ Walk. This is the future for the industry. 3 ‘s X-Series is interesting. It says a lot for where the industry is heading. TV is the one to watch for next year.

Mark Allera, sales director, 3 UK

There has been a lot of change in the market place this year, and 2007 will be no different. 3 will continue to grow. We ‘ll invest in three key areas: our X-Series mobile broadband service; our direct retail approach and new 3 stores; and the roll-out of HSDPA across the network to deliver higher data speeds.

Stuart Henry, director of indirect distribution, Carphone Warehouse

People have been predicting consolidation in the retail and distribution landscape for years, but nothing significant has so far materialised. Next year could be the year.
More so than ever, the three constituent players  retailers/distributors, networks, manufacturers  have got to work together to deliver a sustainable business model for the industry. Everyone will have to figure out where they sit in the value chain and agree on the part that they should play in the future  frankly there will not be room for everyone at the table.
By the end of 2007, the two major high street retailers will offer all networks and the roll-out of network-owned stores will be complete. Independent dealers will remain a significant part in the industry only if they play to their strengths. Business to business will continue to be hugely important to dealers and networks alike, but networks will only be interested in those dealers able to deliver long term value
If you don ‘t figure out what part you play, you won ‘t have one.

Simon Ainslie, UK managing director, Nokia

The mobile market continues to move at a frenetic pace with convergence the key driving trend. 2007 will see an even greater emphasis on convergence as we see the end of the single-action product  the camera-phone  and the emergence of mobile devices that do it all, and do it all very well.
2007 will also be the year that Internet services on mobile devices really take off thanks to better connection options, and consumers will be able to enjoy many of the experiences they are used to on a PC while on the move.
Next year, we ‘re also likely to see the launch of more exciting, experience-based applications from the mobile operators. Navigation services will emerge as one such application taking advantage of new devices featuring integrated GPS.
Music has been a key trend in 2006 and this will continue into 2007 as we see a greater consolidation of the mobile and music industries.

Dino Maroudias, owner, DM Telecom

Small dealers are finding it difficult to be all things to all people. Next year B2B dealers will have to decide which networks they will align themselves with. We ‘ve got to pick sides. That ‘s what the networks want  because we are a dedicated, motivated and loyal sales force for the networks we choose.
The industry has been ravaged by less scrupulous dealers that are in purely for financial gain. We have done well to cut out the bad business and leave it to the professionals.

Manny Hussain, managing director, Intek

One big hope I have for 2007 is that it becomes the year when the networks actually realise the true cost of acquisition through their direct high street stores, by taking into account the real overheads in their monthly profit and loss accounts for each shop and not hiding the rent, rates, and infrastructural support costs deep inside their annual accounts.
This will finally show them that paying an independent specialist to look after and have a proper relationship with the customer on their behalf year-in, year-out, is in fact far cheaper than directly offering the same customer a virtually loss-making deal.
Put simply, it is cheaper to pay a dealer £200 commission for a mid-high range connection and have little other costs, than to give most of the £200 away to the customer through their own shops with crazy deals and have massive overheads.
In 2007, there should be a proper study on this by the networks and it will pay back handsomely by what they find. We will willingly partake in any experiment.

Ben Marnham, COO, Alternative Networks

The current trend for consolidation will lead to a reduction in the number of channel partners that are truly independent. But those businesses with the right scale and strategic partnerships with multiple suppliers will still be able to offer customers a choice.
The opportunity for the channel will be to join-up the component parts and deliver the customer a complete solution.

Frank Masson, sales director, European Telecom

Few could have predicted this time last year many of the key happening that took place this year  networks getting as tough as they did on quality business, and some actually ending long and trusted partnerships to make their point.
It is therefore key that networks and device manufacturers alike closely align themselves with trusted partners that will deliver their message to the market as seamlessly as they would themselves. All networks are now part of worldwide corporations with big responsibilities to shareholders based on delivery of high-quality, high-spending consumers.
Looking to 2007 I see a whole lot more of the same, where only the best will survive. The networks have tasted blood and will not be slow to dispense with any unwanted partner.
I believe the networks will continue to grow their retail base in the high street together with significant investment in their online activities with even higher amounts being spent on retaining those existing and newly acquired customers.
I also see a couple of the international distributors enter the fray next year.

George McPherson,group managing director, Phones International

Networks have adjusted their requirements from volume to a focus on channel segmentation, quality and more effective spend of their SAC fund. Effectively they want more bang for their buck and everybody has felt the repercussions.
Despite this, however, there is still plenty of upside for us in distribution and I remain optimistic, though not complacent, about the future. What opportunities do I see?
Consolidation is certainly one: the market can no longer sustain the number of players it currently has. Combine this with the rumours that Brightstar or Dangaard want to enter the UK market and this makes consolidation even more probable. I would not be surprised if at this time next year there were no more than three serious distribution business in the UK and Data Select will be one of them.
The traditional view of distribution as just box shifters has long been an anachronism  we would not have survived if this was so. We are the most inventive, challenging, creative and forward-looking channel. We have to look for all the new opportunities  as the networks want to own all the existing ones.
Distribution will become more competitive and squeeze those who are not growing. They will become marginalised and either fade away or be swallowed up.