Beginning Feb. 1, Sprint Nextel (S) has imposed charges on its Business Indirect Partners and Business Solutions Partners for access to business indirect channel support managers, channel support managers and the programs they support. While optional, the charge has gotten mixed reviews from some of the carrier’s agents as well as elicited concerns that this model, if unchallenged, will be adopted by other service providers.
That concern may be very real. Less than 5 percent of the company’s partners opted out of the program, according to Sprint spokesperson Stephanie Greenwood. Several agents who spoke to PHONE+ said they still hoped to negotiate with the company on the terms and would not discuss the matter with PHONE+ for fear of jeopardizing those talks.
Specifically, Sprint is invoicing agents for fees on a monthly basis based on the number of wireless gross activations and/or the wireline base revenue for the previous month, according to documents obtained by PHONE+. The minimum monthly fee is $100 and the cap is $4,000. Wireless support ranged from $8 per activation for 100 or fewer to $2.50 per activation for 1,000 or more. As an example, 500 gross activations at $3.50 each would produce a $1,750 monthly fee. Wireline fees start at $0.0075 per dollar for bases of up to $99,999 and $0.0035 per dollar for bases greater than $1 million. A $500,000 wireline base at $0.0045 per dollar would generate a $2,250 monthly fee.
Considering this wireline example, depending on the commission – let’s assume 10 percent to 20 percent – it would take between $11,250 and $22,500 per month, or $135,000 and $270,000 per year, in new sales to break even.
One agent PHONE+ spoke with on condition of anonymity said that the price is steep and continues to climb every month that new sales are added.
Given the choice between a commission cut and the support charge, however, the agent said this was the “more moral way to do it” because agents had the chance to opt out.
Master agents, however, have reason to disagree. Determining if and how to pass these charges on to subagents is trickier. But when 75-80 percent of the carrier commission is passed along, there isn’t a lot of room to absorb these extra fees, agents told PHONE+. An across-the-board cut, on the other hand, would be easier to pass along, they said.
Sprint did not confirm that a commission cut was considered as an alternative to the support charge, however. Greenwood told PHONE+ the move to the “shared cost model” was a result of plans announced by the company in late 2009 to reduce internal and external labor costs by at least $350 million on an annualized basis.
“With this effort, we wanted to continue the full range of support previously available to Business Solution Partners (BSPs). Included in this range of support is a team dedicated to supporting only BSPs and it was determined we’d need to move to a funded model to continue providing this team,” Greenwood said. “This model also helps ensure long-term stabilization of the customized support program, no matter what other changes may occur at Sprint.”
She added that the change impacts only a portion of the overall support available to BSPs. Solution engineers, customer care and national sales support are unaffected.
One agent agreed that much of the required support would remain, but the agent said it would be especially difficult to bid wireline services for large enterprise accounts without access to the special pricing support available only to those on the pay-as-you-go plan. “I’m guessing if they want the deal bad enough they will find a way to special price,” the agent said.
Agents also expressed concern that the charges were retroactive, covering the whole base, even though the majority of support is required for new sales.
Of course, the larger worry is that the idea will catch on. “My big concern is the likes of Qwest, Verizon or AT&T will be watching over the next 12 to 18 months. If it’s accepted [by the agents], they may follow,” said one agent on condition of anonymity.
Given that so few agents opted out of the program, it appears the agents have accepted the charge as a cost of doing business with Sprint. But partners told PHONE+ many agents are concerned about raising a fuss for fear of being cut from the program and losing commissions. Instead, they said they will most likely quote Sprint less.