Carrion Carriers

The recent and ongoing consolidation in the telecommunications market has more to do with mismanagement than a shrinking market.

In our cover story this week starting on page 60, CRN Senior Editor Elizabeth Montalbano takes a look at the telecom market consolidation, including SBC's $16 billion acquisition of AT&T, a once-great company that stumbled over its own shortcomings more than market conditions.

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

What Montalbano found is that the fat-cat carriers are being outgunned by agile VARs, who are cashing in on the VoIP revolution without the help of carriers.

Ironically, if the carriers had created strong partner programs and leveraged the channel they also could be enjoying the fruits of the VoIP boom. Instead, they remain committed to an old-world model, selling phone services, pipes and bandwidth rather than solutions. If the carriers want to know how to do things right, they need look no further than companies such as Cisco, Nortel, Avaya, Enterasys and Netgear, which have driven adoption via channel programs that reward VARs for delivering VoIP solutions to customers.

One solution provider that has beaten the carriers to the punch is Berbee Information Networks, a 12-year-old, $250 million Cisco partner in Madison, Wis. Berbee competes regularly with SBC and flat out beats the carrier with better solutions and service. Who would you rather bet your businesss on? A carrier that is more interested in selling bandwidth or a solution provider with applications expertise that is helping you grow your business? Berbee's VoIP implementations shot up to more than 100 in 2004 with the average deal running about $350,000 vs. only 65 VoIP implementations in 2003 with the average deal coming in at $150,000. "We are in the middle of a wholesale changeout with every business over the next five to 10 years converting to VoIP," said Pat Scheckel, Cisco practice director at Berbee.

If the carriers want a piece of that pie, they would be wise to engage solution providers such as Berbee. If these dinosaurs instead decide to stick with their old-world business model and fail to partner with the channel, there will be more consolidation. One day these carriers may even find themselves being eaten by a Berbee. Extinction or distinction: That's the choice the carriers face.

What do you think of the big carriers? Let me know at (781) 839-1221 or via e-mail at sburke@cmp.com.