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Catch the Integrated T1 Wave


It’s high summer, and surf’s up for
channel partners catering to small and medium businesses. A flurry of integrated access options let agents offer SMBs fully managed voice and Internet access on one T1 line, for less money than traditional circuits. Partners can really shoot the curl with bells and whistles like dynamic bandwidth allocation for speedier Web access when voice lines aren’t being used.

Integrated T1s also typically offer buckets of local or intraLATA minutes, seamless scalability without truck rolls thanks to smart CPE, a single bill for all voice and data services and support for enhanced features like CLASS5 functionality, Web hosting or e-mail.

Targeted to businesses with five to 24 employees without a need for a full T1 of data or voice, integrated access is a fit for more than 1.1 million businesses, reports The Yankee Group.

“These customers typically have no or little IT staff, and desire a cost-effective telephony and data network solution,” says Jennifer Blatnik, product manager for Cisco Systems Inc.’s Multi-Carrier Business Unit. “A customer can choose to have all services managed by the service provider, [including] IP Centrex for telephony, VPN, firewall and other security services for data, all on a single pipe. Customers with an existing PBX or key system can interconnect their system to the IAD and still have a more cost-effective voice and data solution with a single T1.”

Integrated T1s also allow businesses to do more with their communications infrastructure. “Managed services are hot because with the advent of the Internet, SMBs are continuing to grow at a more rapid rate,” says Blatnik.

“Technology has enabled companies to have a larger overall presence while maintaining a smaller staff at any single location. Businesses with small staffs cannot afford to dedicate resources into managing IT needs, hence the market for service providers to provide managed services.”

The biggest marketing point is saving money. Agents and vendors say customers can save 20 percent to 30 percent in telecom charges per month. “Take the time to do a comparison between a prospect’s existing telecommunications services and associated costs, versus the services and costs delivered via an LDMI SmarT,” says David Bailey, vice president of product marketing at LDMI Telecommunications. “In most cases the comparison speaks for itself in regards to the true value of an LDMI SmarT.”

A TSUNAMI OF OPPORTUNITY

To paddle out into the SMB segment, many operators are launching integrated service, turning to the channel and offering reasons why agents can benefit.

“CLECs have retrenched into major Tier 1 and Tier 2 markets where they are trying to grow market share,” says Norm Bogen, an analyst with In- Stat/MDR. “RBOCs are fighting back by introducing their own integrated T1 service offerings, as well as significantly lowering T1 and 1FB POTS line rates.”

LDMI is in the process of launching SmarT service, local, long distance, Internet and data services, to agents in Ohio and Michigan. The Midwest-based CLEC says agents selling the SmarT service are able to generate “substantial recurring revenue.” LDMI also delivers promotional spiff programs, and agents can provide phone systems and complementary consulting and services on top, such as managed firewalls, VPNs, conferencing and network integration.

“[Integrated T1s] help agents sell a broader product portfolio of services, which allows them to get closer to their customers,” says John Chapman, director of product management and development at PAETEC Communications Inc. “This allows us to increase our penetration, increase the agents” value to their customers and with more products - this allows them to receive more healthy commissions.”

At the Spring Channel Partners Conference & Expo, PAETEC launched Value Bundles - integrated packages of local and long-distance voice, highspeed Internet connectivity and associated customer premise equipment for a flat monthly fee, available through the company’s agent channel. PAETEC is using Value Bundles to target SMBs for the first time, giving its agents another market opportunity. “PAETEC’s Value Bundles are all about simplicity and convenience,” says Brad Bono, co-COO. “They’re an innovative new way for small businesses to obtain PAETEC’s world-class communications capabilities at surprisingly affordable rates. Our customers are asking for simple, reliable, comprehensive communications services.”

Integrated T1s also can be entrees for agents into bigger businesses with branches. “There are many times that in a large multilocation office, one of the satellite locations needs voice and data and the bundle product is perfect. This opens the door to the rest of the locations,” says Rob Westervelt, XO Communications Inc.s president of indirect sales.

BellSouth offers network VPNs with its integrated services, so customers can share private secure data over an MPLS network. BellSouth uses it to provide a proposition for branch office locations that require less than a T1 for data.

The managed services aspect of the offer is another boon for agents. “Typically when agents sell similar solutions they have to also maintain it, which - depending on the type of maintenance contract they sell - can be less profitable for the agent if the customer requires a lot of the agent’s time,” says Brian Hollister, senior marketing manager at BellSouth, which rolled out its Integrated Solutions portfolio in January.

