Cutting Room: ‘Distie’ carve-up due


Something appears to be happening in airtime distribution. Let us put two and two together and see what we get.

The days of five-network distributors are over. Avenir lost T-Mobile and then, swiftly, Vodafone. Redstone is the last, as it is the only one to retain a Vodafone distribution licence.

Rumours are mounting Yes Telecom is to rebrand as ‘Vodafone Distribution’ imminently, to set up as the central connections house for all third-party Vodafone SME business, which precludes Redstone retaining its full house. (Vodafone, as it stands, claims it has “no plans in the short term” to drop the Yes Telecom brand).

But would Redstone retain its other four network partners anyway? We should discount three of them from this supposition simply because the game appears to be between Vodafone and O2, the UK market leaders, to reshape the dealer market at present.

O2 has said in these pages several times the channel will be called to choose sides. This is not a new line of thought. Could O2 present Redstone with a choice now, as it apparently struggles to maintain performance and retain its distribution licence? Them or us?

HSC, whose parent Carphone has ironically been linked with a Vodafone reunion, could potentially be down to three network providers if O2 does turn heel. And the remainder are less illustrious brands, if more consistent performers in the dealer market.

Despite their parentage, both HSC and Redstone are still perceived generally as family businesses, with a nice line in after care and support. They have good reputations. It is a symptom, then, of the tough market that they are apparently struggling so.

O2 does not have much time for criticism of its revenue share scheme, and considers most of the complaints to be from stockists, rather than important business connectors. But its Centre of Excellence partners, those which have met its demands before, are now scrapping around for crumbs.

As one sage distribution source put it: “It’s like there’s a bush fire all around, and O2’s asked us to carry petrol. We are trying really hard, all of us in distribution. But there is a recession brought about by short finance, customers are reluctant to change or renew their business, and O2 has taken away cashflow. It is just impossible.”

Which is the issue for the traditional sales channel, in a nutshell.

HSC has angered its rivals, and even O2 according to some, by disrupting the market with huge  bonuses and aggressive poaching tactics. O2’s rule that dealers cannot switch distributors for six months once connected can easily be avoided by various cheats and dodges – HSC has its own connection code, for one thing.

But HSC is acting in exceptional circumstances. Like Avenir, with its bumper pay and rumours of its moves with its Vodafone customer base among its O2 dealers. This is a tough market. No one is offering dealers these types of O2 package and making any kind of money.

Most are losing out, gambling that the storm will pass and take out the competition.

There is something else, perhaps, in this rough equation. Keith Curran. Yes Telecom – Curran’s old Yes Telecom and Tanny Price’s potential Yes Telecom, come to nothing – is the jewel in the distribution channel.

For ease-of-use and for dealer support no distributor comes really close. That was the real draw for Vodafone, along with the quality business it was writing – even now, the 2007-model Yes Telecom is something of an ideal for dealers and network operators of how the channel should run.

But Yes Telecom is in a mess. Vodafone head of indirect sales Dale Parkinson, the man handed the job of righting it following the Price debacle, has been overseeing it for the past 12 months, through its late decline, and up to now has rarely set foot in Yes Telecom’s Didsbury base.

Yes Telecom should be great for Vodafone. It has a captive audience.

Its troubles have been a huge opportunity for O2, meanwhile, which is understood to have struck up dialogue with Curran about a business MVNO, dubbed ‘Know Telecom’, for the mobile and IT dealer market.

Could there possibly be a neat resolution to all of this, for O2 at least?