The Cutting Room

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It might have taken cold calls to MPs and Orange VPs, plus pressure from Ofcom, for Orange to move on misleading sales practices, but this action appears decisive and measured.

The fact its dealer review covers a six-month performance window will irk some of its victims, on the grounds they may have been loyal to Orange before the assessment period. Some will be unfortunate to have been caught in such a wide-ranging net, which is hugely disappointing and should be addressed.

But, and this statement perhaps risks alienating some Mobile News readers, Orange should be applauded for cutting off dealers in a way that other networks, which have taken similar measures during the past 18 months, should not.

Liberal approach

Orange’s approach to the dealer channel is, by and large, undemonstrative. It is not set on taking ownership of its routes to market in the kind of bludgeoning ways Vodafone and O2 are. And it is not reactionary like T-Mobile and 3 – both inconsistent, and both suddenly ruthless in their retreat from the channel.

Orange’s move to issue ‘do-not-deal’ notices to third party churn machines and to stamp out sharp practice is neither bludgeoning nor reactionary. If anything, it comes late in the day.

Orange has cut dealers in swathes before, but it has resisted wholesale changes to its code of practice for third parties. Here, it has merely refined it, and done so in a consultative manner.

It has not blamed distribution, middle men in the tumult, for high churn rates – far too soft an option. It has simply requested distributors to raise their games.

Unlike rival networks, Orange’s philosophy is not to cherry-pick partners or to ‘request’ them to pick sides with strong-arm money tactics. It believes the market will decide for itself which distributors will survive. That, alone, is a hugely commendable approach to business. Natural selection; survival of the fittest and all that.

At the end of last year, Orange was widely expected to persuade high street multiple retail to take poorer connection payments for exclusivity on contract sales, in the way that Vodafone and O2 had.

 

Networks at fault

And, to an extent, you get the networks’ dilemma about commission payments to the independent channel.

Market saturation and churn rates mean acquisition and retention are, basically, the same thing in multiple retail – a significant expense for negligible net customer returns.

But the networks have fuelled the machine and, so, such a dictatorial approach wears pretty thin. Of course, the acquisition/retention headache could be remedied by hiking upgrade remuneration for independents to discourage churn, and inviting new customers on the strength of the deal alone.

Which makes the headline figure of 150 in Orange’s dealer action fairly unpalletable.

But Orange never went beyond the negotiating table with any threat to terminate airtime contracts at the end of last year, which is entirely consistent with its liberal ethos for distribution, also demonstrated here.

Ultimately, the long-term benefits of its new code of practice for the distribution channel outweigh the short term costs of another 150 dealers falling by the wayside – because the networks still haven’t fixed their upgrade commercials.

 

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