On Rad's Radar? - mpls Archives

One Deal And One Bullhorn

2013-05-09T19:36:31Z

UNSI has been in the news lately. It was originally American Broadband, reselling DSL nationally. Then it changed its name to United Network Services, Inc. and became a facilities-based carrier, with 18 Points of Presence (PoPs) and interconnections (and NNIs) to over 150 carriers in the US (including cable, DSL, wireless, CLEC and ILEC). "UNSi's partners are able to leverage the relationships with these carriers, paired with the cost savings and convenience of working with a single partner, under one invoice."

In 2012, UNSi acquired IPNetzone, a nationwide MPLS network provider, adding an advanced backbone network to capabilities. They partnered up with their Derby Capital teammate RapidScale. Yesterday, they decided to acquire Airband in an all stock merger. The combined entity will be named UNSI and generate about $60M in revenue. This will add fixed wireless and Hosted PBX to the service offerings. The biggest competitors UNSI faces are EarthLink, MegaPath, Masergy and AireSpring which all play the same game - MPLS and HPBX.

The bullhorn is the re-emerging noise around tw telecom being acquired. A few months ago CenturyLink's stock took a hit when their bankers floated the balloon that C-Link would buy twt. C-Link is sitting on a boatload of debt - $20.6 Billion. To buy twt would only add to the debt. It would hamper C-Link from its integration of Savvis-Qwest-Embarq and its plans to "leverage those synergies".

Now the bankers are floating the Level3 will buy twt balloon AGAIN - for like the 3rd time. How??? I get why - take a fiber player off the table and add revenue. But how?

Level3 is NOT the sum of its parts - parts which include, most recently, Global Crossing. Level3 is horrible at integration. Maybe all telcos are because the Ma Bell umbrella is still a bunch of silos, but come on, integration is not what they do well. And synergies have never been realized from this - or quite frankly most any telecom merger.

I have an idea for Level3: fire the top guys that have been there since they bought WilTel -- all of them. Hire from OUTSIDE the telecom world for a new CEO and a new President. Level3 has all the assets in place to be doing far better than they are. In baseball terms, they are the Yankees with Bucky Dent or Ralph Houk managing. (Sprint, too , btw).

You know how you get out of debt? You sell stuff!!! Then you deploy stuff. Then you keep it running. POOF!! That thing you see is called revenue which will eventually get you to profit if you stop selling on price alone.

Apparently L3 quietly bought a San Fran based fiber provider.

Growing Out an IT Business

2013-04-08T13:32:44Z

This is a slide from EarthLink's earnings presentation. Basically, telecom spending is flat and it is roughly 11% of what companies spend on IT services. So if you were looking for growth where would you turn? Oh, yeah, IT services.

These have been the 4 segments -- the 4 drums really - that EarthLink has been beating for a while now - MPLS, IP, IT and Hosted Voice.

When you look at the broader picture, MVNO is not a high margin business. It is the new UNE-P. And as I have repeatedly said - Layer 1 or Layer 7 - either own a network or own the applications.

With the onslaught of the cablecos on the SMB market with their triple-play, CLEC's have to pick up the pace on sales. Not only do they have to sell more, faster, they have to retain their customers, too.

CLEC's need to get sticky. It doesn't have to be your own services either. Partner with someone. Speed to market is more important than owning or building. And if you partner with someone, they should have the deployment formula down pat.

Deployment is where the relationship begins. On-boarding is like the first date. When that impression is bad, there is no second date. There are rumors in the schoolyard about how awkward and weird you are. Today that school yard is social media.

Not every provider has the skills in-house to offer security, desktop, RMM and other IT services. Leverage a strategic partners' skills.

The key to stickiness is to be the one throat to choke. It was a lesson I should have learned working in the VAR business, but didn't get until I was an Agent. It is far easier to sell more to your current customers than it is to continually find new customers to sell one or two services to. And if a customer has 3 or 4 services with you, no one can take them away unless you screw up.

I'm not saying become a cloud services broker, but a model similar to that will work. You just need to have a small piece of all of the services that your clients use.

What Did I Miss?

2013-03-26T12:55:58Z

After making the news for supposedly canceling tele-working (which they only did for 200 distracted employees), Yahoo is not acquiring. First, Y! bought Jybe, a social recommendation site. Now, "Yahoo announced it is snagging the mobile news reader Summly, created by 15-year-old Nick D'Aloisio," according to the USA Today. Now 17, Nick gets $30 million from Yahoo.

Oracle bought Tekelec, which was known for its Class 4/5 TDM switch in the day, but is now referred to as a signaling company. (Huh?) On the heels of its purchase of Acme Packet, I have to wonder what Oracle sees in the telecom industry that I am missing. Consolidation and bankruptcies are coming. There is too much debt, too much disappearing revenue, and too many companies that do the same thing. There are a thousand VoIP providers out there who could buy a telecom package from oracle IF they had more than 300 customers and any profitable revenue. Unfortunately, most of the VoIP companies can only take orders and not sell. It has become a whore's game of how low can you go - in LD, international, termination, toll-free, and POTS line replacement. It will be interesting to see if these purchases end up being Oracle's Palm.

