Threat to Smaller Mobile Dealers

James Hinchley of Fort William based reseller Telepoint has written an open letter to dealers in the mobile phone market urging them to join forces to counter a threat from network operators who, as Telepoint claim, are undermining the channel business by taking deals directly. His letter is reproduced below.

Dear fellow dealer,

How often have you successfully processed a mobile phone contract only for the rug to be pulled from under your feet by the network?

The very same network that you fork out rent, rates, advertising etc to promote has triumphed again by convincing your customer to do a 14 day return with their retailer and sign up for a better deal directly through the network instead. It appears that loyalty is a one-way street.

Sure, this is a cut-throat business, with each of the major networks vying for their slice of the market. But to stoop to the level of avoiding paying commission (and creating claw-back charges) by pinching customers who have been set up nicely by the small retailer is absolutely immoral and despicable, to say nothing of daylight robbery.

Remember it is you and I who put the networks where they are today. At the outset, they didn’t have their own shops and web sites and didn’t do the dirty tricks that undercut you at every turn. This only started quite recently. I have no problem with their having shops because they are paying the same rates, rent, heating, staff, and advertising just as we have to. No. We used to have a fair playing field and we are demanding one again.

Now that ‘3’, the youngest of our major networks has joined the ranks of those participating in direct selling, despite assurances at their launch that they would never do so. We have to ask ourselves, are the days of the small independent dealer numbered?

The answer is YES if we don’t stand together to be counted.

Have you heard the latest one?
3 are now contacting customers TWO months before their contract expires and upgrading them to stop us keeping our customers. I contacted Dealer Channel and tried to do the same but was refused. My customer was offered 6-month ½ price line rental on any of the packages but we can only do it on the VT ones. Second class citizen comes to mind here.

If current trends are allowed to continue, it’s inevitable that mobile phone contracts will only be sold in the future over the phone, Internet, or via the network’s own outlets or larger dealers like the Carphone Warehouse.

Does anyone remember how the British motorcycle industry adopted a philosophy of “it’ll never happen to us”, just before their industry shut down forever? They buried their heads in the sand, ostrich-like, thinking things would pick up in the future.

There’s a real and imminent danger that the demise of small independent retailers like you and me is just around the corner unless we’re prepared to do something about it. Ancillary organisations such as wholesale suppliers and mobile phone magazines will also be placed in a perilous position.

So what can we do?

Firstly, I’m sure you’ll agree that any action taken by individuals, or even small groups, would have little or no impact. To be successful, any action has to be large-scale and unified.

We have set up a Federation of Mobile Dealers (FMD) in order to convey our grievances to the networks and demand an end to their dirty practices and a return to a level playing field. As long as sufficient support is received from you and fellow retailers nationwide, we can approach the networks with a considerable amount of muscle at our disposal. The trump card we would hold is the threat to boycott networks that don’t play fair, meaning
a considerable loss of business to them.

Imagine if 50% of all independent retailers stopped signing up contracts for a variety of networks and purely gave business to, let’s say, Vodafone for example. Or conversely, if Vodafone were the offenders, boycott them and restrict contracts to networks that were compliant.

This is not a question of holding the networks to ransom; it’s simply a case of demanding a return to the days of level playing fields.

The major problem I can foresee is dealer apathy.
I’ll stress once more that this proposed action will be ineffective unless it’s universal.

I suspect many of you will agree with my sentiments, but unless that transfers into direct action and support, the shadow of the death knell over small independent traders creeps ever closer.

As a small retailer (our shop has two full and two part-time members of staff), organising the proposed Association mentioned above, and collating responses may prove to be time consuming and costly, depending on the scale of responses to this letter. If so, it may regrettably be necessary to charge a small subscription fee to cover such overheads at some point in the future. In the meantime, membership will be totally free and all costs absorbed by Telepoint International Limited.

Finally, it is beyond my capabilities to send this letter to every mobile phone dealer in the country, so please spread the word to others you know in the business and let’s see if we can generate sufficient interest to take on the networks before they bury us for good.

Please respond by emailing your views to, james@telepoint.co.uk. or by fax 01397 703917

Thank you for your time