AT&T Hangs Up On Agents, VARs

The plans, disclosed in letters to agents dated Oct. 1, involve the termination of more than 500 agent contracts overall and force the remaining 300 agents to agree to entirely new contracts with completely new terms.

According to agents, these new terms transition the existing four-tiered Referral Partner Program into a one-tier Authorized Reseller Program. While the old program had four levels of commissions and bonuses, the new program puts all remaining channel partners on the same margin structure and eliminates bonuses altogether.

Rick Dellar, co-founder of Intelisys, a master agent in Petaluma, Calif., received a termination letter and said he was downright angry with the way he'd been treated.

"We've been with [AT&T] for more than five years, do many, many millions of dollars of business with them, and we had no advance warning for any of this," he said. AT&T's standard channel agreements included a 30-day cancellation clause. "Maybe they feel they need the money more than we do, but it's hard to think this could be about agent commissions."

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Other agents--even those who received new contracts--seemed just as steamed. Many complained at length about AT&T's "disregard" for the channel, but requested anonymity for fear of jeopardizing recurring revenue down the road.

"These are deep and wide cuts," said one master agent who received the new contract but was still deciding whether to sign. "Overnight, they've killed their channel and forced us to find another way to make a living."

This particular agent, as well as others who were offered the new deal, said that under the new agreement, agents would not be allowed to recontract their own customers. Bedminster, N.J.-based AT&T would continue to pay residual commissions only until existing customer agreements expire or until they are recontracted by AT&T.

Agents who were offered the new agreement have until Oct. 31 to sign.

A spokeswoman for the carrier declined to discuss specifics of the restructuring, but said that AT&T had "simplified" its program in both terms and requirements. She also said that the channel will be a "critical part of the sales force through 2005."

Yet agents reported that their channel managers and support teams were no longer working at the company.

The AT&T spokeswoman would neither confirm nor deny any layoffs in channel staff. She said that Celine Azizkhan, vice president of indirect sales channels, still heads AT&T's channel effort and is "not going anywhere."