Could Mobile Phone companies get out of direct sales?

The latest JD Power survey has showed a fairly major drop in mobile phone calls over the last year......summary in The Register

The survey, of nearly 3,000 UK mobile phone users, found that pre-paid customers are making an average of 10 calls a week, falling from 14 last year. Contract customers average 27, down from 35 in 2006, but those customers are now sending 46 text messages every week, up from 32.

More worrying for the network operators is the amount customers are saving by using text. A pre-pay customer is now spending an average of £12.35 per month, down from £19.29 last year, and even contract customers have seen a 20 per cent drop in their bill (from £40.44 to £32.45).

Among pre-paid customers, those with O2 are spending the most, averaging £13.95 every month, while Virgin customers are only spending £10.90. Orange has the most spendthrift contract customers, averaging £37 a month, while Virgin is again the home of the cost-conscious at £26.50.

These are quite big drops, to put it mildly. If these % drops are carried through across the board then there will be a need for serious restructuring of these companies.

Or will Mobile TV save them

Unlikely...the big costs in a Mobile phone Co are the direct and indirect costs of persuading, incentivising and subsidising customers to buy the phones - and in hypercompetitive markets like the UK this cost really hurts the RoI on each new customer, usually pushing breakeven way beyond the 1 year limit of most contracts and making PAYG a much more risky proposition

So, despite falling incomes, the networks are still desperate to reduce churn rates - apparently.

(Radical Hint....try investing in great customer service....a grumpy customer tells 7 others, and that data is from the pre blogging era - its probably an order of magnitude higher now at least! )

Reducing churn is actually quite sensible - in most industries, the cost of new customer acquisition is c 5-10 times greater than keeping an existing one. In fact, given the UK's hypercompetition and the existing subsidy model the ratio in mobile could be a lot higher.

So, given this and that the UK market share of the Big 4 has stayed relatively stable despite all the hypercompetition, is there an argument for just shutting down nearly all the sales functions and spend some (1/5th?) of the huge savings on just incentivising existing customers to stay?

A 'phone is increasingly a commodity, there is no real reason why it should be sold from branded retail stores rather than through other retail channels - I don't by my camera from the Nikon store or my HiFi from the manufacturer's store, or my DSL from the BT store.

....maybe even go a bit "Web 2.0" and market them virally over the Web instead......

And why stop there?

Some wags have suggested that Planet Mobile data traffic is essentially pre Microsoft devices running on pre-Internet networks - i.e. there is a lack of dominant standards, and extremely high friction in moving value added content and services. This puts large lumps of cost in the system, that until now have been justifiable as they defended the high prices.

But clearly this is no longer the case, so it will be increasingly important to take these inefficiencies out of the mobile value chain.