Sprint Looks At Altering Partner Compensation

As conflicts continue to simmer between carriers and solution providers competing for hardware sales, Sprint is seeking input from channel partners on different ways to compensate them. One possible scenario Sprint is considering is compensating solution providers up front, rather than on a residual basis, for the sales of Sprint services.

Sprint also wants to push more network equipment sales through solution provider partners, said Lee Priest, director of indirect channel marketing at Sprint.

"We only sell the equipment to sell our services," he said. "We would much rather see the partner receive that margin on equipment sales and potentially receive an up-front payment from us for selling our services. We know it's difficult for equipment resellers to get into the services business, so the direction we are trying to move in is to make it easier for them to do so."

Priest acknowledged that Sprint receives steeper discounts that solution providers from vendors on product sales, but said the carrier prefers that partners sell the equipment.

Sprint's plan to restructure its partner compensation program comes at a time of increasing conflict between carriers and solution providers, who say carriers use their relationships with vendors to outbid partners on equipment deals as a way to sell connectivity services.

Traditionally, Sprint has paid partners on a residual basis, but more solution providers are asking for up-front compensation.

"Sprint is definitely coming around," said David Morken, president of Bandwidth.com, Durham, N.C. "In these economic times, carriers are realizing that the channel is at a premium, and Sprint is definitely amenable to working with us now with one-off and unique accommodations."

Sprint's up-front compensation plan for connectivity and voice services has not yet been implemented but will be available within a few months if the carrier decides to move forward with the plan, Priest said.

The idea behind the program: Pay partners a lump sum for the sale of Sprint transport services. In return, the partners give up their residual payment or take a reduced residual, Priest said.

But not all partners believe this arrangement is good for the long term, said one solution provider and Sprint agent, who requested anonymity. "Onetime payments instead of residual payments are not necessarily a good way to build and maintain long-term relationships, and you lose that ongoing revenue stream."

Partners said Sprint also is looking into a program that would pay partners an up-front commission if a partner's sales lead results in Sprint closing a sale.

Sprint also wants to help SMB VARs penetrate the services market with its offerings and is in talks with several distributors to reach that market, Priest said.

Tritel Communications, Springfield, Mo., wants up-front compensation for solution sales. The solution provider brought Sprint into a Cisco Systems hardware deal recently and now wants an up-front commission for a percentage of the sale.

"We did the design work and brought Sprint in to buy and install the Cisco gear because they get a higher discount as a Cisco Gold partner," said Vera Gibbons, president of Tritel.