Recently in channel Category

I received an invite yesterday from XO to come down to the Tech Data Expo at the Don Cesar Hotel in St. Petersburg FL. ADTRAN shared the booth with XO at this event. Surprisedly, the other two carriers that distribute through Tech Data had assigned booth space, but were absent. 

XO is a good fit for Tech Data. While I think the XO catalog is too large to know well - wireless, hosting, IP, VOIP, transport, collocation and more - the VAR's at Tech Data vary so much in what they do and what would complement their business that the wide selection helps - IF you can get in front of them and remind them throughout the year how they can take advantage of the additional revenue stream. 

For many VAR's the advantage of XO through Tech Data is that there's no contract (especially for those VAR's already under contract with Ma or Pa Bell) and with Tech Data as the "master agency", it isn't likely you need to worry about your residual check.  (And now that XO has converted their debt, it is in a good position going forward, which other debt laden CLEC's can't say).

Many VAR's are already in the PBX space and were asking about SIP. I wasn't sure if they actually grasp the concept of SIP or that they just know enough to be dangerous. The biggest difference between a PRI and a SIP Trunk is Inter-Operability. PRI is a standard with two available configurations that work with almost all the PBX's on the market. SIP Trunk is a spec - a collection of a lot of RFC's that have to work together just right to provide dial-tone. Broadsoft, the softswitch that XO is using, has tested inter-operability on many IP-PBX systems. Not so for other SIP Trunk vendors. So before you sell that SIP Trunk make certain that the IP-PBX model will inter-op with your SIP trunking vendor. It's a mess if it won't work.

Remember the MCI Agents who didn't like the new deal under the Verizon Business umbrella, who were pushed aside and lost commissions? Did you know that when Verizon did their funky little deal with Fairpoint over the New England region, VZ agents were pink slipped. In fact, one agent is suing Fairpoint. It's the quote from Beth Fastiggi, a spokeswoman for FairPoint, that shocked me:

"We believe that our own local employees can better serve our local markets and, given the appropriate resources, will have the commitment and ability to increase our share of the local business market," Fastiggi said in a statement Friday.

Don't need agents. That attitude explains the lousy service, numerous complaints to the PUC, and the lose of over 100k lines - in a rural market!

Today, VZ announced it is spinning off the landline network in 13 more states - to a joint venture corporation with Frontier. I'm certain those customers are thrilled. At least, they had a slight hope of getting FTTH. Now, not so much.

Frontier does have a Business Agent Program. I don't know anyone in the program so I have no comment on how strong it is for agents.

Embarq agents are waiting to hear what happens to them with the CenturyTel merger. These mergers do impact both consumers and small businesses, especially the agent businesses.

"Level3 is expanding is expanding its operations in key local markets throughout the United States. These actions are designed to provide a world class customer experience for mid-market business customers in these markets. Level 3 is launching the first phase of this initiative in the Nashville, Seattle and Washington, D.C., areas, as well as upstate New York (Buffalo, Syracuse and Rome/Utica) and Colorado (Denver, northern Colorado and Colorado Springs)." [press release]

Level3 has gone back to the Type II CLEC strategy of offering service to everyone they can touch via their own network and UNE / Special Access from the ILEC. It is pouring personnel into these markets to take on as much revenue as fast as it can. Under that plan, L3 is having face-to-face meetings with its Channel Partners.

Please join the Level 3 team at a special Partner briefing and Open House event in Buffalo, Denver, Nashville, Seattle or Washington, DC, and see why it has never been easier to link globally and connect locally. Following the briefing will be a reception where cocktails and hors d'ouvres will be provided. RSVP to your channel manager for one of the following events in your local area (2 PM local start time):

Now's the time for agents to take advantage of the push in each market. Pricing and spiffs are aligned for this market push. Here's hoping this is the turn around point for L3.

This expansion by L3 comes after XO expanded in RDU and Charlotte markets last month.

In another pr, Level3 financing news.

