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How the Phones 4U collapse will hurt the UK mobile market

Friday, September 19th 2014 by Cable.co.uk
How the Phones 4U collapse will hurt the UK mobile market
The collapse of Phones 4U spells an uncertain future for the high street middleman in the UK mobile market.

On Monday (15 September 2014), 5,000-plus Phones 4U staff – and thousands more of the company's customers – woke up to dismal news that the 18-year-old retailer had entered administration, and that stores and concessions up and down the UK would not be opening for business.

In retrospect, it wasn't that hard to see coming. Last month, its biggest competitor – Carphone Warehouse – joined forces with Dixons in a merger that spelled the end for Phones 4U's concessions in the latter's stores. Then, at the beginning of September, Vodafone ended a reseller contract with the retailer. EE had become its sole network partner and the thread by which its business was hanging.

Since that thread was cut, which happened this weekend, Phones 4U bosses have made no secret that they consider the two network operators responsible for the company's collapse. John Caudwell, its founder, sent out a tweet suffixed with the hashtags #ruthlessvodafone and #ruthlessEE. Chief Executive David Kassler was equally explicit: "The great service we have provided should have guaranteed a strong future, but unfortunately our network partners have decided otherwise," he said.

As the week has transpired, there's been no shortage of rumours and speculation on how talks between the companies broke down, and impassioned statements from all angles have only served to further obfuscate the debate. However, it's important that we don't lose sight of how this whole affair will actually affect consumers: it's going to create a less competitive, more carrier-centric mobile market in the UK.

Vodafone and EE weren't just dealing a blow to Phones 4U, but to the very concept of a high street middleman. It's no secret that the UK's network operators are working to grow their own retail operations, with both of the above in the midst of highly-publicised high street expansions. EE, Three, O2 and Vodafone don't want to work with resellers – they want to deal with their customers directly.

For the high street phone-buying public, this translates into less room to negotiate contracts, less transparency when comparing two or more operators' plans, and fewer unique options like contract buyouts – a rawer deal all round.

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