Global Capacity came out of bankruptcy with a new owner, Pivotal Investment; a new PR firm, iMiller; and new marketing spin in the One Marketplace. Netwolves, UNSI and EarthLink have joined the platform either to sell circuits or to extend their reach for MPLS.

The FCC released its wireless study that Congress requires but doesn't read. ARPU has been steady from 2009-2011 but voice revenue is dropping as data revenue increases. Is the wireless industry competitive? The report doesn't say. What do you think?

Broadsoft released UC-One, its IMS FMC offering. Basically, after signing up 400+ customers, it now has to sell deeper into each account, because there are no more new accounts. So all you BSFT customers, start selling IMS and FMC vis UC-One. Leslie says so.

Broadsoft also blogged that UC demand was outpacing supply, which makes me laugh. On the street, where sales are actually made, customers are seeing 2-4 quotes for phone service. No one is asking for UC, but that doesn't mean unified comms isn't being quoted and sold. Why would the analyst say that? One, he might not be watching enough service providers to see sales growing. Many of the VoIP companies are private and don't do PR or report numbers to anyone, so how would any analyst know the size fo the market, revenues, sales, seats sold, etc.? Two, UC is being quoted but not being purchased - due to poor sales skills or customer sticker shock or the fact that Premise PBX are still selling. Finally, it could be that UC only works with integration. So if the customer isn't using the 3 or 4 applications that integrate with the UC platform, it won't be a good fit (or will require big dollar integration). There are number of reasons why UC sales look dim. A lot of it is education to the customer and to the sales teams, but also a lot of businesses just want fast Internet, a smartphone and cheap dial-tone.

Sprint will start carrying Mitel's hosted PBX solutions as part of its broader Cloud Wholesale Services portfolio.

CenturyLink Merger Mania Does Add Up

2012-08-15T20:57:58Z

"CenturyLink Inc.'s (CTL) second-quarter earnings fell 36% amid early-debt extinguishment and weaker margins, though the telecom company's revenue was boosted by an acquisition," writes the WSJ. "Revenue increased 4.7% to $4.61 billion, mostly as its Savvis acquisition added $278 million, as well as growth in demand for digital services."

What amazes me is that these giants keep getting bigger and the only metric growing is debt.

It is going to take some big CAPEX to beef up cloud, data center, EoC, broadband and TV services for CLT. How do they focus on that when CAPEX will affect their financials, that is tied to their debt?

Cloud isn't selling as well as the hype that goes with it. Yet. CLT is banking on a big bright future. Truth is CLT, while still headquartered in Monroe, Louisiana, is far removed from its rural ILEC days. It's future lies in federal cloud and WAN contracts; Fortune 5000 MPLS based on its fiber network; global sales for cloud, data center and networking; and data center services. None of these services were on their balance sheet 3 years ago.

Interesting corrollary is that 3 years ago, CLT didn't have a channel either. Now it's channel will be looked upon to drive a lot of cloud and data center sales.

I wonder if the CAF, ARRA and USF funds show up as revenue?

Comcast Hits 300MB

2012-07-25T19:34:32Z

Comcast rolled out Xfinity Platinum service with speeds of 305Mbps down and 65Mbps up for about $295. It was designed to compete with VZ Quantum FiOS, which is 300Mbps down, 65Mbps up, and $205 per month in the Northeast. Xfinity Platinum will include free Xfinity Signature Support (27/4 tech support and a personal consultant), a secure wireless gateway, and the Constant Guard Security Suite.

In some areas Comcast is doubling the speed for its existing tiers. This will make selling T1's - and in some cases Metro Ethernet - very challenging for agents and sales folks. 300x65 is less than $300 - a T1 is a measly 1.5x1.5 for $300-$600. Talking about "Dedicated bandwidth" will only work if the cable system (or FiOS) in that area experiences congestion and/or outages.

Even if the customer only had throughput of 100x15 for that $300, a 10x10 Metro E costs three times that. Certainly, business class, SLA and other factors can be contributing to the negotiation, but it is getting more difficult.

Broadband has cannibalized DIA (dedicated Internet access) offerings. No wonder all the talk is about MPLS and private cloud; these services have not commoditized YET. Coming soon though.

Good News from CenturyLink Channel

2012-07-10T18:21:05Z

Sat in on the CenturyLink Channel Alliance - Get back in the Game Roadshow in Tampa this morning. It was nice to see Stacy Conrad from Microcorp; Josh Anderson and his co-workers from Telephony Partners; Dale Tucker from CCA; and put a face to an old Qwest SE, William Hobbs, now a CCA Emerging Sales Technology Consultant (ETSC) for Florida. Hobbs did a nice job on Why VPDC and The Benefit of Cloud over Colo. The roadshow had 3 parts (Hobbs did part 2):

New Savvis-CenturyLink Phase II Rules of Engagment overview;
Cloud/Hosting Solutions portfolio;
Third Party Data Center Updates/E-Line;

Dale Tucker went over the Rules of Engagement, You definitely need charts and glossaries to follow along the categories and acronymns. Basically, colocation, managed hosting, virtual private data center (VPDC), public cloud, private cloud, and managed servcies (like Hosted Microsoft Exchange) are all available to the Channel to sell at full commission - unless you engage an account exec - then it is HALF!