When I talk with vendors in this space, they often suggest that getting into Costco or some other Big Box retailer would make their day. My father was a salesperson for P&G for 20 years working with Sam's, BJ's, Stop & Shop and other big chain grocers in New England. (Yes, even Stew Leonard). These chains re-designed aisles based on who was paying for what shelf space - and who was sending in labor to re-configure the aisle.

There's a good blog post here about marketing computer parts. Packaging, shelf location, colors, "The Offer", coupons, and more - all affect the retailing of a product.  You will have to fight for space for each SKU. There will be co-marketing funds needed. Your packaging will be very important - from color, to graphics, to wording, to message.

You'll still need to market to the end user too to drive traffic and demand for your product.  Getting on the shelf isn't the end-all. It's just a step.

Over the years I have worked with many VoIP Providers. A good chunk of my consulting is on The Channel, Referral Systems, and Sales Compensation.

There are a number of landmines that can destroy a relationship with an independent sales agent. These include but are not limited to:

1. Your quoting system (or time to quote)
2. How you track the sales and provisioning process.
3. How you track Compensation.
4. How you handle agents calls / issues / sales / payments.

All of these mines have subsets as follows:

• What is your number porting process like?
• What is your training like for customers? for Agents?
• What does your marketing collateral look like and say?
• Issue Resolution

It is no small thing to acquire an Agent. You are asking someone to spend the effort to:

1. examine your service offering
2. negotiate and sign an Agreement
3. Learn all about your service offering to the Comfort Point
4. Now go market & sell it

It is similar to buying a franchise agreement. Foremost, you are asking for the Agent to trust you and to lend his reputation to your company and its services. That's a Big Step.

You have to ask yourself: Why would he take a chance on me? Here are some things for you to think about:

1. Do you have a clear USP?What differentiates your company?
2. Do you sell to Verticals with a clear and concise ROI or TCO?
3. Do you know who your best customer is and why?
4. Do you do any marketing?
5. How much time and effort can I give each agent to get off the ground?
6. What happens if he sells something?
7. What systems do I have in place for that?
8. Will those systems Scale?

Some companies have a Referral Plan now. (I won't even call it a system because it isn't.) What does it consist of? Mentioning that free month if they refer someone? WOOT! Yeah. That won't cut it. A System is a consistent process that involves a plan, a goal, and how to get there. If you want a Referral Plan to work, you have to work the Plan. By that, you have to remind folks that you have it in creative, mentally sticky ways. You have to even give them a script on what to say or a coupon or email link to send to their family and friends network. You have to reward them tangibly and thank the best referrers publicly. Then start all over again. (It doesn't happen automatically).

Now back to the Agent Channel that you want selling your VOIP Service. Why not just hire a Sales person? Too expensive, right? Too time consuming? Don't want to manage a sales guy? These are reasons that your channel will fail as well. Imagine spending money, time and effort on people you have Zero Control over. Imagine them forgetting to propose your services for months, then call with a White Elephant and not close it. And disappear. Lots of work; little return. Welcome to the Channel. The Channel is a case study in Pareto's Principle - the 80/20 Rule. About 80% of the sales will come from 20% of the agents. About 80% of your time will be consumed by the least productive 20%.

How do you get it going then? A system. A plan. A goal. In reverse order.

This from Telephony online and the Convergence Consulting Group:

The latest in an annual study of the bundled services market shows US telecom service providers are losing wireline voice customers at a faster pace and being transformed in the process into companies that will look very different from their traditional telecom roots. The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless, released this week by the Convergence Consulting Group, shows maintaining a broadband connection is increasingly important to telecom providers, as wireline voice services become much less important.

If you look at the numbers in that PDF report and you still think that the QBPP is a viable option or that the last 400K businesses in the BellSouth region will somehow see the light and convert, I have some land for you in South Florida.

