Cisco Channels Director Questioned In Deal Registration Trial

In a trial between Cisco and one of its former solution providers this week, a Cisco channels director admitted that although Cisco had a special pricing arrangement accepted through registration with the solution provider, Cisco offered the deal and the same pricing to another company.

Chris Schlereth, operations director of West Channels for Cisco, said the deal, an IP telephony sale to the Irvine Company, originally developed by the solution provider in question, Infra-Comm, was eventually handled by AT&T in such a way that it did not breach any contracts between Cisco and Infra-Comm.

Infra-Comm, a San Juan Capistrano, Calif.-based solution provider, alleges Cisco breached its Indirect Channel Partner Agreement (ICPA) and the terms of its deal registration program by passing a potentially large deal with the Irvine Company, a property development company, to AT&T.

Networking and IP telephony vendor Cisco, in return, is accusing Infra-Comm of harming Cisco's business and misusing its brand name.

Schlereth spent three days on the witness stand this week at the trial in Superior Court of Orange County in Santa Ana, Calif. The trial started September 30, and is expected to last for about 15 days.

Part of Infra-Comm's lawsuit against Cisco alleges that Infra-Comm identified the Irvine Company deal and registered it, expecting to close it with Cisco's help and receive an extra discount from Cisco under Cisco's Opportunity Incentive Program (OIP).

Infra-Comm received registration for the deal on Jan. 12, 2006. The registration was valid until July 11, 2006, and Infra-Comm said it was informed by Cisco on June 5 that an extension to the registration would be taken care of.

Brian Daucher, a lawyer representing Infra-Comm, asked Schlereth whether Cisco offered the same special pricing to AT&T that it offered Infra-Comm for the deal. "I believe that to be correct," Schlereth said.

When cross-examined by Renee Lawson, a lawyer representing Cisco, Schlereth said that he became aware in the Spring of 2006 through conversations with his team that AT&T became involved in the deal. He said he became involved in order to offer advice because of the OIP in place with Infra-Comm.

Schlereth also said that Cisco extended a DSA, or Dealer Service Agreement, which he called an extra discount, to Cisco for the Irvine Company's IP telephony project. A DSA is a price deviation offered by Cisco in certain cases, and is one of multiple ways Cisco can implement price discounts to customers, according to a channel source.

Schlereth also said that, when he learned that Cisco took the deal in question to AT&T, he went to his managers to ask whether Cisco could offer compensation to Infra-Comm. However, he said, he was not surprised when they said no, and that he had not seen any case where Cisco offered a partner compensation for not closing a deal.

Next: Conflict Over Indirect Chanel Partner Agreement