Tanny Price (pictured) has driven Avenir from the front at a time of extreme contraction within airtime distribution. The whole dealer market, which she joined from Orange 11 years ago, has been torn up, and middle-men distributors are desperately seeking new markets.
Of all UK airtime distribution heads, Price has been boldest; her strategy most divergent.
She gets out just as O2 introduces revenue share, dragging the channel finally and scornfully away from what the networks set it up for in the first place. Important, not just because of the seething anger at O2’s treatment of the dealer market, but because it is illustrative of the whole channel/network aggravation.
The networks sold revenue share as a good idea. In reality, it’s not a good idea for the channel. When the cost of sale was fixed, by commission, the networks didn’t like it because their user revenue was variable. But the channel loved it.
Now, cost of sale is reflective of real user revenue, and so variable. The channel hates it, because it exposes its lack of power and inability to compete. And the timing, with recession upon us, is terrible.
With pricing pressure, user revenues go down. So dealers are now making on voice and data sales what they did six months ago from straight voice connections. Revenue share cannot sustain a dealer market.
Yes, the distribution channel can be slagged off for churning customers for easy payment. But such an argument misses the essential point: it is a Frankenstein’s monster. The channel was created in the first place by networks desperate for the public to use mobile airtime – so desperate, they’d give away hardware for free and pay a speculative commission on top.
Dealers flocked in on the promise of easy money, sure, but the shyster element has also now flocked off. Those now subject to O2’s heavy-handed corralling would claim they never encouraged a UK consumer market to expect free kit. Quite the opposite, when Orange first challenged them to sell its expensive handsets 10 years ago.
Which is why Price’s boldness at Avenir is to be applauded.
‘Convergence’ promises to correct the error of subsidy in UK mobile sales. Smartphones have processors, chips, Wi-Fi, diary, email, office applications, camera, MP3 player, GPS – why shouldn’t a punter expect to pay a premium for such a device?
Smartphones can get the channel there. Time can get the channel there, too. Because 10 years ago, 14 year-olds were paying £79 for their first prepay phone. They are 24 now; prime market, and looking for a premium smartphone.
Has Avenir done well, financially? Not madly well. But it has made the running. Its partnerships with IT firms play on the same ideal that customers will pay for product and service.
Independents hope Price will be an ambassador for the beaten distribution channel in her new role at Vodafone.