Cutting Room – issue 418


It’s funny how quickly relations turn sour in this game, and for how long grudges are held.

T-Mobile has angered old friends. And the feeling is mutual.

VIP Communications has been fighting T-Mobile over the termination of its SIM card supply deal for four years now.

Its damages claim sounds frankly preposterous, although VIP insists it appointed a "forensic accountant” to come up with the equation, and filled it with T-Mobile’s own figures – that its potential revenue figure is deduced directly from T-Mobile’s calculation of its own potential loss figure.

Even so, £625 million? For a start-up? VIP surely won’t get all of that, even if it scores a palpable moral hit in the High Court of Appeal, or later in the European Court of Justice.

The thing with most vexed one-man claimants that go up against ‘The Man’ is the lurking conspiracy theorist.

We know from VAT fraud trials going through tribunals now that traders invariably claim ignorance of fraud in their supply chains. And yet, there is little doubt the Government has been swindled by the mobile trade.

The VAT tribunal appears to support a common sense view: the stink of foul play is down to both the bad eggs in the trade and the old rotters in Customs, spoiling it for everyone.

VIP spies collusion and skulduggery on the part of the incumbent network operators, the same as every defunct GSM Gateway trader.

GSM Gateways represented a new market four or five years ago. It promised cheap calls for customers and boundless profits for third-party airtime providers.

Network ARPU went through the roof. Revenue from termination charges went through the floor, or so the conspiracy theory goes, and the networks pulled the plug, in a mean-spirited and collective show of anti-competitive force. Or so the same theory goes.

The thing about this view of network behaviour is that it is extremely fashionable at the moment – just ask mobile VoIP providers what they think of network control of unreal voice charges; just ask Viviane Reding, who has exercised bludgeoning political power to bring them in line some; just now with cuts totext messaging abroad.

Still, VIP won’t get its £625 million, although an inter-continental band of 40-50 GSM Gateway operators will seize on any scraps in the UK High Court of Justice this month.

Serious damage could be done to network operators; Vodafone, O2 and Orange included.

Which brings us back to dealerland, where Olive is fighting a rearguard action to stop T-Mobile annihilating its entire business and the humble IMPDA is attempting to convince Ofcom a small and old-fashioned market place is getting slowly wiped out.

The details of Olive’s fracas with T-Mobile are murky. Sub dealing. Well, no network likes that. But, like VIP, it claims it had T-Mobile’s permission.

Most dealers, GSM Gateway operators and mobile traders – and certainly those with any previous with The Man – will presumably understand and cheer Olive’s forthright response to rejection.

Unfortunately, the networks are in charge of sales in the UK, and a T-Mobile skirmish is perhaps just a warning of general network policy.