Out of the handset frying pan into the fire – letter to the editor

This letter was issued to selected journalists within the telecommunications field

Dear Sir,

Noriaki Ito, head of strategy at NTT DoCoMO has recently raised concerns about the incentive system for buying mobile phones. However, it’s unfortunate that the concerns are raised only in response to profit issues at carrier level and not as a reply to the changing patterns of consumer behaviour.

Some very strong independent businesses have always sold consumers handsets using the business model more dominant in the US and Arabic countries. In this system one simply buys a phone and then attaches a contract. The benefits for the consumer are rife. Early adopters can change phone as often as they like, while price sensitive customers can opt for a cheap handset that is paid for only in initial outlay.

The fundamental problem with the hybrid payment system suggested by Mr Iko is that customers will pay more for their handsets – not less. I am reminded of Dickens’ Fagin inviting Oliver Twist into his gang, explaining how much better life would be in fire, compared to the frying pan. However, I would temper this by stressing that DoCoMo is without question amongst the most progressive businesses in the industry – at least it is raising the issue of handset pricing.

Best regards,

Ali Mahmoud
Managing director
mPhone.co.uk
191-192 Temple Chambers
London
EC4Y 0DB
Tel: +44 (0) 20 7583 6859