For agents used to working with AE's, this will be a bummer. However, half is better than zero. Also, with the ETSC as your godfather inside the C-Link-Qwest-Savvis beast, you won't need the AE.

A lot of colo and data center business comes from the Channel.

And for those that do not know how to sell Colocation and Data Center, the TCA has done quite a few webinars, including Getting Your Arms Around the Cloud by Allan Watkins of Total Telecom Management n Atlanta and Let's Talk Colo, moderated by Khali Henderson of Channel Partners magazine and featuring Dany Bouchedid of COLOTRAQ and Chris Palermo of GCN.

Tucker did mention that Savvis is working on a sales certification for colo and hosting. This silo will be a huge focus for C-Link it seems, especially with 54 data centers

Hobbs spoke about not talking about the technology of cloud, but about the business side of cloud, especially cloud services like VPDC and Compute-on-demand. It's about right sizing the data center. It's about OPEX versus CAPEX. It's about DR/BC. It's about getting out of the IT business and back to their own business focus.

C-Link also has an initiative to light up data centers with C-Link network - wave, IP-VPN, MPLS and Internet Bandwidth. There are 154 data centers now. In Jacksonville, FL, C-Link is putting in a ring to connect CSX, Peak10, Colo5 and the C-Link data center on a metro fiber ring. C-Link is also connecting 4 data centers in Charlotte on a metro ring. AboveNet did something similar in Atlanta by connecting almost all the data centers on a metro fiber ring. Agents can easily sell ELine, IQ Port, Private Port and WAVE into these 154 lit buildings.

Hobbs pointed out that the integration is going well with CenturyLink-Qwest-Savvis.

Masergy Buys Broadcore

2012-07-10T17:18:58Z

I knew Broadcore was in play, just like many of the Cloud Communications Alliance members. Masergy has a strategy to be more than an MPLS reseller. Picking up Broadcore gives Masergy

"Demand for business-class cloud communications is growing at a rapid pace. Infonetics reported that revenue from hosted PBX and UC services grew by 33% last year and SIP trunking revenue grew by 128%. Further, the number of seats for hosted business VoIP and unified communications services are expected to more than double over the next four years," the Masergy press statement reported. (see more about the Hosted PBX Market here)

"Broadcore will continue to operate as it does today, but as a wholly-owned subsidiary of Masergy. The Broadcore service platform will be directly embedded into Masergy's global MPLS network platform, which was purpose-built to deliver real-time applications like Broadcore's voice, video and mobility offerings."

Masergy kind of has to add some services because the dumb pipe model - even MPLS - is falling apart. Transport only works when you have an exclusive route or the fastest route. Otherwise just transport is a commodity that is price shopped online - or through an agent.

This reminds me of Qwest buying US West in 2000. Qwest needed revenue and traffic to fill its pipes. Hence, buying the ILEC. Masergy had a similar problem: transport in need of some services. And most likely many MPLS customers are utilizing either SIP trunking or Hosted PBX. It might as well come on the same bill.

This won't be the last merger in 2012 - that's for certain.

Rumor has it that one ILEC isn't done acquiring and T-Mobile may be a target.

Tidbits About the GC-L3 Combo

2012-05-29T16:57:28Z

I sat through a 65 slide presentation from Level3 about the integration of Global Crossing. The stats are nice for trivia night. Maybe someday CVX will hold a Telecom Jeopardy so I can use this trivia to win prizes.

Level3 holds the original VoIP patent.
Technical Emmy for "Outstanding Achievement in Technical/Engineering Development.
Global Crossing (GC) was one of the first sub-sea cable operators.
GC was the first to market IP-VPN back in 2001.
GC was the 1st carrier to deploy global MPLS network in 2001.
GC has 140 SONUS VoIP switches throughout global VoIP backbone
First global provider with IPv6 natively deployed. (I thought it was NTT)
100,000 inter-city miles of fiber.
700 cities in 70 countries.
Approx. 170 metro networks.
344 IP-VPN core routers.
99.99% SLA.
L3 can LNP 86% of the NPA-NXX in the US.
Certified Microsoft Lync Nomadic E-911 Partner.
They left off: direct connect to Amazon AWS.

Level3 is THE Internet backbone. The GC ASN (AS3549) is going away. The GC network will be used for IP-VPN and MPLS and the L3 network (AS3356) for Internet.

The second half of the presentation was about the GC-L3 Conferencing options. Level3 has an extensive catalog for conferencing options, including Event services (like for earnings calls for public companies); web meeting; video center; webcasting and streaming. Webex and on24 are partners. There is a buy rate - and it looks very good. A lot of the conferencing is a result of Level3's vast VoIP network, CDN system, WAN optimization service, and video streaming operations. When you combine all that running an audio bridge for an earnings call or a video conference is simple.

Level3 uses the term IP-VPN and MPLS inter-changeably. It was confusing for me since VPN and MPLS are not the same technology. Oh, well, what's in a name. "IPVPN is the marketing name for MPLS."

