Channel Poaching

Agents takes issue with some of AT&T's direct sales practices

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Agents say AT&T's direct sales force is taking business from the channel, and a draconian contract makes it difficult to maintain an effective relationship with the country's largest telecommunications provider.

Among these agents' chief concerns is an apparent 25 percent loss of commission if AT&T's direct sales team engages the channel to close a deal. In addition, they say AT&T's commission structure is lower than competing plans, and opportunities to pick up additional points in commission often have unrealistic requirements.

'The issue is all about competitive skills and the ability to execute.' -- Keith Olsen, Vice President, AT&T

"We've abandoned AT&T," said Bob Norton, vice president of Select, a $75 million solution provider in Westwood, Mass. "I'm sufficiently disgusted with what the big wireline carriers have been doing to the channel."

Keith Olsen, vice president of AT&T's Global Alliance Channel, however, said AT&T's 1,200 agents must add value to a sale and take the time to learn AT&T tools and procedures to be successful. "The issue is all about competitive skills and the ability to execute. As there is more competition in the marketplace there are more pressure points across the entire industry."

Norton agrees the market is more competitive. That's why he believes AT&T's direct sales force is grabbing for any business it can get.

Just days after Select introduced a potential client to AT&T, Norton said, the direct sales force offered the customer a better price for the Cisco equipment that was part of the deal. As a result, Select lost a contract worth about $500,000 in Cisco product and AT&T services and $200,000 in services from his company.

Olsen said it is difficult to analyze such a case without all the specifics. He declined to comment on how the direct sales team gets paid but said they are continually engaging the channel, "and that's a key ingredient to many of our partners' success."

Still, a number of agents echoed Select's concerns. Many said they were hesitant to speak on the record out of fear that AT&T would cancel their contract and they would lose recurring revenue checks.

"We're seeing a failure to engage agents [by AT&T's direct sales force or a resistance if we tried to engage them with a midtier customer because it will cost them dollars," one VAR said.

But other agents, who also spoke on the condition of anonymity, said it's all about adding value in the marketplace. "We've heard rumblings about the direct sales force losing some of their commissions, but we haven't seen a failure to engage because we add value to the deal," said a midsize solution provider.

In addition, solution providers complain that AT&T's commissions are lower than competitors', and additional points can be obtained only if orders are completed without the assistance of AT&T channel support, which the VARs said is difficult to achieve.

Dan Bommer, president of Telesis Management, a master agent in Reston, Va., said even his AT&T channel rep, an 18-year AT&T veteran, has trouble negotiating some of the paperwork. "So if you have to engage AT&T in completing the myriad paperwork, you get dinged on commissions," Bommer said.

But Olsen said AT&T partners that learn how to use the online tools and services can successfully complete orders. The AT&T plan, which pays 6 percent to 8 percent commissions, plus up to 12 percent in up-front bonuses for new customers "is the benchmark" in the industry for return on investment, he said.

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