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Channel Conflict, Controversy: Windstream Agreements, Fusion Bankruptcy, Layoffs, AT&T Strike

Surprised Businessman

Lots of people panned the final season of Game of Thrones; however, when it comes to high drama, the channel didn’t disappoint, offering a steady dose of, “Wow, did that really happen?”

Among the expected news of the day, such as new hires, breaking M&A and changes in channel strategy, there also are controversies that get the channel talking. There have been quite a few since our last channel controversies roundup in March.

Recent hubbub involves Windstream partners’ reaction to new agreement notices, Fusion Connect filing for chapter 11 bankruptcy, and channel executives jumping from one company to another.

Also, MSPs were hit with ransomware and Avaya continues to keep everyone guessing as to whether M&A is in its near future.

Grab some popcorn and click through the slides below to revisit the controversies and conflicts that have rocked the channel over the past several months.

Datapipe's Robb Allen
Windstream’s ‘Intimidating’ Agreement Notices

In May, Windstream partners got an unexpected shock in the form of a letter saying their current agreements were null and void, and they were required to sign new agreements or risk being cut off from commissions.

Windstream filed for chapter 11 bankruptcy in February, and during a briefing in April, Curt Allen, Windstream Enterprise’s president of strategic channels, said the partner program included 31 standard agreements, “so the bankruptcy court has made it really clear that you’ve got to clean this up, this is a mess and I firmly agree with them. So we’re going to consolidate everybody onto a single agreement.”

One smaller master agent representative, who asked not to be identified, said he has been working with Windstream for many years and his agreement included evergreen protections that are not part of the agreement he is being asked to sign. He also said the new agreement includes new sales and revenue requirements, and if they don’t sign, Windstream could either stop paying commissions or pay less than what was previously agreed upon.

He called the letter “intimidating” and “incredibly impersonal.”

“I’ve always had evergreen language without volume commitments,” he said. “If I sign this new agreement, I’m voiding all rights to evergreen that protects my business long term, and then there [are revenue] milestones every six months and every year, and then months after that.”
CloudJumper's Mack Foust
Fusion Connect Files Chapter 11 Bankruptcy

In early June, Fusion Connect became the latest company in the channel to file for chapter 11 bankruptcy after its acquisitions of MegaPath and Birch Communications’ cloud and business-services unit failed to meet performance projections.

Fusion and each of its U.S. subsidiaries filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York. It expects to emerge from chapter 11 before the end of the year. Fusion entered a restructuring support agreement (RSA) with lenders holding more than two-thirds of the aggregate outstanding principal amount of its first-lien loans. Its lenders will end up owning the company when it exits chapter 11.
Expereo's Salim Khouri
Layoffs at AT&T, Symantec, Oracle, Ribbon, Others

Amid selling its enterprise security business to Broadcom, Symantec announced last month it is laying off 7% of its workforce and closing certain facilities as part of a $100 million restructuring program. That includes hundreds in California.

Earlier this summer, AT&T started notifying employees that their jobs are at risk as part of its plans to cut 1,880 U.S. jobs during the next few months, according to the Communications Workers of America (CWA). The CWA said job-cut notifications are impacting AT&T technicians in Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Missouri, Mississippi, North Carolina, New Jersey, Nevada, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia and Wisconsin.

Also this summer, Ribbon Communications rolled out a restructuring initiative, including layoffs, designed to further streamline its operations and improve customer delivery. And Oracle reportedly is shutting down its flash storage division and cutting at least 300 workers. This follows the company laying off hundreds of workers in California, including software and application developers, and others, in May.
Avaya's Chris McGugan
Intelisys Loses Andrew Pryfogle

After more than seven years with Intelisys, and leading the company’s cloud, marketing and corporate strategy efforts, Andrew Pryfogle switched gears and joined Pax8 as its chief market development officer, charged with helping the company merge the MSP and telco agent channels.

“Going forward, there’s not going to be a pure-play MSP or pure-play agent or VAR or integrator or whatever kind of title you want to use for that,” he said. “I think that end-user customers will dictate to partners – this is how I want to consume, this is how I want to buy – and partners of all stripes will have to be prepared to address those needs through a variety of business models.”

A month later, a handful of other Intelisys employees would follow Pryfogle to the cloud distributor.
Remediant's Bryan Copeland
Mike LaPeters Ditches AT&T Cybersecurity for Malwarebytes

In late July, cybersecurity vet Mike LaPeters unexpectedly left AT&T Cybersecurity to head up channels at Malwarebytes, the developer of endpoint protection and remediation solutions.

LaPeters tendered his resignation as assistant vice president of worldwide channels and now is Malwarebytes‘ vice president of worldwide MSP and channel operations.

Marcus Bragg, AT&T Cybersecurity’s vice president of sales, has been managing LaPeters and the company’s channel team for more than two years, and will be leading the partner program. Both LaPeters and Bragg were with AlienVault, which AT&T acquired last year.
AppSmart Best in Show CP Evolution 2019
CenturyLink Selling  Consumer Business?

