Beware of Cable

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Beware of Cable

On the one hand, you have the Top MSO's - Comcast, TWC, Cox, Charter, Cablevision and Bright House - taking market share rapidly, primarily due to its better broadband bargain and its willingness to build out fiber.

On the other hand, cable sells a commodity item at low prices. Obviously, not just cable prices are low, T1's are under $300 in major areas; EoC is inexpensive; and Internet bandwidth in major hubs is under $1 per MB! It is taking more and more sales to make a living.

My comment in Channel Partners - "Beware of cable changing channel rules in 2013 and acting like AT&T or Verizon" - raised some eyebrows. When you look at the whole landscape, my prediction might be early, but it has to be heard.

The RBOCs - AT&T and VZ - are able to do what they want to the Channel - and they do - because they are the largest two carriers in the US. They have a brand name. They are the default carrier. Customers ask for their service. I wouldn't willingly get a quote from either carrier unless it was a specific request from a customer - and I had tried to persuade them to an alternative.

Due to demand, brand, and reach, Agents have to put up with the antics of the RBOCs. The training, the ever changing rules, segmentation, commission nightmares, etc. due to demand mainly. Think about that.

Now the RBOCs are clipping copper and petitioning the FCC to relinquish regulations. That's another post. The RBOC's still have a monopoly mindset and hate competition. They suck at competing without cheating. VZ decided they couldn't beat cable, so they JV-ed with them. AND the FCC let it happen!!!

To me this means that cable companies in some areas will become the de facto service provider. The monopoly mindset that is prevalent inside the RBOC is also prevalent inside the MSO. That mindset means that sharing sales with an external group is unnecessary.

Many direct sales execs in MSOs resent the channel and dislike wholesale. Hmm, where have we seen that before?

Several of the top MSO's would rather have a referral program than a full fledged Agent program.

A couple of them will have trouble justifying the growing line item of commissions on the balance sheet - just like ILEC's do.

Some channel heads think that VARs make better partners because they aren't just selling commodities. I can't see the difference between a VAR selling a broadband circuit with his managed IT or backup service and an agent just selling the broadband circuit. To the carrier, the sale is the same. The piece I agree on is that the Agent has to be selling more than just broadband and voice. To make a decent living, Agents are going to have to capture more of the telecom/IT wallet per customer going forward - and those services can come from a vast array of service providers.

I have much respect for Michael Fair at Charter and Craig Schlagbaum at Comcast. Agents need to be diversified and have multiple streams of income (from multiple service provider types - SAAS, transport, backup, transit, voice, IAAS, MDM, etc.)



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