By St. Clair Newbern IV
While end-users reap the benefits of lower cost services and more powerful technology, telecom agents are seeing shrinking revenues. This has led some to consider the deregulated energy market as a way to replace lost telecom revenue. Electricity, natural gas and energy consulting services can provide an opportunity for channels to leverage existing relationships in building a secondary residual revenue stream.
However, finding the right energy supplier is critical to success in the energy market. There are basically two groups of suppliers:
- Retail energy providers (REPs) literally take title to energy, then structure products that can be sold at the retail level. These entities may own generation, or natural gas supply, or they may buy some or all of their supply via the wholesale power market through one of many exchanges such as the NYMEX. These are the entities that create the energy products you will market to your clients.
- Aggregators, brokers and consultants (ABCs) are similar to telecom agents in that each ABC may have relationships to sell the services of any number of REPs. By definition, aggregators are entities that assemble independent residential or business customers into buying pools with the goal of achieving overall lower rates than these buyers would get on their own. Brokers connect buyers and sellers. Consultants offer any number of services that go above and beyond simple aggregation or brokerage services. In practice, most firms fill a combination of these roles. For most telecom agents, partnering with an established ABC is the best route. There certainly is nothing stopping you from becoming an ABC yourself; however, you will find that in order to obtain the proper licensing, certification and establish supply relationships with top REPs, you must have verifiable industry experience, deep market knowledge, financial strength and technical abilities that take years to acquire. So, for most new entrants the smartest strategy is to find an ABC that will provide an immediate opportunity to leverage customer relationships and begin to building a new revenue stream.
The following primer will help assist telecom channel partners in choosing an ABC partner. The myriad firms offer drastically different services and have varied skill sets, philosophies, relationships and tools. As in any industry, there are firms that do not operate above board or are on shaky financial ground. It is important that you learn how to differentiate the good from the bad. It will allow you to preserve your reputation and, more importantly, allow you to build a solid book of business that you can count on for many years.
When evaluating possible partnerships there a number of questions that you should be asking: