We have been writing about the collision of the telco and cable company agents, and the IT solution providers for more than two years. Technology innovations and a poor economy are driving more customer IT buyers to cloud and managed services. The fact that cloud and managed services are not possible without the high-speed data lines that power the IT infrastructure places carrier service providers (e.g. Verizon, Century Link, Comcast) front and center.
In the last year, we have seen widespread telco and cable company interest in recruiting network resellers and integrators to their agent programs. In our previous research, a nominal 13 percent of the U.S. networking solution providers indicated capabilities in both networking resale or influence, as well as wirelinewireless carrier or cable company agent status. More than 60 percent of networking IT solution providers indicated an influence of broadband or other carrier services; though they stopped short of entering into an agent agreement, they were more likely to design a network and make critical carrier service recommendations. The gap between those who are agents and those who are consulting influencers, and telco and cable company efforts to recruit that 60 percent to agent status, is today’s topic.
We expect the percentage of you who have established formal agent relationships to edge higher, and why not? Telcos and cable companies understand the recurring revenue model; they have invested and continue to invest in infrastructure systems that can provision, bill and provide customer service in a recurring revenue environment. They’ve gone so far as to buy IT Infrastructure-as-a-Service (IaaS) providers, for example, Savvis’ purchase by CenturyLink. If you have been aggressive in embracing managed or cloud services and you are a networking solution provider, the odds are high that you have considered adding carrier services to your portfolio. The question is in what capacity, and impact to you? Let’s start with the major differences in an IT resale relationship vs. a telco or cable company agent program.
First, consider basic reseller discounts that yield product margin. An agent relationship pays commission tied to the recurring revenue sale, typically for the life of the contract. With the standard or typical agent relationship, there is no need to take title and resell the service, no need to price it -- the carrier has priced the service. There is a need for you to size it correctly for provisioning. A master agent, rather than a distributor, will support you in your efforts to conduct this part of the selling cycle. The carrier service provider will take the responsibility of invoicing. Contract renewals? That’s a key role for you to assess the customer’s needs and drive the next set of unified communication applications for a continually improving price-performing solution. The ability to craft a unified communications solution in addition to carrier services is what separates the IT networking partner from today’s telco and cable company’s typical agent.
There are numerous other differences between the ecosystems, but getting started with the basics should prepare you as you head into business planning for 2012 to assess your strategic goals. If you are a design-capable network reseller or integrator, one opportunity to consider, because it’s coming your way, is incremental margin or fees tied to carrier services.
BACKTALK: Contact IPED General Manager Rauline Ochs via e-mail at email@example.com.