Sprint-Nextel Deal May Ring Up New Opportunity For Partners

"If you look at what the customer gets, it's the most interesting marriage out there for cellular users," said Emmet Tydings, president and CEO of AB&T Telecom, a Gaithersburg, Md.-based master agent and national service organization.

The new company, to be called Sprint Nextel, will have about 35 million wireless subscribers who will have access to a slew of wireless services, including the popular push-to-talk walkie/talkie service that Nextel pioneered, according to Tydings. "From full personal information manager services to two-way messaging and talking--with all of that and regular cellular services--it's exciting what could happen from a technology perspective," he said.

However, the $35 billion merger faces some challenges that could affect partners, Tydings noted. The companies, for instance, have vast cultural differences. "Nextel is rock and roll, and Sprint is buttoned-down conservative. That's going to be a real challenge," he said. Combining both companies' billing platforms also is a "dragon waiting to be slayed," he added.

Tydings and other partners agreed that it's too early to tell what long-term impact the merger will have on their business. Still, telecom agents in particular are always concerned when telecom providers merge because it likely will affect the commissions they receive for selling those carriers' services, said Bob Loftus, co-owner of Linksource Communications, a telecom agent firm in San Francisco. Agents sell branded telecom services but don't own the contract with the end customer, as VARs do.

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"What scares the agents is what's going to happen to [their] commission stream," Loftus said. "If that's not clear, those agents are going to move those customers [to other carriers]."

Over the past several years, the terms of agent contracts from major telecom carriers such as Sprint, AT&T, Qwest Communications International and MCI have become increasingly less lucrative for agents, Tydings said. "Right now, in the month of December, all of the large carriers have new contracts on the master agents' desks," he said. "The contracts for 2005 aren't as good as the ones sitting there in 2004, and the ones in 2004 weren't as good as the ones in 2003."

Further consolidation, such as the bid Verizon is rumored to be making for Sprint, could cause an even tighter squeeze on agent commissions, Tydings added.

A Sprint spokesman said no decisions have been made yet on what channel changes might go into effect as part of the merger. "It's an area of exploration, like a number of others are as a result of merger," he said.

Joan Green, a telecom agent based in Las Vegas, said the Sprint-Nextel merger and other recent consolidation in the wireless market, such as the AT&T Wireless and Cingular union, shows that telecom agents and resellers should partner mainly with the largest carriers--the ones that are likely to be around for the long haul.

"You cannot partner with these small carriers because most of these small carriers of any kind will either be purchased, merge or go out of business," said Green, who works as a subagent for several master agents. "If one goes down the drain, at least you haven't lost everything."