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Carriers, Partners Talk Contracts, Loyalty, Expectations

As more carriers consolidate, channel partners are looking for answers from their suppliers about money, loyalty and commitment. They got many of those answers on Sunday during the Carrier Roundtable session that featured one Bell company, one wireless company and two competitive carriers. John Macario, president of consulting firm Savatar Inc., moderated the session.

All four carriers – Verizon Communications Inc., Sprint Nextel Corp., Level 3 Communications Inc. and XO Communications Inc. – have gone through mergers in the past four years. Verizon bought MCI and changes to those contracts got much of the attention. Many partners questioned Verizon’s commitment because the company now pays more for new accounts than it does for renewals. Mike Hassett, senior vice president, Business Solutions Group Sales and Marketing for Verizon, said he has fielded numerous e-mails and complaints about the change. Ultimately, he said, Verizon has to make sure it continues to draw new customers. To do that, the company is showing favoritism to partners who sign exclusive contracts. “We try to make a large investment in them in terms of qualified leads,” he said.

Sprint, too, wants more exclusive partners, post-merger with Nextel, and it is willing to pay for that, said Stephen M. Rowley, vice president of Sprint’s indirect channel program. “We compensate more for exclusivity,” he said, noting, “Loyalty is a big driver for us right now.”

But loyalty only works if carriers continue to build relationships, said Jim Delis, president of business services sales for XO. The company knows. After it bought bankrupt Allegiance Telecom, XO suffered image problems because of channel integration and other issues. XO has made a big turnaround, though. Last year it launched its New Deal partner program and partners brought in 20 percent of XO’s 2006 revenue, Delis said. “It better hit 30 percent in 2007,” he joked. Then he added: “If we are more important to you, it comes from understanding better what you do. That’s something we desire to know and get better at.”

Level 3 is just embarking on work with channel partners and is intent on showing its commitment. The company tried a VoIP reseller model a couple of years ago, but that effort flopped. Now, after a series of acquisitions with companies such as Broadwing and ICG, it’s ready to prove its dedication to the channel. As the company shifts from a wholesale to a two-tier distribution model, “the indirect channel for Level 3 is a key partner,” said Dennis Kyle, senior vice president of indirect channels. “This is new for us so the partner channel is our source of growth.”

Level 3 Communications Inc. www.level3.com

Sprint Nextel Corp. www.sprint.com

Verizon Communications Inc. www.verizon.com

 XO Communications Inc. www.xo.com


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