Cutting Room: Reality check for the high street


Michael House argues that ever-increasing sales targets could be one of the main reasons store staff are continuing to box break

For years the network operators have ignored the scourge of box breaking. In the rush for market share their head-in-the-sand approach only sees connections.

Yet the more connections they make and the more equipment they sell, the more money they lose. Contact an operator’s press office for a comment about box breaking and you’ll be told it’s not an issue so there is no point talking about it.

Two weeks ago we reported that some box-breaking gangs were making up to £60,000 for two weeks’ work buying handsets from retail stores. To which one operator spokesperson sniffily replied, “It always fascinates me that this (subject) is still knocking about. Naturally, we take box breaking seriously and take the necessary steps to avoid it.”

It’s an extraordinary dismissal of a problem estimated to collectively cost operators more than £300 million every year in lost revenues and subsidies.

I am originally from Zimbabwe and have witnessed first-hand the extent of box breaking in that country. Go into any independent mobile shop in Harare and you can buy just about any highend device, most of which are branded to UK operators.

Orange is not a particularly famous brand in Southern Africa. But there are thousands of Orange-branded handsets being used on Harare’s streets, making calls and sending texts.

Zimbabweans buy these phones without a second thought. The furthest thing from their mind is that they are using unauthorised UK stock.

There is an unlimited and insatiable demand for mobile technology in the developing world where the number of mobile users has doubled to 500 million in three years.

And millions of these people want the latest devices now, at whatever price it costs.

Useless controls
So, with Third World demand for devices outstripping supply, where are these tech-hungry consumers going to easily obtain their handsets, other than from a shipment of phones meant for UK activations?

Yet in the UK, where the bulk of these devices come from, the problem is dismissed.

At least Everything Everywhere VP of commercial trading Neil Macgeorge seems to be acknowledging the seriousness of the situation. He admits box breaking is a main reason subsidies will be removed from Everything Everywhere prepay devices (Mobile News, issue 489).

Previously both T-Mobile and Orange distanced themselves from the box breaking problem claiming they had it under control by limiting per person sales and monitoring credit and debit card transactions.

His may seem like a foolproof plan. But all Macgeorge and his team have to do is make a few undercover enquiries, as we did, and they would realise their box breaking controls are about as effective as a chocolate fireguard.

Rule breakers
Only Carphone Warehouse appears to have a cohesive strategy for controlling box breaking. All our attempts to tempt Carphone staff into selling us quantities for cash failed. For once, the PR statements matched the reality.

On the back of our investigation, only Carphone can rest assured its press statements are valid. But O2, Orange, T-Mobile and most alarmingly Phones 4U, need a serious rethink.

Although I mystery-shopped posing as a tourist from Zimbabwe, I was absolutely honest about the reason for the purchase. I wanted to buy phones I could unlock and take back to Southern Africa. Some store staff even asked how much I would be able to re-sell them for.

We found that staff who were aware of the rules on box breaking were prepared to ignore them. The rule on two handsets, per person, per quarter was ditched in return for cash and applying under different names. Returning to the store on a daily basis with cash in hand would not be a problem.

The shocking result from our investigation is that it is perfectly possible for anyone without any specific industry knowledge to purchase, unlock and export handsets. Claiming Government benefits would be a harder task.

Sales targets to blame?
So why do store staff appear to want to risk their jobs? Perhaps it is for extra commission, thus doubling the hit their employer takes on the subsidised equipment. But many store staff say prepay commission is minimal, if it exists at all.

The real motivation appears to be to enable staff to reach prepay sales targets they consider impossible without catering for the box breakers.

Herein lies the problem. Prepay numbers are declining, but staff claim this downward trend is not reflected in their ever-increasing sales targets.

Thus, we have the scenario of management in its ivory tower dictating sales strategies at odds with the realities of the market and the street. Perhaps box breaking will only come under control when the losses from box breaking are deducted from the attractive salaries of the head-office sales team.