I have written about this in years past: the telcos have finally hit the wall. Everything is flat or down now: TV, wireline, cellular, and broadband. Granted most numbers are for residential, not business accounts which agents sell, but this will affect the entire telco business. Telco moved from the most profitable service - Voice - to Internet (the 2nd most profitable) - into TV, which is te least profitable. Why? Set-top boxes cost $400 per pop. How do you recoup that $5 per month rental? Most of the pricing goes straight to the content. You know, Disney and ESPN want their dough. Then there's the network upgrade for TV (and high-speed internet), which although VZT says is under $900 per home passed, the numbers I see are closer to $2000. Let's factor in the advertising. I get something almost everyday from VZ. At even $0.75 per mailer that's $15 per month. Times how many homes passed?  See how that may slow the telco engine? Plus MSO's moved from the least profitable service (TV) to the most profitable (Voice). And MSO's are getting into mobile data and maybe cellular voice with Sprint.

When you look at the summary from Convergence Consulting Group, it looks bleak.

• We estimate Cable's double play base of TV and Internet subscribers YE2008 at 61% (we forecast 79% YE2011). The RBOC/Telcos residential telephone to broadband overlap was 33% at YE2008 (we forecast 54% YE2011). Hence, it's easier for Cable to add voice customers off this overlap than for the RBOC/Telcos to add TV customers.
• 2008 RBOC/Telcos residential wireline telephone line loss was 10%.
• Wireless Substitution was responsible for about half the loss and Cable for the other half.
• We forecast Cable will have 23% of residential telephone subscribers by YE2009.
• We estimate wireless-only households at 20% at YE2008.
• Wireless annual subscriber additions continue to slow, 2008 saw 15.6M (2007 saw 22.4M) and we forecast 13.9M in 2009.
• Data continues to drive wireless ARPU growth (voice ARPU is declining). We forecast that price competition, which intensified in 2008, will continue to increase going forward.

Telcos are building out high-speed networks for TV and Internet, which is costing a bundle, at the same time that they are forklift upgrading the cellular networks to 4G. Have they even paid off the debt from constructing the 2.5G and 3G systems? Meanwhile, Charter is bankrupt and the rest of the MSO's have to upgrade to DOCSIS 3.0 while also constructing WiMAX networks. All while the ARPU is decreasing and the customer acquisition costs are increasing.

With these kinds of pressures on the RBOCs, imagine the pressure on the ILECs without a cellular division like QWEST, Embarq, Windstream, Frontier and Fairpoint. Landline losses that cannot be off-set by TV or cellular revenues. Yikes! Basically, the EarthLink strategy right? Cost cutting as the primary executive decision. Right out the knitting until its over.

Where do you think Agents come into that play? With losses, an easy cost cutting measure is to stop paying agent commissions. Think about your Channel Partners in 2009.

So a client calls me. An agent sent him an unsolicited quote for 10MB of bandwidth over Ethernet for a ridiculously low quote. Since I have a long history with the client, he offered me the chance to match it and take the order.

So I go back to the carrier and ask for a match. I'm told no. "A competitive quote on the competitor's letterhead is required, which must be 10% to 15% less than the discounted price available with this promotion."

There are a couple of things wrong with this:

1. Why can't I offer the same quote as the other agent -- it's the same carrier?
2. How did tthe other agent get this price without a competitive quote?
3. Why do you want me shopping this client around? If I found a better quote, I would sell him that because you made me jump through these ridiculous loops!

This is the type of policy that drives agents crazy. (Where's the common sense?)  It's one reason that resellers are taking business from the carriers.

Did you know that as an agent you can broker energy? Paetec is plugging agents into the energy business - after it purchased an energy broker. I know a couple of agents that have been in the energy business for a while. I don't think it can replace its telecom business.

In other energy news, the telecom companies are also looking to get into energy management in the way of the smart home. Most homes do not have the equipment necessary installed in their homes to take advantage of this service. Likely, this will change as time goes on. It allows the telecom connection to the home be more productive. At the end of the day, people aren't buying telecom - they are buying a communication device or a platform for productivity or entertainment or knowledge or whatever. That's what telecom companies need to keep in mind.

At the Channel Partners Expo, on individual calls with agents, and on a conference call with a bunch of agents today, I noticed something big: the Channel is shifting.

