The Verizon Lesson

Solution providers of all stripes are being impacted by an unprecedented wave of vendor consolidation that more often than not results in partners being walloped by new contractual terms. Case in point: Verizon's $6.7 billion acquisition of MCI.

STEVEN BURKE Can be reached at (781) 839-1221 or via e-mail at sburke@cmp.com.

In some of our top online news stories last week, CRN Senior Editor Dan Neel detailed the fallout from the merger. As Neel points out in his no-nonsense coverage, Verizon effectively fired more than 100 legacy MCI agents simply by deciding not to offer them new contracts.

Partners that were offered the opportunity to sign the new contracts were not treated much better. They were expected to sign the new contracts without being told by Verizon what their new sales quotas were. Don't worry about how much you might make. Just sign on the dotted line or take a walk. Verizon's actions are a case study in how not to treat partners after a merger.

It's no wonder that a group of outraged legacy MCI agents have organized an effort to fight back. The question becomes, just what can this group do to prevent Verizon from trampling all over its new partners? That remains to be seen. There is certainly a fair amount of contract law that will govern what options are open to the shunned partners.

What's so maddening about this Verizon-MCI dispute is the bizarre, irrational course taken by Verizon, which seems hell-bent on turning proven MCI solution providers into enemies. They are out there in the marketplace day in and day out selling telecom services. Why wouldn't Verizon want those sales?

The most important lesson to be learned from all this is that it's foolish for VARs to put all their eggs in one vendor's basket. The bigger trend reshaping the channel right now is that VARs are establishing tighter bonds with their customers as MSPs and calling the shots on the entire IT budget. If you're not taking that strategic approach, you are vulnerable.

It's going to be interesting to see just how the Verizon-MCI story ends. Neel is taking a deeper look at the impact these blockbuster mergers have on partner contracts. If you have a story to share, please contact him at (516) 562-7236 or dneel@cmp.com.

What lessons have you learned from a merger? Let me know at (781) 839-1221 or via e-mail at sburke@cmp.com.