RESELLER CHANNEL: Turnkey Platforms Turn Out Virtual Telcos

Posted: 10/2002

Turnkey Platforms Turn Out
Virtual Telcos

By Tara Seals

outsourcing momentum or maybe it’s just a really good business model. Whatever
the reason, a new trend of virtual telecom opportunities has emerged, giving
agents and other channel partners an opportunity to take their businesses to new
levels at a fraction of the cost.

Wholesale Carrier Services Inc., for
example, has launched a "Virtual Telco" program, a turnkey solution
for agents, ISPs and other channel partners to make the leap to reselling
private-labeled service. Partners can sell for WCS on a rebranded basis and
avoid negotiating with carriers directly. WCS buys wholesale services from
80-plus carriers and suppliers. Rates are customizable, and agents will make
their money on margin.

Chris Barton, WCS president, says
WCS offers "complete, self-controlled destiny" to the agent. "We
come in and negotiate a buy rate for the agent from us for carrier services, and
the agent decides what he wants to charge his customer — customer by customer,
carrier by carrier," says Barton. "We’ll bill whatever the agent
wants, under his brand."

The customized rate program for the
agent is automated and self-administered — a partner simply goes in via the Web
and picks the rate to put on the bill. The system tracks WCS’ wholesale rate,
the agent’s buy rate, and the agent’s end user price.

"It’s an instant commission
platform — it tracks all the margins," says Barton.

Rate attrition, carriers going
bankrupt, the inability for the agent to control the end user price, and
carriers going after agents’ existing customers are all problems that disappear
under the Virtual Telco program, says Barton.

"We have every carrier on the
planet," says Barton. "Agents can pick the carriers but just change
the PIC if one goes south, and the customers’ bills don’t change."

The payments to the agent are
handled in a "lockbox" setup. WCS drops the bills, and customers remit
payments to the box. WCS then deducts the virtual telco’s service buy rates and
charges for outsourced services from the box, and whatever’s left every month
goes to the agent.

WCS has licenses and certifications
in all 50 states, a legal team, tech support, customer service, a tax remittance
infrastructure and a comprehensive Web-based billing system — a business setup
that would cost a channel partner hundreds of thousands of dollars to acquire.
WCS offers these resources on an outsourced basis to partners that want to offer
services through WCS under their own brand, essentially allowing agents and
other partners to go into the resale business nearly overnight.

"Our carrier buy rates include
regulatory, certification and tax remittance," says Barton. "But I
also charge for billing, that’s 2 or 3 percent. Help desk support, provisioning,
tech support and so on are all separate charges."

The Virtual Telco program is the top
tier of a four-level channel strategy. WCS also offers a referral program with
upfront bonuses, a distributor partner program that offers set rates, recurring
commissions and a value-added reseller program. VARs must sell at least $25,000
and are responsible for bad debt and level one customer service.

To participate in the Virtual Telco
program, a partner must meet a sales tier of $50,000. The program also requires
the agent to secure the bad debt. However, the agent retains ownership of the

Similarly, Unified Signal Inc.
provides private-label customer acquisition Web sites where agents, ISPs,
retailers and other channel partners can sign customers up for service. Unified
Signal’s back-office platform performs service selection, equipment selection,
credit checks and billing account creation/fulfillment, while agent
"virtual resellers" maintain ownership of the customer and make money
on margin.

"Many agents would like to
become resellers, but are deterred from doing so because of the difficulty of
establishing carrier contracts and building a quality back-office and billing
system," explains Kimberly Tassin, a spokesperson for Unified Signal.
"Unified Signal removes these barriers and allows agents to transform their
agent business to a reseller business and immediately realize the increased
profitability the reseller business model offers, which can be four to 10 times
more profitable than an agent business."

The Unified Signal network is built
through alliances with various vendors. For instance, it has signed deals with
NUI Telecom to access NUI’s long-distance offerings. Earlier this year it signed
with AT&T Corp.’s global division for access to AT&T’s Internet dial-up
network, and to AT&T’s suite of global business services, including
dedicated and switched services, voice, data, long-distance, VoIP, Web hosting
and gateway services.

For service providers, WCS’ and
Unified Signal’s value proposition is in the aggregation of traffic volume and
the pooling of back-office resources, to create economies of scale.

"[This] technology creates so
much efficiency in customer acquisition, that it makes great business sense to
take advantage of it," says Michael Latimer, global network consultant for
AT&T. "Their technology creates a powerful buying consortium that makes
it profitable for us to offer them below-market rates."




Signal Inc.

Carrier Services Inc.  

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