I do have clients on Level3 experiencing network issues. Every integration that L3 goes through, they mess with the network while they shut down routes and routers to consolidate. This issue is giving Cogent a chance to take market share, while also opening up opportunities for other carriers like InterNAP and AS3561. It would be a great time for Sprint to flex its IP Network muscles, but all's wireless on the AS1239 front.

L3 has put in place Partner Integration Specialists to aid Agents in interfacing with the correct quoting tool, product people, and the like. Take advantage peopel! I would also say jump on the webinars to learn about the new offerings that can get you into bigger accounts. Smart WAN and website optimization are not for SMB.

L3 offers a direct connection to Amazon AWS for clients. Now, L3 offers SIP Trunking for Microsoft Lync: "As Microsoft® Lync® continues to gain market share in the unified communications (UC) space, we are seeing strong funnel growth and implementations around Microsoft Lync-based deployments in both our direct and indirect sales channels. Level 3 views this as a lucrative sales opportunity for our agents." Think Enterprise clients. According to this study, UC interest is in the Enterprise space.

Will It Rain for EarthLink in the Cloud?

2012-05-24T04:32:20Z

EarthLink is really pulling out the umbrella to get it to rain in Cloud. EarthLink picked up XO's former CMO, Michael Toplisek, as EVP of IT Services. The press release says that he was President of Concentric Cloud, but that was for a hot minute, since XO only rolled out that brand 2 weeks ago. He's not a cloud guy - he worked at XO, Global Crossing, MCI and Frontier - all telcos. The only IT he got near was conferencing at GC. Why would you spin this resume? (Especially after the Yahoo resume-gate.)

EarthLink rolled out 4 cloud packages. "The Cloud Launch Pad, the Cloud Entry Bundle, and the Secure Email Bundle enable customers to economically partner with EarthLink to complement their internal IT resources by leveraging a comprehensive mix of IT Services and security experts in an enterprise class data center environment." [Source: PR Newswire] FYI, "Cloud Launch Pad is designed for organizations that want to leverage the benefits of a virtual environment or that currently run VMware® environments and need additional elastic computing capacity."

These products allow the business to keep things intact, but layer on Cloud Services from EarthLink to complement the current system or outsource extra capacity or services.

The Secure Email Bundle is with Zimbra, encryption and archiving.

The fourth package is Cloud Workspace, which is hosted virtual desktop.

An interesting play since it sounds like it requires MPLS. If so, then ELNK is tying their products to MPLS, probably to insure quality of service delivery.

Will they be able to sell these services against other MSP's and VMware partners? We'll see. It will depend on training - not just salespeople but the marketplace as well.

Watch this video where all the Master Agents talk about why they are choosing EarthLink.

The Incumbent Mindset

2012-05-10T18:02:28Z

I'm heading to NYC next week to attend Seth Godin's seminar. It is always worth the trip to me. From his Domino Project newsletter today, a little insight:

"It happens to just about every industry, from hard drives to furniture--the insurgents, coming up from the bottom of the market, had an incentive to refine their techniques, engage with their customers and innovate. The incumbents, saddled with much higher costs and less innovation, watched themselves go bankrupt, one by one."

Can you say China? HUAWEI? Vonage? 8x8?

Every market gets disrupted. The Internet has been the greatest tool of disruption. Think about Netflix and Google Apps.

"Instead of working hard to keep their share of a shrinking pie, or working even harder to make sure the industry stays as is, I think the most essential thing legacy ~~book industry~~ players can do is set up independent ventures with great people and little interference and work really hard to put themselves out of business by starting at the bottom, not by reinforcing the top."

Some ILEC's like Windstream, TDS and CenturyLink have used acquisitions as a way to counter-balance disruption that broadband and cellular have done to the market. M&A will only get you so far.

We are already seeing where Live365/Office suites have become a commodity. VoIP is certainly sold as a commodity. Hosted PBX is probably next. Any time you can automate it, someone will come along, with less costs, and undercut your price. The Incumbents will have to take the hit just to stay in the game. Look at CLEC's and the T1 market. The cablecos are disrupting the T1 market. Next it will be MPLS.

It will be skill set, human talent, integration, customer care, and WOM that will set your product offering apart from the rest of the crowd.

That Seth Godin always gets my mind going.

Is it Cloud versus Agents?

2012-05-02T16:45:52Z

Is it Cloud versus Agents?

As an Agent, I sell bandwidth and transport almost exclusively. I am learning that the Channel does not want that business. The carriers do, but on the wholesale/carrier side. No 10GB private lines. No 1GB ports. Nope. The Channel wants Multi-site multi-access customers. That's fine. Just stop talking about your fiber map then. It's irrelevant for that kind of sale.

The CLEC's also want Agents to sell Managed Services and anything Cloud. That's nice but who cares?

Cbeyond announced that they are "no longer recruiting traditional telecom agents". well, they already signed up the biggest masters - CMS, Telarus, Microcorp, TBI, etc. So what they are really saying is that traditional agents will have to use a master agent to get paid. That's becoming Normal in telecom. Carriers just want to deal with master Agents. I guess, they think that is more effective or efficient. I have no idea if it is either. We'll see, I guess.

