Channel Disruptions in February 2014

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

Channel Disruptions in February 2014

So as I understand it (I will confirm with Telx next week), Telx has revised its channel program. So Telx has over 300 agents of which maybe 100-120 have sold a deal. Those other approximately 200 are being given their walking papers. The top 25 partners will be business as usual. The others will need to sell or go. I heard actually that they would be cut, paid until contract expire, but then have to go through one of the top 25.

I had a talk with Coresite today because they are launching a channel program. I explained that Channel is NOT a numbers game. It is a business alignment game.

Coresite told me that there are between 2000 and 3000 registered for the CPExpo. (I am assuming that the 2000 numbers is just channel partners with about 1000 being exhibitors.) Every one of those channel partners has a different business model.

Does selling Collocation fit into most of those business models? Evidence suggests that it is like 5% sell colo. (Similar evidence suggest that less than 10% sell Conferencing, so most partners have a business model focused on a core product set - like servers or network or voice.)

I would suggest that just selling network is getting less profitable. Looking at E-Rate pricing for the midwest last week and it looks like 10GB private lines go for about $2000!!!! That's right $2K! VZ is selling Internet ports in a couple of data centers for less than $2 per MB!!!! Ummm, has everyone become Cogent???

Speaking of which, Cogent wants to join the channel, where the partner can sell a 1GB private line for a whopping $700!!! WOW! $70 per month!

Now the thing is: all pricing is depressed. That's one reason that the revenue numbers at the public carriers have hit the wall. When you used to sell a WAVE for $10K and now it is $5K, well that's a lot of write-down in the renewal revenue column.

How does the carrier make that revenue up?

Cbeyond has to sell 3 cloud deals for every 1 TDM deal that doesn't renew. That's just unrealistic.

For the channel partner, you have to transact 3x as many deals today as you had to previously. (I wrote something similar recently.)


Speaking with some channel managers yesterday, they were b!tching about how agents don't want to do the paperwork and just want to throw the deal at them and move on. No kidding!!! When you are selling a cable modem for $150 and the process is a paper tiger, and I stand to make $15 -- yeah!! You do the freaking paper.

I can't believe that more of this ordering and quoting -- hello, Sprint and EarthLink - isn't automated!! How can you say that you are in the cloud when your systems operate like its 1975?? Are you guys still running on a VAX or IBM 3033?

Well that's enough venting.

Windstream is revamping its channel too. See here.

A last thought:

"Outstanding student loans increased to $1.08 trillion as of 12/31/13, $218 billion larger than the nation's $862 billion of credit card debt. That total, coupled with an 11.5% delinquency rate (i.e., percentage of loans, by dollar, that have failed to make a payment for at least 90 days), has economists concerned about the buying power of a generation of 25-year olds that are struggling to pay down their student debt (source: Federal Reserve Bank of New York)." Maybe all the pricing pressure is due to the lost buying power. But that begs the question: If you don't pay your workers more money, can you stay afloat long term?

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