In May, CenturyLink said it’s conducting a strategic review of its consumer business, and selling the business or spinning it off haven’t been ruled out as options. Jeff Storey, CenturyLink’s CEO, discussed the review process during its first-quarter 2019 earnings call.

CenturyLink is examining assets like its consumer business, and has “engaged advisers to assist us in that review,” Storey said.

According to the research note obtained by Telecompetitor, MoffettNathanson sees interest in spinning off CenturyLink’s consumer business driven, in part, by Frontier Communications selling its local service business in four states for a lucrative price. The researchers estimate, however, that Frontier’s footprint in the four states is more fiber-enabled compared to CenturyLink’s, suggesting that CenturyLink wouldn’t be able to command the same price.
Shedding workers
Sprint in Hot Water with FCC Over LifeLine Program

The Federal Communications Commission (FCC) this week said Sprint took millions of dollars in subsidies meant to help make phone and broadband service more affordable for low-income consumers.

The FCC learned that Sprint claimed monthly subsidies for serving about 885,000 Lifeline subscribers even though those subscribers weren't using the service. In response, Commissioner Geoffrey Starks said this directly impacts the FCC’s review of the proposed merger between Sprint and T-Mobile, and called for a pause in the review.

The FCC has launched an investigation and said Sprint’s actions would be a violation of a key rule – the “non-usage” rule – designed to prevent waste, fraud and abuse in the Lifeline program. The 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base.

Also, despite reaching an agreement this summer with the U.S. Department of Justice to salvage their planned merger, Sprint and T-Mobile still face a major regulatory obstacle as a group of state attorneys general from New York to California claim the deal will harm competition, limiting access to affordable wireless service.
Shedding workers
Avaya Keeps Everyone Guessing

In May, Avaya began exploring alternatives to maximize shareholder value, and the rumor mill has been running wild ever since.

Bloomberg reported that Avaya is considering a bid by Mitel that would create a telecommunications vendor worth more than $5 billion. And Reuters said Avaya is considering an all-cash offer from private equity firm Clayton Dubilier & Rice as an alternative. Neither have panned out.

Next up, headlines said Avaya was pursuing a joint venture with RingCentral as opposed to an acquisition. And again, nothing came of it.

This week, Avaya said there can be no assurances regarding the timing of any action or transaction, nor that the strategic review process will result in any particular outcome.
Richardson's Ben Taylor
AT&T Riles CWA, Southeast Workers Strike

Last month, more than 20,000 Southeast AT&T workers went on strike for four days as negotiations between the carrier and the Communications Workers of America (CWA) failed to yield an agreement. The employees returned to work after a “handshake deal” was reached on a new collective bargaining agreement.

The strike involved technicians, customer service representatives and others who install, maintain and support AT&T’s residential and business wireline telecommunications network in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
Expereo's Salim Khouri
Sungard AS In-and-Out Bankruptcy

Sungard Availability Services  exited Chapter 11 bankruptcy less than 24 hours after filing with new ownership and Broadview Networks’ former president and CEO at the helm.

The company filed Chapter 11 with a prenegotiated plan to reduce its nearly $1.3 billion debt and transfer control to a group of creditors. Its restructuring plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York.
K2 Software's Eyal Inbar
Cyber Breaches Mount, Hitting MSPs

Hackers targeted multiple MSPs with the 2019 Sodinokibi MSP ransomware, according to WatchGuard Technologies. The perpetrators leveraged weak, stolen or leaked credentials to gain administrative access to legitimate management tools that these MSPs used to monitor and manage their client’s networks, then used the tools to disable security controls, and stage and deliver the Sodinokibi ransomware via PowerShell.

Corey Nachreiner, WatchGuard’s CTO, said more attacks are likely as hijacking an MSP has a great deal of return on investment for cybercriminals.
Growth of AI
Tough Times for Hadoop

MapR, which provides a data platform for AI and analytics, came close to shutting down and laying off 122 employees within weeks if it didn't secure additional financing to fund its operations. Once worth more than $1 billion, the company faced an uncertain future until HPE came to its rescue via acquisition.

Also this summer,  Cloudera CEO and board member Tom Reilly announced he was leaving the company. In addition, the company lowered its full 2020 revenue guidance, from $835-$855 million to $745-$765 million. However, its latest quarterly results show Cloudera may be getting past its troubles since acquiring HortonWorks earlier this year.

One comment

  1. Avatar Anonymous October 3, 2019 @ 11:07 pm

    Another surprised Channel Partner victim of Windstream? Really? Time to come to terms that WIN is a failed business model due to a combination of The Incredibly dumb, desperate REIT spin off decision combined with declining legacy revenue and massive debt load. The new products are solid (though the people responsible have already exited for bigger better things – shocker!) …but not nearly not enough to off-set the baggage associated with Thomas saddling the company with chapter 11. It’s compounding gross negligence so stop being surprised by the stupid sh**. Move on. Curt is a solid guy doing his best at polishing the turd but at this point muddying himself in the process.

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