Where is the Channel Going?

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

Where is the Channel Going?

There have been several announcements lately about channel programs from Windstream, AT&T, InterNap, Integra and others. In a few cases, the announcements are in defense of reduction in force. In the wake of layoffs, the carriers are defending their channel position. In unison they are singing, "We still like the channel!"

Even companies that left the channel came back to it. (I am talking to you InterNAP!) Why? Sales. It always comes down to sales.

Layoffs may have been a result of low sales or missing the revenue goal. In some cases, like XO or TWC, it takes so long - over 2 weeks - for a service inquiry (let alone a quote), that more efficient carriers - for example, ACC Business - can handle in 24-48 hours. These types of operational hurdles WILL impact revenue. People migrate to where it is easiest to do business.

We live in a time of the iPhone and SAAS, where customers can hit a website and be live in less than 24 hours. No one is waiting around for a quote any more, because if it takes that long for a quote WHAT WILL THE ORDER BE LIKE and WHAT WILL TECH SUPPORT BE LIKE?

According to a comment from Windstream, the next gen partner is what they are looking for. What the heck is that?

WIND's program dates back to Nuvox and T1 slinging. All of a sudden, WIND wants to go upstream with a $1250 minimum sale. That will be hard to do for a number of reasons. (1) Their current active partners are with you for $300 T1s. (2) Culture of operational messiness cannot be fixed with an infographic. (3) At the $1250 space, there are numerous other providers who carrier a cache brand that live in this space - AT&T and VZ just being 2 of them. (4) Comcast Enterprise will now be competing in this space.

Another reason for layoffs is a new corporate strategy - like WIND going upstream. We used to see this about once a quarter at BellSouth. "Today, you must sell this. Stop selling that." As if any partner could shift strategy that quickly.

The conflict that most channel programs are experiencing comes from the trauma of wanting to sell stuff that the market isn't ready for. The hype of UC is louder than the ability of the UC players to sell it. While most carriers want to sell multi-location deals, a majority of businesses are single location.

It would be nice if a partner could sell the entire catalog to a business customer, but typically that catalog is so large and vast that not even direct reps know half the products! And partners need to be comfortable that the carrier can deliver on it. That is hard to do when the carrier has trouble delivering on network services - quoting, ordering, installing, billing and servicing properly, timely and satisfactorily.

How do you put a customer in front of a carrier that can barely supply network and hope that they do a better job on cloud services? Cloud services is something with more moving parts and a number of deployment flags. It is why some partners pick best of breed providers for each service and bundle that with the network provider that is available in that area. Is that the Next Gen Partner that WIND was talking about? Or did they mean the partner who goes upstream with them?

The strategies for the carriers is changing. Just look at AT&T, VZ and Comcast. AT&T bought DirecTV. Granted that netted them bundling in LATAM and saved them $15 per sub on U-Verse, but TV is like wireline. VZ bought AOL and launched an online video service - chasing eyeballs, Hulu and Netflix. Meanwhile, after losing its bid for TWC, Comcast is launching an Enterprise division and looking at an MVNO with VZW. Similar but different.

The Channel needs to start thinking about specializing. I say this because in healthcare now, specialists are still making money, while general practitioners are getting squeezed financially. I see this happening in the channel as well.

It isn't that you won't make a living; it is just that your income will decrease and you will have to transact more and more deals to maintain. Inside a specialty, price gets a little less pressing; you know the lingo; you are perceived as an expert; you can move beyond network to other services to get stickier and raise ARPU.

More and more service providers are looking for channel partners. Many are just migrating to master agents. Master agents are looking like Tech Data.

Channel shows are more numerous - CVX, CP, UBM, CRN, Penton, TD and the master agents. The co-marketing dollars cannot extend much further. Someone has to lose.

Shows that RFID tag your badge: You are the Product!!! Think about that. It should change how you feel about (a) the industry; (2) the show producer; and (3) the vendors/sponsors. It should also make you feel like a piece of meat or a commodity. How do you change THAT perspective?

The vendors, masters, providers and distributors stopped thinking of us as partners a long time ago. It is readily apparent today.

Even when they say it isn't a numbers game - it is. Pareto was almost right: it isn't 80/20; it is 95/5. They chase 100s to get 5. Are you one of the 5 - or one of the 95?

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