Like so many other providers, Cbeyond thinks that the answer to its cloud strategy will be VAR's. That's not likely to happen.

VAR's don't trust telco. (Heck, I'm still waiting a month for an FOC from XO on an Internet T1, so I totally get the attitude.) VARs already have relationships with VAD's like Ingram and Tech Data, who can provide most of what Cbeyond is offering - or they can provide it themselves. Would you go to Rackspace or Cbeyond or EarthLink for hosting? That's basically what it comes down to: who is doing the hosting.

Right now Microsoft itself and carriers are getting into the traditional VAR space (offering hosted Microsoft products and data backup). Why would VAR's shift from a reseller model to a sales agent? It's kind of like, do you want white-label or straight resale?

The thing that most miss is that it is all about Control. In white-label, you can build a branded business that you have a decent amount of control over, especially in Hosted PBX. In straight resale, the bill, the brand, everything is in the carrier's name. No control at all.

My clients - CLEC, ISP and ITSP - want the illusion of control - or at least as much control as they can get. VAR's want the same thing. In the case of the ISP and the VAR, they like technology, but selling and marketing not-so-much. And you won't have much success forcing them into a sales+marketing shop - any more than you will trying to get T1 slingers become Consultative Sales people pitching cloud. Why? Motivation. Comfort Zone.

Robin Robbins has a very successful business offering turn-key marketing programs to VAR's. Cloud providers need to plug in to that kind of a system.

XO just re-launched its old hosting brand, Concentric, probably to get some space between the telco and its cloud services. (XO has to do something about its reputation in the telecom space and re-branding buys them time until someone buys them.)

Some Agents will obviously move into this space. Some already have making money on Cloud Comm like Hosted PBX, UC, IVR and conferencing. Some have sold collocation - although its a big leap to PAAS and IAAS from colo. But virtualization might be a nice tool in that box. It will come down to who you trust to deliver it.

I'm not saying Agents shouldn't be shifting their business. Lord knows that the way it is now, it is extremely tough to make the living we are used to while selling what we are used to. So a shift has to come. I just don't think it will be to the same carriers that make it in the future. When you look at things like commission adjustments, contract disputes, channel segmentation, and the like, Agents might want to try another silo of vendors to see if they get a better shake.

There is a tremendous amount of competition for the attention of Agents and VARs. That means that there will be price competition, commission shopping, and other things that the providers do not want to have to deal with right now.

The only providers who can afford to be exclusive right now are vertical cloud providers and cablecos - both have an almost exclusive product to offer.

Everyone else is selling the same stuff - MPLS, SIP, backup, managed network security, blah, blah, blah. That means the Channel can shop around. And as you can see from the ecosystem diagram, there are a lot of places to shop - VAD, Microsoft, Google, Amazon, ILEC, CLEC, Cableco, MSP, Rackspace, Web hosts, Parallels, ITSP's, and so much more. And Agents can just partner up with a VAR or MSP to sell their own services, leaving the CLEC's out to dry.

It's a matter of control. Do you want to build yourself a business with white-label partners (like VAR Dynamics) or do you want to trust that the telco that is having trouble delivering telecom services reliably will be able to provide you and your customers with unparallelled service delivery of cloud services?

We'll see. In the mean time, be nicer to the Agents. They may be all you have left.

Get Off the Agents' Back

2012-04-12T21:48:50Z

These were my thoughts on the 2011 CPZ that I was a panelist on. These are my thoughts as a reaction to the latest CPZ.

Surprisingly, not everyone read my post about how the whole telecom eco-system is shifting. Agents, Masters, Carriers and Cloud Providers are all going to experience a Shift.

Did you ever see Shift Happens?

Considering all these factors - Quota, Debt, declining revenue, pricing pressure, and flat markets - the future does not look bright.

Most of the people who were talking on the CPZ 2012 video about transactional agents are not actually agents and to my knowledge never have been.

Does a subset of Agents shop masters? Probably. On the other hand, I know masters who shop to sub-agents with "I'll give you another point or two to go with me." Part of this is due to the weight of quota on the Master Agency business. Master Agents are under a tremendous pressure to hit quota to keep the support level and sustain the commission revenue at its current level. So don't get mad at the Sub-Agent when Masters are doing it too.

Value and Telecom

The whole Industry talks about VALUE, but can they describe it? No. Our Industry has been a series of me-too, arbitrage bandits selling the same thing: UNE-P, Integrated T1, SIP Trunking, and today it is MPLS. It's all just similar looking and sounding services. How does an Agent or a Prospect tell the difference?

Branding is non-existent in our space, except for the Duopoly of ILEC and MSO. You create value with branding. Other value comes from benefits and differentiation. We are lacking the Differentiation.

Without value, it becomes a commodity. Commodities are price shopped. Tell me the difference between any two Internet T1's or any two SIP Trunks.

Carriers are Unhappy with Agents

Just because Agents don't act like you want them to doesn't mean they are all in the wrong. You built this current eco-system. Now you want the ship to turn on your say so. Easier said than done, pal.

Truthfully, have you done all you can to give Agents the tools they need to sell your product? Not to be repetitive, but have you established your value statement? Do you know who the target market is? Do you know what triggers the sale? Who is the actual buyer? Answer those questions first.

