Telcos Forced to Up Their Game in the Channel

Ovum's Mike SapienAs the new senior editor at Channel Partners, I thought I’d tap an old telecom source — principal analyst Mike Sapien at Ovum — with some new questions. Are carriers, now branching out beyond circuits and voice into all manner of cloud services, vertical offerings and even professional services, bringing channel partners along on this ride? 

Sapien, whose practice includes helping carriers and IT vendors bring their channel programs up to speed, was happy to answer. And to draw some distinctions between the colliding/converging channels of IT and telecom.

Sapien/Ovum: Compared to the networking vendors, the telecom channel’s programs in general tend to be not as comprehensive, not as broad and, in some cases, not as well thought-out. But there’s been a resurgence of that channel development activity in the past two years.

Telco channels have tended to be more like network resellers, predominantly keeping their brand prominent. I sell Verizon service, say, just as the telco packages it. I get a commission for it, or residuals, and there’s not much fancier value add.  

On the IT vendors’ side, channel partners have either a) added a lot of value to the offer or b) repackaged it and sold it with something else. In some cases, the IT vendors decide to distribute 100 percent through channels. Telcos always have a direct sales channel and a channel program. There are obviously some issues around who covers which accounts, and some channel conflict.

Channel Partners: And how is this conflict being addressed?

Sapien: The telcos are still trying to manage that. Verizon now allows partners to sell to more of their larger accounts, where before they used to have a protected list. In some cases partners now collaborate with Verizon’s direct sales team. CenturyLink has been doing something like this for four years. Their channel program got distracted, shall we say, after they bought [data center hosting company] Savvis, but they’re now working on it again. 

As services become more complex, channel partners have to become more knowledgeable and technical. Four or five years ago, if you needed to sell a circuit, it wasn’t that tricky. You might have to know about five or six services. You sold it, you got a commission, end of story.  Now you have to understand IT services like cloud, hosting. 

CP: Are telcos looking for these people or trying to growing them themselves?

Sapien: Telcos are struggling to find their own direct sales people first. Then, they start thinking about how they can find and help and train the right channel partners.  It’s a secondary thought. When it comes to something like asset tracking or fleet management,

Verizon is working with specialist partners — it’s more like an OEM relationship.  In some cases the partner is the prime vendor, finds the customer, and deals with several carriers.

CP: So how are they attracting and/or supporting partners?

Sapien: They’re consolidating and streamlining their programs. Verizon used to have a wireless program that was sold separately from wireline. There was always this confusion; you’d have to sign one contract with VZ enterprise and another with VZ wireless. Last year, Verizon worked to combine them. Likewise, AT&T has worked to revamp and consolidate their program, and even include wholesale.

Telcos also are beginning to understand that they have to invest in more professional channel infrastructure.  And that they need to let the channel have access to more accounts and not confine them to the low end. AT&T is realizing that they’re not reaching their midmarket very well and are opening up their channel to the midmarket. The telcos are doing this because they’ve seen surveys that say that some of these solution providers and specialists have better relationships with those customers than they do.

The smaller providers and larger MSPs like XO, MegaPath, and EarthLink have historically been more open to the channel. This is forcing the telcos to build more mature, richer programs.

CPO: What makes a program “rich?”

Sapien: The end-to-end sales cycle, with tools that allow the channel partner to do the whole sale themselves. As an example, most of the CLECs and the MegaPaths and XOs have had online portals for years. You can look, quote, get marketing material, put your labels on their marketing material, eventually sell, close and get paid with direct deposit to your account. 

Versus some of the telcos, who were doing some of that stuff manually. You had to email a support person to see if an account was open to you. They’ve only recently invested in online portals, deal registration, online sign-up, marketing tools, and direct deposit. Now they also have field support people, local people helping partners.

CP: So self-service, but also backup for the more complicated sale?

Sapien: Yes. As the offers got more advanced and complex, manual wasn’t going to cut it. Sending in a manual order for one circuit for one network service was easy, it could be done in email. But now the customer wants five services and five features and there’s 25 pages of configuration sheets. The complexity of the offer demanded that telcos started thinking seriously about the channel program as well as the infrastructure and the tools to support it.

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