EMBARQing on the Channel

Theres always something new on the horizon, and for EMBARQ Corp., that thing is its channel program. Its channel strategy is a work in progress, launched when EMBARQ was spun off a year ago this June from Sprint Nextel. And rather than take a template from competitors, the company is taking its cues from an innovative service portfolio and feedback from its partners.

Marty Leavengood, EMBARQ director of strategic alliance and channels for business markets.

Kenny Wyatt, EMBARQ vice president of marketing and product managament.

When it comes to the channel, we are a one-year-old company, says channel chief Marty Leavengood, director of strategic alliances and channels for business markets at EMBARQ, which was formerly Sprints local services division with roots stretching back to 1899. Were a fledgling company, and we want to make sure we were moving towards the right kind of strategy.

Fledgling or not, EMBARQ has a directive to increase channel revenue by 200 percent this year. Kenny Wyatt, vice president of marketing and product management, says the goal is to drive the indirect sides percentage of total revenue from the single-digits to the teens and beyond; that likely will include a big fall channel push from the company focused on high-end business data services. It also has a number of changes slated for the coming months, including portfolio additions, program changes and support systems upgrades. Unlike the behemoths out there with established agent programs, EMBARQ is willing to craft and recraft the program until we have it right, Leavengood says.

EMBARQs program structure is still somewhat dynamic, but the mission flows from the brand.

Weve had to focus on establishing the brand and all the basic things you do when you launch a company,

says Leavengood. Part of our genetic makeup is going back to our roots and getting local, telling customers that were ready to be the local phone company. And now that were spun off and no longer funding Sprints wireless spectrum activities, we can invest in our own future, and build out facilities and infrastructure to help our market position. So, part of this is a reintroduction of a trusted company, and our agents can leverage that.

As an ILEC, the first challenge for EMBARQ in building out new channels of business (the agent program as well as retail stores and e-tailing) was figuring out how to augment a long-standing field sales force so as to minimize conflict and maximize exposure.

Initially, the strategy was a conservative approach, says Leavengood. A direct-side regional director owned a piece of geography and all the revenue from any channel within that; and each director had an alternate channel head that reported to him or her. Going into this year, that strategy changed.

The agent channel now has its own leadership and status outside of the direct sales force, consolidated under Leavengood, who has five indirect channel managers reporting directly to him. Partners have direct access to the same provisioning, engineering, order management, customer support and people that the direct side has.

Our structure is inherently channel-agnostic, but within some areas we have a specialization effort, Leavengood notes. For instance, theres an adjunct in the marketing department under Wyatt that focuses solely on indirect efforts with bundles and promotions.

As the overall role of the program has evolved, so too has the structure. In 2006, when we knew we were going to spin off, we knew that we had to generate three times the existing revenue within the partner organization, says Leavengood. We were able to do that, and we just brought on a lot of people selling as much as they could to achieve that. For 2007, its more of a controlled growth phase, and the makeup of our program has changed a little bit.

Along the way, the company started to realize the need for value-added partners, who can be more than just another person wearing an EMBARQ shirt, says Leavenworth. And now, the company is looking to bring in more diverse partners. Our partner of the future is a bigger, stronger, faster partner, he adds. They have a clear understanding of us and our services. And they have the ability to add value with professional services, hardware, thirdparty applications, wireless integration, security, even selling PCs. This is not simply a model of putting as many feet on the street as possible. A call center can do that if we target it the right way.

Wyatt says his main focus in the next five years is to grow the channel dramatically. We are heavily reliant on partners to serve accounts that we couldnt reach, first of all, says Wyatt. But also, data is the single most important product I have in the portfolio and we want to greatly accelerate that over the next five years as voice and business applications move to the data network. So, a big goal for us is to push more integration of partner capabilities, influencing the data sale. For example, an agent could put together a business in a box targeted for a vertical market that includes EMBARQ network services with hosted applications. These guys have capabilities we dont have that they can add to the core services, the absence of which a customer may not buy from us, explains Wyatt.

To that end, the carrier may open up the channel focus beyond agents, too. We have the EMBARQ logistics unit, so it may make sense to open up the program to resellers and dealers that can do an end-toend, integrated solution for a customer with the hardware and so on, says Leavengood.

The agent program, as it stands now, consists of about 100 master agents and their subs. Now, the company is considering moving to a more formalized tiered system. Were trying to figure out if the right number of master agents to have is 150 or 25, says Leavengood. Were exploring the right way to set it up. Do we want 100 medium-sized guys, or 25 gorillas?

One other challenge the provider is faced with is the issue of support. EMBARQ has monthly calls with partners, a newsletter to keep in touch, a national partner conference, ongoing surveys and an indirect partner advocacy team; but we need to determine what incentives we need to provide for big volume commitments, says Leavengood. Often, that seems to be customized support, individual customer care people and so on. But were operating without the benefit of experience. As a first step, EMBARQ is implementing a single point of contact within the organization for big, complex orders.

Another focus for the company is PRM. As a result of the spin-off, were making sure that the best processes and support are being enhanced to make it easier to do business with us, says Leavengood. And the billing and order provisioning needs to be crisp and clean, and capture the right information so the guys in the field have the right information to make customer target dates.

To that end, a goal is to make the partner Web site more self-service oriented and more detailed, with order, provisioning, crediting and commissions information.

The program will continue to be tweaked in the coming months. We always have someone coming after us, competitively speaking, so were starting to blend a lot more science with the art to focus the channels, notes Leavengood. Were studying how to maximize the right channels to deliver the EMBARQ story to the right customers for the most impact.

Wyatt is focusing on this process via marketing, for one. We can price specific products in specific areas, pull lists according to geography, segment, company size, industry, buying behavior, he explains. We have literally hundreds of variables we can use just to key in on the prospects and customers that are the best match for the channel partner.