The Industry wants the Channel to go upstream, except they don't. By that I mean, the carriers want revenue. Period. It's all about quota. While they might want an Agent to sell MPLS, they aren't turning away T1 business either. However, they want the Agent to turn away from that business to go upstream. Yeah.

Keep in mind that it might be that the marketplace doesn't want to go upstream either.

Right now, Cable is doing an excellent job of disrupting the market and stealing business with cheap loops.

At a CLEC training, it was stated that cable would own the sub-$500 business. It sounded like they were conceding it. The cablecos will become the de facto ILEC's. I have no idea what the ILECs are going to do. Only the 2 RBOC's have a cellular business. And CLEC's will probably run into too many problems to continue to sell network access.

In that same training, the CLEC stated they wanted Multi-site, multi-access business. Unfortunately, everyone wants that business. Masergy, Smoothstone, EarthLinke, Megapath, Netwolves, Wind, CenturyLink - just to name a few. To hear carriers talk, I guess, MPLS is the new Integrated T1 (in every way). They say there is more margin in it. No there is not. There is more revenue per customer, but they will have to give away margin to (A) hit every site and (B) win the business in a hyper-competitive marketplace.

No one buys the way most service providers sell either. That's why the carriers are always searching for Consultative Sales Professionals. The whole industry sells what they want - and it is followed up by a series of me-too. Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering. Do we know what the marketplace is expecting?

How Things Can Shift

One thing that could cause a big shift is if Tech Data becomes a Master Agent. With TDMobility, they already have the platform and are selling cellular in a Master Agent model. Plus by offering mobile device management, TEM and all that hardware, they have caught up to the big Masters. CDW could become a Master Agent if they wanted to - and they might have to in order to sell more hardware.

Dell could become a Cloud Provider. As it stands now, they are an MSP Enabler. And Dell is selling CDN now! It will be interesting to see what Ingram and SYNNEX - both betting on cloud services for their future - do to not have to compete with Dell head-to-head, while also competing with Tech Data.

I don't think that most telcos will make the shift to managed services and cloud successfully. It's labor intensive. It doesn't scale like telecom. They think they can automate everything, but that only works for cookie cutter stuff. Plus they can barely deliver telco services without a headache. I think MSP's will win this war. Any company that can integrate apps (like CRM and invoicing with Exchange and Sharepoint) will be successful. If they partner with VAR's who can handle the on-going maintenance and support that all this technology will require, they win big.

Can the Channel change to become Trusted Advisors? Probably not all of them. Selling Cloud is different than selling telecom. Period.

The Channel basically sells replacement services. Here are some examples: VoIP for POTS: SIP Trunk for PRI; Ethernet for T1. Each transaction is replacing like for like. Even MPLS is just a replacement for Frame Relay, ATM and IP-VPN.

That is why selling Hosted PBX and other cloud services are so challenging: It is not a simple replacement. It's not like for like.

The sales process for selling replacement services is pretty easy. When the sale becomes about business process change or fork-lift upgrades (like Hosted UC or Virtual Desktop), the sales skills are different. The sales cycle is different - and longer. Provisioning takes longer. Ultimately, commission payments are much later.

This is really important to remember.

Selling Cloud and Managed Services will not just be more of a challenge, but it may be less satisfying. Why? Transactional sales types are motivated and driven by quick hits and a lot of ink in a month. Extended sales cycles are less motivating to this type of sales person.

Moreover, as commissions decline with the price decreases, agents have to sell more and more to maintain their revenue goals. Shifting to new products, new sales skills, and a different sales approach will be a huge leap, especially without training, a financial cushion, a deep desire for change, and vendor support.

Agents are not FARMERS! They are Hunters! They do not do Account Management, cross-sell or upsell to the base. Smart agencies will higher a couple of farmers to work the customer base and perform account management.

All of this makes me wonder who will be the Agent of tomorrow, who will be grooming accounts and performing consultative selling of complex solutions to their customers?

What is the Market Expecting?

2012-04-01T17:46:30Z

Tuesday I was in Vegas at the Channel Partners Conference mainly for the TCA events. At the TCA Channel Chief Summit, Tiffani Bova of Gartner and Rauline Ochs of IPED Market Bridge Alliance presented research. The take away for me was in perspective.

No one buys the way most service providers sell. That's why we are always searching for Consultative Sales Professionals. Because the whole industry sells what they want - and it is followed up by a series of me-too.

Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering.

The market is consuming technology differently. It enters the business via the consumer. About 70% of devices are owned by the consumer in the business environment. Only about 30% are paid for by the business. That means support for devices either isn't available or is imposed on the IT staff by the employees. That's a confusing (and expensive) way to handle it. Don't you agree?

Most of what Bova and Ochs presented had to do with mobility and Cloud. Mobility is a huge problem for most CLEC's as the model for cellular sales is unprofitable - whether they sign a wholesale, agent or MVNO contract - the margin on cellular is thin to none.

And what is prompting Cloud? Two things: ubiquitous broadband and a mobile workforce.

