The Sharp End: O2, Parrot and Nokia

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Well we’re half way through the month of October and O2 has had its radically new commission structure in place for a couple of weeks.

However, many dealers are still totally confused as to how the new commission structure actually works.

The Phone Dealer Forum has seen some lively debate on the subject, with most questions seeming to be answered with yet more questions.

O2 has dropped a major clanger with regard to dealers on this new commission structure. It seems to have been rather ill thought out and without a doubt the communication through the dealer channel has been nonexistent.

In fact, personally I still haven’t been advised as to what the new package from the network actually is.

I, and many others, truly believe O2 has now made it clear to the independent channel it really does not value, or even want, our contribution to connections.

If it did, surely they would have made a much better plan for introducing these major changes.

It looks as if Orange will be going down the same route as O2, removing upfront commission and introducing ongoings.

However, it seems Orange will get the Christmas period out of the way first and introduce its changes early next year.

Hopefully Orange will introduce whatever changes it has in mind with plenty of forewarning and communication to all areas of the channel before it actually makes the changes.

I think everyone realises ongoing commission is the way to go and that networks will reduce up-front commission. But I would hope to see any changes being done gradually, over a period of say six months.

By gradually reducing upfront commission and replacing it with monthly ongoings, it will help a dealer’s cash flow.

And by spreading these changes over six months (or even longer), the ongoing revenue will hopefully start rolling in by the time the networks got to a level they were comfortable with for upfront payments.

The networks that don’t follow this new commission structure immediately will undoubtedly see a huge increase in connections, for a while at least.

Full article, discussing Parrot and Nokia also, in Mobile News issue 425 (October 20, 2008).

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