Qwest Asks Agents To Take A Pay Cut
The Denver-based telecommunications provider, which serves 14 states, wants to amend the commission structure of the Qwest Business Partner Master Representative Agreement (MRA), according to a letter sent to Qwest partners and obtained by CRN.
The Dec. 19 letter, signed by Tom McGrath, vice president of Qwest Alternative Channels, outlines three changes to the way Qwest pays its reseller agents. And each change potentially reduces an agent's income, Qwest master agents who received the letter told CRN.
The amendment would trim agent commissions to 14 percent from 15 percent, a decrease that applies to new sales of Qwest products and recurring revenue from current accounts, according to the letter. The 1 percent reduction is significant because if an agent has a Qwest customer income base of $1.5 million annually, for example, the new terms would cut the agent's income by $15,000 a month, or $180,000 a year, according to a Qwest agent who received the letter.
The letter said the amendment also places a minimum incremental sales (MIS) requirement of "$40,000 in new booked monthly recurring changes over a rolling three-month window." If agents don't hit the new MIS quota each quarter, they lose another 2 percent of all new and recurring revenue on top of the 1 percent they have already lost, the Qwest agent explained. The 2 percent reduction stays in place until an agent hits the $40,000-per-quarter quota, according to the letter.
Also under the amendment, if agents lose more than 10 percent of their customer base during any given quarter, another 2 percent of all new and recurring revenue will be deducted, the letter said. That change ties the hands of agents because Qwest in large part is responsible for customer satisfaction and retention, the Qwest agent noted.
"If [Qwest doesn't] do a good job of activating our accounts and supporting our accounts and provisioning, then we can lose accounts no matter how good of a relationship we have with the customer," the agent said. "And there is no SLA [from Qwest]. The only SLA is, 'Here, you have to sell.' "
Overall, the amendment potentially could take an established Qwest master agent's commissions from 15 percent to 10 percent by the second quarter of 2007, the Qwest agent said.
Qwest agents who received the letter have until Jan. 15 to sign the amendment and return it to Qwest.
The letter said Qwest has been witnessing "dramatic changes in other carriers' channel programs" and that, by comparison, the Qwest MRA is substantially unchanged. Qwest is evaluating a bonus program for agents this year and will share the details of it as soon as possible, according to the letter.
In an e-mail statement, Qwest said the proposed amendment represents an effort to make the company and its partner program more competitive. "The changes that were made to the partner program for 2007 are designed to drive growth and to reward partners for continuing their commitment to Qwest, while preserving a partner's ability to receive full compensation on in-region renewals -- a substantial differentiator for [the partner program]," the statement said.
Qwest also said in the statement that the program "provides all partners with significant financial opportunity, including a bonus program for 2007," and that the changes for this year will allow the company to "design strategic programs to reward high-performing partners."
Qwest has been hurting financially in recent years, reporting losses of $1.7 billion in 2004 and $779 million in 2005. As of September 2006, the carrier had three consecutive profitable quarters, but before that the company had lost money in seven out of eight quarters. Qwest has not yet set a date to announce its 2006 fourth-quarter results.
*Story updated with Qwest comment.