Interest on the part of service providers is growing, and agents soon may have even more vendor options to choose from. Qwest Communications International Inc. plans to launch an integrated T1 to the channel late this summer, while agent-focused TMC Communications Inc. is planning to get into the market. “TMC is in the process of developing broadband access services that will be flexible, dynamic and cost-effective for our customers,” says TMC CTO Ralph Widmar.

The effects also are rippling through the industry’s supply chains as resellers climb onto the integrated T1 longboard. Through an agreement with XO, reseller Lightyear Communications Inc. launched its own BizComplete integrated T1 product to agents at the Spring 2004 Channel Partners Conference & Expo, combining local, long-distance, data and Internet services.

LOOKING FOR THE PERFECT WAVE

In marketing the service to the customer, agents say finding the right integrated T1 offer for the situation means taking into account everything from carrier reliability to vendor promos. “Integrated Ts are generally generic with only minor variations,” explains Emmett Tydings of master agency AB&T Telecom.

“Marketing and promotions are where the differentiation lies today. NRC [non-recurring charge] fee waivers, free equipment installations, low flat-rated loops extending further from the central office, free audio conferencing services and other lures are what sway customers if all other things are equal.”

Tydings has put together T1 service and promotion grids with a half-dozen options and posted it on its agent extranet. “Promotions and local-loop cost can influence integrated T1 prices significantly. We have a large offering of T1 services because geography and promotions can alter pricing, so for particular location(s) that agents and VARs will lose deals without the right choices being made available to them. Agents need to sell circuits for the most reliable carrier possible, which many times means that the least expensive T is not the best option.”

End user education is part of the marketing. “Customers still need to be educated on the integrated T1 product and its capable applications, especially the ones who are coming from a DSL line and the ones whose businesses are growing extremely fast,” says Isabella Marquais, a spokesperson at Total Call USA Inc. She advises agents to start with the customer’s needs and to go in with a consultative approach. “We just finished working closely with a startup company to set up its customer service department,” she says. “After assessing the size of the call center, the potential incoming calls towards the customer service department, we were able to provide the right combination of voice and data at a cost that was very affordable to the company and fit budget… . The customer was new to this product and had to be educated on all features of the T1.”

Widmar says TMC’s product will address the learning curve. “Many of the integrated products that I have seen suffer from too many configurations that require far more explanation than many customers have the time or constitution to understand,” says Widmar. “My approach to product design is to make sure that the service is provisioned correctly, works flawlessly and is a better value. Transparency is important as well; If correctly done, a user should only notice a difference because the quality is better, and not require any retraining in order to use these already familiar services.”

Lead generation also is slightly different from a traditional sale, practitioners say. Ken Mercer of agency Telecom Brokerage Inc. says his approach to the customer relies on the multiservice nature of the product.

“It provides one point of contact with one company; it simplifies multiple services to one bill and one price,” he says. “It is perfect for [a company] too big for DSL, but too small for a full T1.”

He recommends that agents walk through the first order from start to finish with someone who knows the pitch, such as a master agent. Once an agent has the pitch down, sales snowball. “At TBI, it is quoted for about 50 percent of our local service quotes,” he says.

Going to existing customers is another option. “A great way to find these opportunities is looking into your own existing customer base that has purchased analog service and DSL,” says Stacey McCormick, director of sales at World Telecom Group. She says increased bandwidth for data is a strong selling point for most of those prospects. “With dedicated Internet speeds it can tremendously help productivity. Most businesses have some form of Internet connectivity, such as ADSL, SDSL or IDSL. Dedicated Internet and xDSL is a night-and-day comparison when you have more than five employees on that service.”

Links

AB&T Telecom www.abttelecom.com
BellSouth Corp. www.bellsouth.com
Cisco Systems Inc. www.cisco.com
In-Stat/MDR www.instat.com
LDMI Telecommunications www.ldmi.com
Lightyear Communications Inc. www.lightyearcom.com
PAETEC Communications Inc. www.paetec.com
Qwest Communications International Inc. www.qwest.com
Telecom Brokerage Inc. www.tbicom.com
TMC Communications Inc. www.tmccom.com
Total Call USA Inc. www.totalcallusa.com
World Telecom Group www.wtgcom.com
XO Communications Inc. www.xo.com
The Yankee Group www.yankeegroup.com


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