I have known for a while that VAR's would replace the traditional telecom dialing-for-dollars, save-you-10% agents. It's coming because sales cycles are longer; the product set is very different; and it's all about IP and Apps. (Net-head versus Bell-head).

There's another shift happening: agents are banding together every way they can to get leverage against the carriers, who hold too much power. It started bubbling  in 2007 with my post called What's a Partner Worth? In the 2 years since that post, there hasn't been much change on the carrier side.

Agents first started bonding together as Master Agents. Then came the experiment called the Agent Alliance - a group of master agents banding together for group buying. I guess its a master master agency. None of those entities speaks for the agents.

"There is a serious disconnect between many agents and their suppliers on the expectations they have for each other in developing a mutually beneficial partnership," says PHONE+ Editor Khali Henderson. "Some of this may be a failure to recognize the changing dynamics in the telecom industry and their impacts on the participants in the value chain. Starting a formal dialog in the industry may help to overcome these gaps in understanding."

The dialog today starts when commissions aren't paid. You look at the situation for agents with MCI when Verizon bought them and changed the MCI Agent contract. Over 100 agents got screwed out of commission because the new contract was unfavorable or untenable. It happened with Cable & Wireless. Many mergers have had similar results for agents. 

I will have to say that most of these issues are contract related. The quotas and other issues are spelled out in the contract - IF you read and understand the fine print. If you use a Master Agent, you don't even get to see the fine print, because this Industry loves the NDA (non-disclosure agreement). It's why agents can't get a fair shake - they have no idea what is availble to negotiate. Cisco just lost in court with the judge declaring that Cisco's partner agreement was unconscionable, meaning that the contract is too one-sided. I think that if that precendent stands, agents will have a leg up.

I've been on the receiving end of a carrier (BellSouth) taking away a boatload of hard earned commissions, so I understand the frustration. (After 5 years, therapy, anger management classes, blogging and drinking, I can almost move past it). But at the end of the day, what band of agents has $1M to hire an attorney to fight a carrier over a contract dispute? That's what it would take. About $1M and a long time (7 years). What do you do in the mean time?

Not to be mean, but the industry is almost tipping over with bad debt, rising costs of goods, lower margins, and, let's face it, failing strategies. By that I mean, how many carriers have a solid long-term strategy?

[I deleted my FiOS is a losing strategy rant here]

Let's just say that I look at many CLEC's who are so obviously selling underwater that I want to take a SCUBA test. And it isn't just the Channel - the direct side is drowning in there too. In fact, the direct side is usually the one that starts the price war against the agent side. And where are the policies and guidelines in place for that Not to Occur?

Some carriers (like the ones on Moody's Death Watch list) may not be around in a year, so agents need to watch that to.  Agents need to be aware of how inter-connected the whole CLEC and Reseller market is. Reseller A buys from Carrier V and Reseller B and D, who buys from Carrier Q and Reseller A and D. When one collapses (like Alphared did recently), it cripples the rest. And there isn't enough margin - room - for that kind of error.

At the end of the day, the agents need to band together - to do more than swap tales of woe and vent - and that's why a bunch of us have put in many hours in the last year to create the Technology Channel Association. Join now! It's free through the end of March for agents and we offer group health insurance for our members.

ACC Business is a subsidiary of AT&T. It uses the AT&T network to provide voice, data and Internet services to small and medium business via agents only. ACC Biz does not have a direct sales force. Tech support and billing through ACC Biz is actually more customer friendly than using AT&T. And ACC Biz is MUCH easier to deal with.

When ACC Biz lost Ben Ho as National Sales Director last year, I started to ask what's up. AT&T has a love-hate relationship with their channel. They love you when you fall in line and sell what they tell you to and hate you when you don't. (You can guess where I sit, right?)

So watching the internal moves being made at both the parent company and the step child, my prediction is that ACC Business gets swallowed whole in 2 years.

The product line at ACC Biz hasn't changed much. They are just now getting Ethernet offerings. No VoIP or SIP Trunking, which has been a big hit to SMB. Add in the personel changes, like Dan Morford and Ben Ho, and you have to wonder, what the future holds.