Crime for the Upwardly Mobile: Demand for mobile phones, the yuppies' old hallmark, is rocketing among the masses, and now, in a fiercely competitive market, teenage criminals can make a nice living selling stolen ones to crooked dealers on the cheap

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The Independent Culture
DETECTIVE Sergeant Jim Dickie sits with his feet up on the desk of his small office in Chelsea police station. He tells me about how he spends a great deal of time following teenage boys around the streets of Chelsea and Kensington. 'They check out virtually every car. They do all the stuff of looking in the car, looking around, walking round the block, then coming back and breaking the window with an elbow or a brick. They're just normal lads.'

Behind his head, on a shelf, is an NEC P3 mobile phone in its recharger. The P3 is a heavy, cumbersome object, fitting into a jacket pocket at a pinch. It's too bulky for a trouser pocket. It's a cellphone, which means that it sends radio waves through base stations across the country; the battery runs down after a day or so, because, unlike a pager, it must constantly send a signal, even to receive calls. When you speak into it, if you're beside a hill or a large building, or a copse of trees, your voice crackles and can become virtually inaudible. It's nowhere near as good as a fixed-line telephone.

But this is exactly what the kids are looking to steal from the Mercedes and BMWs in the streets of Chelsea. 'The most popular,' says Dickie, 'are the P3, the P4, the Panasonic F-series and the Motorola Tac-2.' In Chelsea, carphone theft accounts for between 30 and 40 per cent of all vehicle crime; nationwide, 10,000-12,000 mobile phones are stolen every month. And the thieves are not just taking telephones from unattended cars. These days, there is a lot of what Dickie calls 'Chicago-style crime in traffic', in which thieves pull open the doors of cars stuck in traffic jams and rip the phones out while the driver cowers. Recently there have also been reports of pedestrians being mugged for their phones while they are talking into them.

The theft problem, Dickie says, is rife in rich areas of London, places with a high density of mobile phones. But it's spreading, fast, as cellphones penetrate the market more and more - everybody wants to be reachable, to chat to people when they're on the move, to have the business edge, the little bit of extra social flair.

Cellphones started out as an elite item, but now they've broken into the mainstream population. The sales graph is steep indeed - the same number of cellular phones have been sold in the last seven months (700,000) as were sold in the previous seven years. At the moment, cellphone crime is costing the industry - and, indirectly, the consumer - an estimated pounds 50m a year, because of the loss of talk-time. Stealing phones and re-selling them cheaply takes them out of the hands of reliable users and gives them to less reliable ones. 'If the industry admits they're losing pounds 50m a year, you ask yourself what the true figure is,' says Dickie.

What's happened is that the mobile phone market has expanded spectacularly. Five years ago, it was a specialist market for businessmen and show-offs. Two years ago, it was still a specialist market for businessmen and show-offs. But now it's taken off beyond people's wildest dreams. 'In Italy,' says Gary Stevens, a telecommunications specialist at Natwest Markets, 'people are walking around with handsets in the back pockets of their jeans. It's going to become that sort of product. It's going to be bought in the way people bought Swatches.'

In fact, there's so much opportunity in this market that it's being cluttered up with substandard technology, false promises, and cowboy entrepreneurs. It's a kind of grey economy, with constant technological change, lots of loss-leaders, small-print rip-offs, and government regulation lagging behind events, attracting criminals. The Government, in an effort to avoid one company establishing a monopoly, prevented the major networks, Cellnet and Vodafone, from selling directly to the public. As a result, the mobile phone industry became a nightmare of middlemen; a grey economy of sweeteners and theft, in which sellers of air-time pay money to dealers if they can connect people; this works fine until the balance is disturbed, when a price war starts. Then the dealers, forced to sell the actual handsets cheaply, stop making much for themselves.

This is New Age capitalism gone wild.

What is being sold? Information? Keypad units? A service? All of these things, from different salesmen. 'The problem is the huge kickbacks that are paid. It encourages criminality,' says Dickie.

