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Cell phone makers fight resales September 10, 2006

Posted by tkcollier in Business, Life, Technology.
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Cell phone makers fight resales
The middlemen indicate an apparently insatiable hunger for the phones, with profits in some cases of 100 percent for a handset that retails for as little as $20.

The phones are so cheap because TracFone and other providers of prepaid cellular service sell them at a loss to create a market for their real profit maker, selling customers more call time.

A lawsuit filed in January by Nokia Corp. accuses Pan Ocean Communications of Pompano Beach, Fla., of buying $20 cell phones from Wal-Mart, Sam’s Club and Target Corp. stores, disabling their software, then reselling them for $39 as legitimate Nokia handsets. The company sold them to distributors, wholesalers, exporters and flea market booth operators, the lawsuit said.

Destinations have changed over the years, from Singapore in the past to Mexico today, said John Walls, a spokesman for CTIA, a cellular industry trade association that opposes the practice.

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