Orange and T-Mobile dealers selling consumer contracts have been hit by swingeing cuts to commissions, as EE moves to bring consumer sales in house.
Under new tariffs introduced this month, b2b dealers selling consumer contracts say they will see their average revenues per box cut by up to £50. EE is also making changes to the way ongoing commissions are paid, with the upfront payment increasing to around 25% rather than 15% paid monthly across the life of the contract.
Dealers gave a mixed reaction to the new tariffs this week which were published in EE’s August price book. One said: ‘EE’s commissions on consumer deals have dropped like a stone. It is nearly unviable to build a deal.’
One major dealer said: ‘The problem is that it has not been handled well at all and has come out of the blue. It has been very poorly managed. There should have been more notice.’
Dealers attributed the changes in consumer commissions to a wider strategy by EE, aimed at driving up consumer revenues.
One said: ‘The long term plan is for EE to do all consumer sales themselves, not via the indirect channel. They want more control. Up until now they have been investing too much customer revenue back into the channel. They just don’t make enough money on consumer sales via the indirect channel. They have been bringing in relatively low spenders. Now EE wants to rectify that by bringing consumer sales inhouse.’
Others agreed that EE is on a mission to bring in higher spending consumer customers. One dealer said: ‘The amounts these deals bring in are small. These are traditionally low spenders and EE wants high spending customers. So they want to drive up revenue and reduce duplication by pushing this business to their stores.’
Others speculated that EE is preparing to dump both the Orange and T-Mobile brands.
One T-Mobile reseller said: ‘My suspicion is that they are trying to negotiate a soft landing to kill off the T-Mobile and Orange brands whilst not alienating their stronger performing dealers. I just wish they would authorise us to sell EE to make up for the drop in business.’
However one dealer, who stopped selling consumer deals last year, said EE’s strategy has been clear for some time. He said: ‘The writing has been on the wall for ages. I am amazed anyone is surprised by this. We stopped selling consumer deals some months ago because revenues have been falling for some time and it was clear then that EE was moving this inhouse.’
Dealers attributed the changes to consumer commissions to EE’s plans, revealed last month to launch a major b2b push in a bid to become the leading b2b network by 2016.
‘EE wants its dealers to focus on b2b alone,’ said one dealer.
An EE spokesman confirmed changes had been made to the commission payments but said it was part of a strategy to harmonise the way it pays commission across its three brands. He said: ‘We’re simplifying the commission structure, bringing into line our terms across the three brands to make things clearer for our partners selling 4GEE, Orange and T-Mobile.’
The changes follow news of EE’s plans earlier this month to cut its 1,500 strong b2b dealer base by two thirds, by terminating the contracts of dealers with fewer than 50 customer telephone numbers on ongoing revenues.
Author: Carol Millett