Another thing the Government did was to issue licences in 1989 for one-way systems (Zonephone, Phonepoint, Callpoint, Rabbit), and, shortly afterwards, for a competing system - a low-cost two-way digital system (Mercury's One-2-One), which allowed you to receive as well as make calls. It should have been obvious, as Ian White, editor of the industry's newspaper Mobile News, says, that the more advanced technology 'would totally blow the others out of the water. What was the Government playing at? It shows they didn't know what they were doing. Rushing into deregulating mobile communications has resulted in the loss - the waste - of more than pounds 200m.'

Zonephone, Callpoint, and Phonepoint all went out of business over the last couple of years. Rabbit announced this week that it, too, will cease trading at the end of the year. Mobile communications are always catching people off guard; Shell, the oil company, who were part of the original Rabbit consortium, were disappointed to find that they could not, as planned, put a callpoint in every forecourt because of potential problems with radio emissions from the handsets.

The kids who steal the phones are being organised by crooked high-street dealers. The dealers want stolen phones because the market is too competitive - the price of the phones is always dropping. The dealers make money by selling the phones at a loss, but picking up connection charges from middlemen called service providers, who themselves buy airtime from the two networks, Cellnet and Vodafone, and sell it to the consumer. The service providers are the Government's monopoly-denying buffer between the two networks, Cellnet and Vodafone, and the public.

What happens is this: the service provider pays the dealer a sum (the figure varies, but pounds 200 is typical) for providing him with a phone- user, a 'connection'. This phone-user pays the service provider a monthly line rental, and money for use of airtime - between 25p and 50p a minute. The pounds 200 fee the service provider gives the dealer is slightly more than the loss the dealer makes on the phone (say pounds 150); the dealer, to remain competitive in such a hot market, must undercut the competition. The dealer often buys the phones from the service provider, and pays as much as the service provider can get away with - they have the dealers over a barrel.

If you're a dealer, then, it makes sense to sell stolen phones. You can buy one for pounds 50 or pounds 100 from a teenage kid, and sell them for the same price, making pounds 200 profit on your connection fee. Some dealers simply pay the thieves with drugs - if they are, say, crack addicts, the phones can be bought, in real terms, for less than pounds 50 each. Normally, however, the pay-off is in cash.

And naturally, if you're a service provider, the more connections the better. When a phone is stolen, if the owner has insurance, they get a new one straight away. But replacing a phone can cost twice as much, or more than twice as much as buying it in the first place. If you are buying replacement hardware, the dealer doesn't have the incentive of a connection fee, because you're already connected. The phone is only cheap because of the kickback. 'People realise, when they get nicked, it's not worth pounds 99 - it's worth pounds 300,' Jim Dickie says grimly. 'Insurance companies are beginning to ask themselves: can we afford to insure mobile phones?'

While there are two networks and 43 service providers, there are around 1,000 dealerships in London alone, and around 3,000 nation-wide. You see them all over the place: mostly small, recently rented premises on high streets and in new shopping centres. Their staff can get very squirmy when you tell them you're a journalist. Nobody is keen to tell you how the business works unless you promise not to name them.

This dealership was in west London. I saw how recently the small front room had been fitted; the new carpet tiles, the bare fuse box and pipes, the half-painted walls. The assistant was a woman. She only makes money on the phones themselves, she said, 'if we find someone who's selling them cheaply enough'. For the small dealer, she said, the task was to get cheap phones, and to deliver good customers to the service providers. But bad customers - impostors, for instance, or criminals - were often better than no customers at all; dealers often turned a blind eye to a customer's obvious criminality. Service providers required either a deposit or a credit check; dealers often 'helped' customers to get through credit checks. 'They tell them they'll never get through it, and to come back with someone else's credentials. Sometimes they run a credit check, find the person to be non-creditworthy, and tell them to go and get a deposit.'

Of course, a crooked service provider is interested in selling airtime to anybody. We all know that drug dealers rely on mobile phones. And how many of them would pass a legitimate credit check? The whole business, she said, has become much more crooked since the price of mobile phones had gone down because the general public had been buying them. Time was, she said, when your customers were reliable, when they were all bankers and the like, with their companies picking up the tab.

Cellphones are issued with electronic serial numbers, or ESNs, a measure to enable the phones to be traced if they are stolen. But dealers can quite easily 're-chip' the phone and issue it with another number. 'They plug it into a laptop, erase the old ESN, and put a new one in,' says Jim Dickie. Then it becomes, in effect, a new phone.

Of the new GSM digital phones, which require a personalised smart card to function, Ian White says: 'Secure? Yes, in the sense of eavesdropping. But they're just as desirable to the thieves as any other phone.' The hardware is nothing until you put a card in it. So you have to steal - or make - your own cards. Not impossible.

Every day, you want a mobile phone a little bit more than you did yesterday. If you've already got a mobile phone, every day you want a different kind of mobile phone a little bit more than you did yesterday. For instance, like Jim Dickie, you might have the NEC P3. Not a bad phone - one of the thieves' favourites, in fact - but a little bit on the heavy side, a bit big. But have you seen the P4? The P4 isn't just a briefcase phone, a jacket-pocket phone - it's a true trouser-pocketer. Some of my friends have already made the switch. And they wonderhow they got by before.

Have you seen the ad with the sweaty man on the jogging treadmill, holding a first-generation mobile phone? Or the one with the fat yuppie holding a thing to his ear - Is it a brick? Is it a car battery? - and saying: 'This is serious spondoolies, Charlie]' You're supposed to think: these are not yuppie items - that's all over] You're supposed to say goodbye to the yuppie image along with the bulky cellphone. They're telling you little ones won't stigmatise you.

We've been bombarded with advertising telling us that if we don't have a mobile phone, we're not smart, not fashionable, not safe. A woman, frightened, looks around her stalled car. It's dark. The camera plays on her frightened face, her nervous fingers. She picks up the carphone: 'Darling, you're there. It's getting dark. I'm stuck. But I'm not panicking . . .' There's a burst of Hitchcock-style music, a face at the window. . . and it turns out to be a friendly farmer. This is to advertise Vodafone's clever 'Lowcall' service: line rental is cheaper, calls more expensive. It's aimed at the person who sees cellphones as an expensive indulgence - the large, untapped part of the market, poorer people. 'But then, you'll only be using the service when you really need to.' Oh, yes? Is that right? The hope, it seems to me, is to get poor people to see a luxury as a practical tool, and get them addicted to it. Mobile communication is a drug. First, you become a user. Then you become a heavy user. Then you want a better-looking phone. The point of this Vodafone ad, in the words of the company's agency, Leopard, is 'to position Lowcall as part of everyday life'.

So how much do you save, if you have Vodafone Lowcall, rather than Vodafone business rate? Well, you pay pounds 25 to get the phone connected, and pounds 15 a month line rental, as opposed to pounds 50 and pounds 25. But calls cost you 50p per minute at peak time, as opposed to 25p. So you're potentially throwing away pounds 1 every four minutes of calling time. Forty minutes peak-time talk per month and you're saving nothing beyond your initial pounds 25; more than 40 minutes and you're eating into it. (Roughly, that's a minute and a half a day, or five minutes twice a week.) Don't people want to talk more than that?

Yes, they do. That, ultimately, is why people are being mugged, people are smashing car windows, breaking into people's cars in traffic - because the market's so buoyant that there is a huge demand for phones that sell cheaply.

Convicting the thieves is difficult. Dickie says: 'It's hard to prove the handler knew it to be stolen.' Sometimes the police need three months to build up a case against a bent dealer. But, says Dickie, they recently seized 250 phones from a single dealership, all of which had been re-chipped. 'Through technology,' he says, 'we have been able to trace the owners of these phones.' He would not, of course, reveal what the technology was.

At the moment, 12 cellphone dealers are awaiting trial. And one man, David Mbaungo, has been convicted on six charges of handling stolen mobile phones and one charge of obtaining services by deception. He had taken on the identity of an Irish builder, John Casey, who had been dead since 1974. His penalty was 180 hours' community service and a pounds 500 fine. 'Which is a joke,' says Dickie. 'He'll pay that with two reconnections.'-

(Photographs omitted)