Verizon 2007 Contract Contested

After nearly a year of talks with former MCI and Verizon agents, Verizon Solutions Partner Program (VSPP) executives in November unveiled the companys 2007 contract, which did little to quell the growing chorus of concern surrounding the combination of the two carriers agent programs following their merger.

Former MCI agents (fMCI as they are known to each other) expressed lingering reservations about the terms and conditions of the new agreement. And, one effort, the WE WILL NOT SIGN Coalition, is under way to protest the agreement. An e-mail solicitation circulated in late November requesting agents to rally by responding to an anonymous Hotmail address.

Disgruntled fMCI agents solicit support with this e-mail broadcast campaign on Nov. 29.

Nonetheless, about two-thirds of the agents invited to participate in the 2007 program attended signed contract in hand the kickoff meeting Nov. 29 in Basking Ridge, N.J., the company says.

Nearly 100 agents 60 percent of them former MCI Solutions Partners and 40 percent legacy Verizon agents were sent invitations with contracts in mid-November. The agreements were changed following three conference calls between VSPP and its prospective partners with second drafts distributed right before the Thanksgiving holiday. In light of the change, the deadline for signing the agreements was moved back from Nov. 22 to Dec. 15.

Because of the shortened review time, some agencies like ARG in McLean, Va., and master agency MicroCorp. Inc., in Atlanta, did not attend the orientation and say they will take the extra two weeks to consider the contract. We didnt attend the meeting because we didnt have enough time to do our due diligence. It would have been impossible, says MicroCorp CEO Brad Miehl, noting at press time (prior to the Dec. 15 deadline) that he was still reviewing the contract. I am hopeful that all parties can come to terms and that everyone does the right thing.

Greg Praske, CEO of ARG, agrees. I dont understand how anybody could that quickly review and sign an agreement. I cant imagine that somebody could do that and appropriately represent their employees and their subagents, he says.

One fMCI agent that did sign the contract and attended the Nov. 29 orientation says he was not happy about the brief review period and the lower renewal compensation among other terms. It was a tough call for us, says Vince Bradley, CEO of master agency World Telecom Group. He adds that the second version of the contract had dramatic improvements and that WTG will continue to request clarifications and amendments to the agreement through the review period and beyond a practice he says has been common and successful for the agency with other carriers.

One example of that, which is exactly like this situation, is that we and other agents were able to successfully get another major LEC to give us 100 percent comp on renewals after we had signed the original agreement, which previously only allotted 25 percent comp on renewals, he says. He also notes this same carrier, like Verizon, did not have partner quotas in place when it rolled out its program. I am sure the poor comp on renewals coupled with not yet having a quota resulted in poor new and renewal sales, something that Verizon may experience with the terms of their current agreement, Bradley says.

Bradley says WTG executives and lawyers completed a rushed legal review and did not feel significant additional changes that had already been requested and denied would occur in a few weeks. Finally, they felt that it was important to be at the orientation meeting in person to meet with key Verizon leadership.

Ted Schuman, CEO of PlanetOne Communications, is another fMCI agent with misgivings about the contract. I appreciate Verizons most recent attempt to improve the original agreement sent out but it is a long way from what can be considered an equitable agreement that sufficiently protects our revenue, he says.

Shelley Murphy, vice president, Verizon Business Solutions Group, says her team is well aware that some agents, including a number who had worked as agents for the former MCI, still have concerns about the program design. She says VSPP is continuing its ongoing dialog with each agent in hopes of resolving outstanding issues.

The contracts extremely challenging, says Praske, whose company is a fMCI agency. We feel that how they are treating existing business that was put on the books through our previous agreement is simply not consistent with our agreement and especially not consistent with how MCI executives conveyed that agreement. We are very concerned about their restrictions on pursuing larger accounts. And, we totally disagree that the value of a renewal is so substantially less than new business. Renewing the customer takes every bit as much effort as new business, especially at the speed the technology is changing.

Praskes concerns largely are the same ones expressed by other agents who spoke to PHONE+ on condition of anonymity. We need to secure the base we have now, says one agent, noting thats separate from the new conditions on selling new business.

Current MCI accounts you have sold previously are not protected at all, notes PlanetOnes Schuman. This statement refers largely to rules of engagement for renewals, large accounts and evergreen payments three of the major sticking points for fMCI agents.

The evergreen payment clause, which ensures payment to the agent on their accounts as long as they remain with the carrier, is a particular trouble spot. It was included in fMCI contracts, but Verizons policy is any new service added to the customers account automatically puts it under the new Verizon contract, which does not have an evergreen clause.

The rules of engagement regarding pursuit of larger accounts requires agents to get permission of the local branch manager before being able to target accounts that bill 10,000 or more per month. One agent who spoke to PHONE+ on background says it was akin to getting permission to continue working with customers they have had for years. Not knowing this in advance, he adds, makes it difficult to determine if you can meet set quotas.

Quotas, however, have not yet been shared with invited agents another reason many are concerned about signing the 2007 agreement. Failure to meet quotas can result in termination of the agent agreement, according to VSPP Q&A documents.

The renewal comp plan is probably the most contested. Praske calculates renewal commissions at 70 percent to 80 percent lower than new sales commissions. It definitely has an impact; we cant continue doing what we are doing and get paid 70-80 percent less, he says.

Another partner agrees: We cant fund our operation based on renewals at 70-80 percent less. Renewals are paid at 4 percent to 6 percent depending on whether they are classified as core or growth products, agents told PHONE+.

The likely result of such a policy, one agent told PHONE+, is that nonexclusive agents will renew their accounts on another carrier whenever possible to avoid losing the revenue. He is hopeful that Verizon eventually will budge on that front.

Another agent says any change of heart would require Verizon to abandon its incumbent mindset and recognize that the former MCI product set is subject to competition. They have a model they know and theyve tried to apply it out of region, he says.

Overall, Schuman says he has other more general concerns with the agreement, such as that it can be amended, altered or terminated at any time with 90 days notice up to including forfeiture of all compensation earned under the agreement. Best case scenario, you would get a one-, two- or three-year payout. This would depend on why you were terminated, he says.

Master agency Telecom Brokerage Inc. is another fMCI agency that has signed the agreement. TBI CEO Geoff Shepstone says the company will be starting a campaign to recruit new agents that want to sell Verizon products. TBI represents a safe port in the storm for agents that want access to Verizons products, he says.

MicroCorp Inc.
Planet One Communications Inc.
Verizon Solutions Partner Program
World Telecom Group
Telecom Brokerage Inc.

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