Channel slams new O2 commission deals

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The independent channel has been caught short, and angry, by O2’s decision last week to suddenly cancel upfront commission payments in favour of an ongoing revenue structure.

O2’s channel partners were until now paid upfront fees and bonuses according to voice tariffs and bundles they connected.

Instead, from last week, they now receive a down payment of 48 per cent of projected revenues over a 14-month period, with a reconciliation payment/clawback at months seven and 15.

But many were angry last week at the suddenness of O2’s move and by a lack of support, with many left in a tailspin as they overhauled their systems to cope with the new package.

O2 responded: “We have been speaking directly to our entire distributor channel on an individual basis throughout August and September to inform them of the planned changes and have had a detailed consultation period with them.”

But one leading distributor source said: “It’s turned our world upside down. It has been rushed in, with too little guidance.”

Another said: “It’s completely shambolic. O2 has thrown it out there and then gone into hiding.”

O2’s Advance dealer partners meanwhile have been given until January to join the new scheme, Mobile News understands.

Distributors accepted, largely, O2’s premise for the new scheme: to reward high ARPU connections and reduce acquisition costs on lower-value deals.

But several distributors and dealers were angry O2 has dropped its £100 BlackBerry data bonus completely, and rescinded its grace period for deals written under old commercial terms and processed under new terms. One dealer claimed to have lost more than £2,000 on one deal.

But O2 insisted: “The 28-day process of honouring changes to commercials has not changed. If the opportunity was logged, and registered with O2 and the distributor before the end of September, it will be honoured.”

Distribution sources claimed O2 instructed partners consumer connections should be processed on old dealer codes, according to the old remuneration scheme.

A number of prominent B2B dealers were, meanwhile, considering boycotting O2 and churning customers to rival networks.

The new pay scheme requires them to subsidise handsets on lower-end tariffs, they said. Even O2’s offer of £100 upgrade handset subsidies at month 12 are unviable, they added.

“O2 is trying to undo a decade’s work overnight. Consumer expectations of what handsets cost will be completely undermined,” said one.

“It has left the door wide open to other networks,” said another.

But the move also had some support. “It has been coming. O2 has led the dealer market in pursuing quality business, and this is another example of that,” said one senior distributor boss.

 

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