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Channel Partners Expo Blog: What Carrier M&A Means for Agents’ Pocketbooks

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So many carriers are consolidating these days that channel partners may start to worry about their competitive supply chains.

In just the last half of 2010, PAETEC bought Cavalier, EarthLink snapped up Deltacom and One Communications, and several fiber companies joined forces (and that’s not to mention the long-pending, $22.4 billion CenturyTel-Qwest deal). It’s been a whirlwind of M&A even as the economy remains somewhat rocky.

The “Managing Consolidating Carriers" session at the Spring 2011 Channel Partners Conference & Expo in Las Vegas will take a look at just how much the activity is impacting agents, resellers and distributors. There’s good and bad in the change, as Ben Bronston, principal at Nowalsky, Bronston & Gothard, and Michael Murphy, president of master agency NEF Inc., will discuss. To be sure, carrier M&A is putting a lot of pressure on channel partners.

“Although agents are more productive than ever, their income streams are more precarious than ever due in part to the threat posed by consolidation," wrote Bronston in a new article for Channel Partners (formerly PHONE+).

So what are agents and other partners to do when carriers combine? Bronston advises partners get familiar with their existing provider contracts. That way partners know their exact rights and obligations. Second, when M&A rumors start to circulate, let carrier leadership know you expect “the acquiring company to honor your agreement if a deal is consummated," Bronston said.

“The mere fact that you’re aware of the rumors may cause the carrier to address this in their negotiations with the acquirer," he added.

Above all, have a backup plan. If a carrier union means your contract won’t be honored, be ready to find a new provider to serve your customers.

“This is also where it’s important to know what your contract says," said Bronston. “You need to know whether the acquiring company can terminate you for convenience and then seek to enforce a non-solicitation clause, thereby preventing you from moving the customers to another provider."

Certainly recent carrier M&A illustrates why working with multiple providers pays off, noted NEF’s Murphy in an opinion piece for Channel Partners.

“Instead of being at the mercy of a single carrier, enjoy the freedom to switch between several companies, securing your business as a result," he said.

Also, ensure your contracts are transferable. This can make “all the difference" during consolidation, said Murphy.

The ultimate takeaway is this: “Consolidation definitely has its pros and cons," as Murphy put it.

“Your willingness to prepare yourself, diversify within the industry, and maintain strong client and vendor relationships will help you succeed no matter how the landscape changes."

These are just some of the tips and insights Bronston and Murphy will share in their hour-long panel on Monday, March 14, starting at 9:15 a.m.

Meantime, be sure to check out the other sessions slated for the “Partner for Profit" track – from “Value of a VAD" to “Collaborating with Competitors" and “Cablecos as Telco Alternatives," channel partners will come away with valuable new tools for running their businesses.

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