Ubiquitous is really hyperbole because even with 3G, 4G and wi-fi, you can't get bandwidth everywhere and even when it is available it is shoddy (like at tech conference hotels).

Mobile workforce means a couple of things. One that more businesses have accepted remote workers - whether at home locally, across the country or across the globe. The economic downturn (and all the consolidation) has translated into businesses having less workers but expecting more work. This means working at home, while on the road, etc. Hence, not just email, but the application data has to be available from any authorized, connected device. That is the beauty of Cloud.

Cloud changes the way business is done.

Read that again, because that means it has to be sold that way.

It's easier to sell email, because everyone has email and it is almost a requirement. Selling unified messaging gets more complicated. Unified Communications and Collaboration is just too complex of a sale, of an explanation, of an implementation, of a deployment. That's where the service providers want to go, but they neglect the challenge of the sale. There is a lack of the story, the sales triggers, the value proposition, the WHY, and of course the on-boarding.

One thing Bova pointed out was that VDI (virtual desktop) sales have grown in EMEA (Africa and Mid-East) while have stagnated in North America. One reason: VAR's have too big a quota with HP or Dell to take a 500 desktop refresh to VDI instead of selling 500 desktops. Not just the quota for the discount, but to sustain Gold level service. It's the same with Cisco, Microsoft, etc. VAR's will keep selling what they sell for 2 reasons: First, to maintain the current level of vendor support to continue to service current clients in the manner that is expected (or even contracted). Second, making the changes to shift business to an MSP or all service model is complicated and expensive. Bova suggested firing clients and employees to create the business you will need in 5 years, but that's easy to say from a consulting seat. Not so easy from a business owner perspective.

When EarthLink told its channel partners in Tampa that it only wanted Multi-Site multi-access opportunities, it didn't come right out and say that it would stop selling T1's, but that was the underlying message. (And ELNK did tell me that 1GB and 10GB private line, even ON-net, was not what they wanted to sell.) That's one way to start planning for where you want to be. Say no while being specific about what you are looking to offer.

As a whole I don't think the service providers have any idea what buyers are buying or why. Just because you WANT to sell MPLS with security or Hosted UC&C or whatever, doesn't mean that prospects will actually BUY it (that way).

When does something become a commodity? When the customer buys it directly online.

For non-commodity services, you need a well trained sales force that understands the brand, the value proposition, and the target. As an industry we aren't there yet.

I'm going to leave you with that.

Coming soon two posts: (1) Master Agents are like Pharma Reps. (2) Tech Data versus Master Agents.

EarthLink's Sweet Spot

2012-03-14T19:53:22Z

I learned a few things at the EarthLink training today in Tampa. EarthLink has 175K business customers and about 3 Million consumers, most of them dial-up customers, providing $20M in free cash flow per month. So of the $1.3B in annual revenue, about $500M is dial-up. ELNK has 4 data centers - Columbia, SC; Rochester, NY; Marlborough, MA; and 55 Marietta.)

The first (or 70+ slides) shows that Pipe is the foundation for Managed Security and other services. However, despite having 28,000 miles of fiber, they don't want to sell transport on it. Even On-Net gets the response that "This is not our sweet spot".

What is the Sweet Spot? As I wrote here, Multi-Location Multi-Access type across LEC's or cablecos.

The partner portal is in development. The customer portal, called myLink, seems cool they way that you can drill done on customer locations in Google Earth and open a trouble ticket.

Agents in the room, called T1 Slingers, asked about DSL, since EarthLink resells ADSL out of 10K end offices through 12 providers. As a resell service, a 1FB is required. And since neither RBOC is really supporting their copper plant and especially not DSL, it leaves the business DSL customer hanging for days when there is an outage. [See my post about Is DSL Done?] 3G/4G wireless backup is my answer for that. There are cool routers that even do it automatically.

The other question centered around T1. "You just are not going to make a living slinging T1's at $400 any more." PRI's are available east of the Mississippi still, which actually IS an advantage for ELNK. TDM PRI's are still the preferred reliable way to deliver voice to a PBX, especially with alarms, faxes, and elevators.

It was an hour on MPLS. I still find it amazing that almost 9 years after my first MPLS class, we are still presenting the Fundamentals of MPLS. For Agents, it will be about layering on services to the MPLS network. The sticky stuff is value added services.

Retail needs a voice line, some Internet, credit card processing, payroll and data backup. That should actually be a bundle that someone offers. ELNK has the old New Edge AX platform that connects payroll and cc processing to the MPLS Network. Add on a VoIP line and some data backup and there's a bundle. Want to make it stickier? Add network DVR to the service so that those IP surveillance cameras can be viewed from anywhere (and can't be erased locally). Bingo! (Do you have an opening in Product Management? My resume is here.)

The team mentioned POS, Inventory, HR and Loyalty programs. Do you have those on the AX platform? Those would make some excellent sticky add-ons.

"So we have an Internet T1 service that connects you securely to one of 4 data centers, Mr. Prospect. Do you currently have a payroll service? Are you looking to upgrade your POS? Are you worried about security on your credit card data (PCI compliance)?"

That's where the conversation has to go. Even though the customers just want the access - as cheap as possible - Agents will have to steer the conversation to: applications on top of that access (AOTTA).

