Verizon Relaxes Stance On Compensation For Ex-MCI Agents

Verizon said in an Aug. 18 conference call with former MCI partners that those partners would no longer be compensated for the contract renewals of legacy customers if those clients are taken over by Verizon Business direct sales. But on Monday, Verizon's Business Solutions Group Channel Communications team sent an amended question-and-answer document to former MCI partners saying that the company hadn't yet decided how legacy MCI contract renewals would be handled.

"Compensation for Verizon Business contract renewals is under development, additional details to follow," the amended document said.

Many of the partners on the call, conducted by Kristen McCarthy, director of partner programs for Verizon's Mid-Atlantic and Western regions, were fuming over Verizon's plan to immediately conduct interviews with former MCI partners to determine if they could stay on as Verizon agents. A new 2007 Verizon Solution Partner Program (VSPP) contract is expected in November, and it has many legacy MCI partners concerned about their future because Verizon doesn't intend to retain all former MCI partners in the wake of the carriers' merger. This "recruitment phase" for VSPP will last through November, she said.

"We don't have unlimited capacity [to accommodate former MCI partners]," McCarthy said.

Former MCI partners who spoke to CRN asked not to be named because they were concerned their comments might affect their eligibility for the VSPP. All said they're worried that they will make less money as Verizon partners -- if they're allowed to be Verizon partners at all.

"I think it's going to be a tough transition period," one legacy MCI partner told CRN. "They are eliminating the old MCI and getting everything converted back into the RBOC world. A lot of us were dealing with MCI as an alternative to Verizon, and now we're concerned about rules that will allow their direct-sales people to poach our MCI accounts."

A Verizon spokesman said after the call that he couldn't specify how many legacy MCI agents Verizon plans to retain in 2007. But in March, Kathy Koelle, former senior vice president for business solutions sales and marketing at Verizon, told CRN that a very large number of former MCI partners were to be terminated from the ranks.

"I don't need a thousand partners. I probably need 100 to 200 of the right partners," Koelle said. She later was reassigned.

Some legacy MCI partners are discussing the possibility of joining forces so they could wield more influence with Verizon and sway the New York-based carrier from taking their accounts direct or cutting residual compensation.

About a decade ago, more than a dozen telecommunications companies and CLECs banded together to form the Agent Alliance as a way to optimize and share front-end costs and back-end support. As carriers have consolidated in recent years, such as through the mergers of Verizon and MCI as well as AT&T and SBC Communications, the Agent Alliance has begun to flex more muscle to protect its members' profitability, an Alliance member told CRN.

"We have protections [against the big carriers] not everybody has," the Alliance member said. "Legally, [Verizon has] to be careful about what they do. We have certain evergreen provisions that give us some protections against ill intent." According to McCarthy, the full details of the upcoming VSPP contract won't be available until well into November. "And by that time, our interviewing has to be completed," she said.

In advance of the interviews, Verizon will give legacy MCI partners questionnaires to prepare them. The questionnaires will cover sales forecasts, sales territory and business plans will each be part of the questionnaires, McCarthy said.

What is known of the 2007 VSPP contract is that it will have two tiers, one exclusive and one non-exclusive. "The more exclusivity you give us, the more compensation we will give you," McCarthy said. She declined to disclose commission levels for both tiers but said legacy MCI partners will be told during their interviews.

The 2007 VSPP contract raises the deal size required for an agent to get on-site assistance from Verizon Business engineers to $50,000 from $10,000, according to McCarthy. This process, called "teaming," also could be subject to reduced compensation for a partner, according to a data sheet viewed by CRN.

Commissions will be paid the same way to partners in both tiers: Half of the commission on a deal will be paid up front, and the balance will be paid as a residual over five years or the length of the contract if it's less than five years, McCarthy said.

Legacy MCI partners not selected for the VSPP can't renew their legacy MCI contracts, according to the data sheet. All legacy MCI contracts will become Verizon contracts in 2007, so if MCI partners don't make it into the VSPP, they lose their legacy accounts. Verizon Business also will take direct and bar VSPP agents from all "premier, federal, system integrator, government, education, wholesale and international" accounts, the data sheet said.

"This just makes [Verizon] tougher to work with, if we even end up working with them at all," said a legacy MCI agent, who requested anonymity. "It's like they are running some kind of fraternity, where they want to interview you and see if you qualify for the club, which they are going to run their way."

After the merger with SBC, AT&T, ended residual payments for legacy SBC agents, an AT&T spokesman said. The carrier moved its legacy SBC agents to a one-time, up-front payment approach, which includes payments for renewals, he said.

In response to the latest concerns of legacy MCI agents, a Verizon spokesman said the VSPP is still evolving. "In this stage, the company and the potential partners are actually defining it," he said. "At this stage, both sides are in the selection mode."