Guided by Services

A big part of maximizing the agent strategy is giving partners access to the entire EMBARQ service portfolio, which includes several enhanced options, such as the pioneering SmartConnect dual-mode applications for the business market, which allow users to switch between Wi-Fi and wireless calls.

Were focused on data services and our compensation plan rewards that, but we also are staying on top of fixed-mobile convergence, says Leavengood. As an MVNO, we have a different way of looking at things. It allows us to do some things with bundles and to tie some things together. A lot of our business customers are also our residential customers, because were the local phone company. Its likely that when they go home, they have our dialtone. So down the road, if we can provide a seamless EMBARQ experience, thats valuable to them and to agents.

While Sprints partner program began as selling long distance almost exclusively with wireless service added in later, it never put its traditional local services into the mix. Now, EMBARQ can leverage the local side to develop unified communications. Youll see us focus on that, and how it weaves in the traditional wireline and wireless and also WiMAX possibly down the road, Leavengood notes. Thats something youll clearly see thats on our product roadmap.

Other areas of focus include IP trunking and hosted solutions for SMBs. And, later this year, the carrier is investing in its own MPLS network within the local service area, with tie-ins to IXCs to offer a full footprint. With the growth of IP, customers are often doing business across our boundary lines, but they and agents dont want to have to think about that when putting in their communications, says Leavengood.

On the core services side, Wyatt notes that agents are having the most success with business bundles. For less than a $100, consistent monthly charge, a customer can get unlimited local and long-distance, along with 3.0 DSL and some value-added features like security, he says. And the agents are just selling gangbusters out of that to SMBs.

To go with the services, EMBARQ offers required, formalized training on the portfolio and the processes for order placement, capturing data from the customer. But unlike some of its peers, the LEC doesnt block agents from selling certain products, or from multisite or highcapacity sales. We do have engineering forces to help because we need to make sure there are no problems, says Leavengood. But if you wanted to sell a 40-site MPLS network, we would just need to make sure you have all the things they need to adequately sell that. Its a question of protecting the brand, but also not denying opportunities. I would like us to get better at helping channel partners react as fast or faster as the competition.

Like its portfolio, EMBARQs channel program has been full of new frontiers, including some for the carriers employees. Ive spent my entire career in business markets until a few months ago on the direct side, and dealing with the indirect channel has just been invigorating, says Leavengood. Their entrepreneurial spirit and how they go about it, and how resourceful and more reactive they are compared to a big corporation thats been a refreshing surprise.

Up Close

Name: EMBARQ Corp., headquartered in Overland Park, Kan.

Leadership: Chairman and CEO Don Hesse Year launched: Technically, 2006 Customers: Millions. It is the fifth largest LEC in the country.

Employees: 20,000 Service territory: Eighteen states: Florida, Indiana, Kansas, Minnesota, Missouri, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wyoming.

Business services: It provides one of the first commercial FMC services in the country, SmartConnect, along with integrated local voice and data services, long-distance, DSL, wireless via its MVNO arm (based on the Sprint network), enhanced data network services, voice and data communication equipment, and managed network services.

Residential services: EMBARQ offers a quad-play stable of local, long-distance, high-speed Internet, wireless and Dish Network satellite TV, along with a blended service with integrated wireline/wireless voice mail.

Channel size: 100+ master agents and growing.

Fast fact: Las Vegas is EMBARQs biggest market, and along with Orlando represents EMBARQs only presence in Tier 1 cities.

Fun fact: Richard Gephardt, former Missouri congressman, onetime leader of the House of Representatives and 1988 presidential candidate, has joined the companys board.

Humble Beginnings

In the late 1800s, the telephone was still new, but local telephone companies were springing up across the nation. As dialtone slowly grew into a universal service, EMBARQ Corp. was there, but it was known as Brown Telephone Co. Cleyson Brown formed the LEC in Abilene, Kan., in 1899 and its had a dynamic history ever since, marked by a range of technical firsts.

Four years after its humble birth, the little local phone company began to grow, and partnered with 14 others to form the Union Telephone and Telegraph Co. to serve Kansas City with long-distance. Going forward, it assimilated several other ILEC companies, like Carolina Telephone & Telegraph and Central Telephone Company, changing its name to various incarnations containing United along the way. Eventually, it grew to operate nationwide.

In 1991, the company changed its name to Sprint and became the nationwide provider for IP, local, long distance and wireless that we know today. The original ILEC business became Sprints local services division, and it was this portion of the business that was spun off last year as EMBARQ, which now operates in 18 states across the country.

Notably, the company has several technical innovation milestones under its 107-year-old belt. In 1959, it started the conversion to a dial operation (rather than relying on operators to complete every call). In 1978, it laid seven miles of fiber optic cable in Pennsylvania. A year later, it installed its first digital switch. Then, in 1984, what was then United announced it would build the worlds first all-digital, longdistance fiber-optic network. The first coast-to-coast call on that network was made at the end of 1986. By 1990, 85 percent of its customers were served by digital switches. It was then that it was decided to change the companys name to Sprint, and the memorable pin drop campaign was launched.

In 1992, the company offered the first commercial Internet service, and by 1993, Sprint was the only carrier to offer local, long distance and wireless services. With the conversion to local packet-switched architecture that began in 2003, local broadband services became a Sprint differentiator.

With the 2005 merger between Sprint and Nextel came plans to separate the local services division into a stand-alone company. With its newfound autonomy, EMBARQ says it plans to continue its long history of technical innovation to launch more fixed mobile convergence services (it already has one of the first commercial dual-mode Wi-Fi/cellular services), explore WiMAX and continue to upgrade its infrastructure to deliver more firsts.

Embarq Corp.

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