So back to MPLS with Type II access. Ethernet is delivered over a Type II DS3 from the LEC. T1 is delivered over the ILEC copper pair. DSL is a resell of the ILEC product offering. Then for outliers to attach to the MPLS network, there is an IPSec GRE tunnel with BYOB (bring your own broadband). Blended Access.

EarthLink is a Sprint MVNO, but it is more for 3G access where there isn't DSL to attached to the MPLS. Also, for the MPLS customers that want to have one bill that included cellular.

Something else I learned: ELNK bought STS because Rolla knew the Mark Amarant, CEO of STS, and STS had a reputation for best practices in on-boarding customers in the Hosted PBX realm. That's smart, because Hosted PBX (like VDI, another product that ELNK is rolling out), requires a detailed on-boarding process from pre-sales through post-sale, including mapping extensions to desktops, extension attributes, handset type, employee training and some on-site installation. EarthLink is not selling Hosted PBX as a stand-alone. You have to buy access from ELNK.

So in summary word of the day: "Blended Access".

Key association: Multi-location multi-access MPLS.

What Else Are You Going to Sell?

2012-03-04T23:44:40Z

TDM is running out of runway. Agents have already switched to selling Ethernet, MPLS and SIP Trunking. What else can they be selling?

Back-up, like Conferencing, is a cash cow that Agents just don't sell. From archiving email per federal regulations to backing up laptops, smartphones, databases, customer records, billing and more "in the Cloud", online backup service isn't much different from Google (see Chrome ad) or Apple iCloud. Access to everything you need through an authorized device attached to the Internet is the beauty to Cloud services, but backing up data is vital to business continuity. How long can a business run without billing records or a customer database? Not very long. Think how flummoxed you are when you lose your contacts in your smartphone. Imagine that contact list was your business. That's why backup is important (to your customers). VAR's are already selling different versions of online backup: their own; a white-label from Remote Backup, DriveHQ or LiveDrive; and a resell of Carbonite (who is hugging Agents right now) or Intronis (who loves the Channel) or Anxient or many others. There are some like SugarSync or Mozy that backup your smartphone and your laptop to the same account.

Managed Security - most of the CLEC's (XO, EarthLink, Netwolves, Integra, Cbeyond), the RBOCs and the ILEC's (Windstream and CenturyLink) offer some type of security offering, usually Managed Firewall, IDS (Intrusion Detection Service) and Network Monitoring. As more data moves to the web (Cloud), security will become even more significant, in the form of email and application security, encryption, event and log management, and mobile device management. For example, Reflexion provides hosted email security, archiving and encryption services exclusively through the channel.

Hosting and email services - everyone has a website or blog; everyone has email. Why shouldn't you be offering those services too? XO started out as Concentric Network, a hosting company. This was Cloud before it was called that. XO sells Hosted Exchange and website hosting. Megapath just rolled out the Microsoft suite. Intercall offers Live365. It isn't big dollars, but it is a place to get your feet wet in Cloud and apps.

Managed IT - remote monitoring of servers and desktops - is a VAR service powered by software like Autotask, Connectwise, Kaseya and GFI MAX. As businesses are essentially dependent upon computers and technology to do business, managed IT services become an option when skilled technical support staff are too expensive, churned or unavailable.

A step past, Managed IT is the remote desktop - aka Desktop-as-a-service (a term I dislike) and VDI (virtual desktop infrastructure). In 1999, Wyse terminals were going to replace desktops for efficiency. It didn't happen (except in the POS space.) Now we are trying it again. MSP's offer this service - with a big fat helping of bandwidth. There are big names in this space, including Citrix, VMware, and Microsoft. There are also a number of providers, like IIS Group, who provide VDI through the channel. Navisite, which TWC owns, just chose Desktone as its DaaS partner.

Next to DaaS is HaaS, or Hardware as a Service. Don't ask me how this is different or how it isn't just leasing. Ask Chartec.

There are issues with selling cloud services - like the service provider's (SP's) financial position; redundancy and resiliency of the SP's architecture; SP's ability to scale in terms of on-boarding new customers properly and scaling tech support for end users; the end users' experiences as cloud services will change some business environmental factors; and licensing issues.

That being said, Agents should be surveying their current customers about the needs outlined here. Why? To get a bigger share of the customer's wallet.

Another way to look at it is: the customer is going to shop these services like he shops T1's, broadband, and voice. He might as well pay you to shop them for him, like he does for the telecom stuff. Get in there!

If you liked this, you might like this blog post too:

What about selling Cloud

One addition, I interviewed VAR Dynamics (local boys from Tampa) at ITEXPO. VAR Dynamics is a private-label Software-as-a-Service (SaaS) and Cloud business apps provider selling exclusively through channels. Apps include Microsoft Exchange, Microsoft Dynamics CRM, Microsoft SharePoint, Zimbra, BlackBerry BES, email encryption, email archiving and more. There will be cross-over in what a provider sells. Just as VAR Dynamics sells the Microsoft software and email security, CLEC's that you are already familiar with - like XO and Cbeyond - offer a variety of services to sell deep into your customers.