Does Verizon Jeopardize MCI's New Partner Program?

newly introduced channel program

Verizon, New York, said Monday it will acquire MCI , Ashburn, Va., in a transaction valued at about $6.7 billion. Verizon beat out a similar bid for MCI by telecommunications provider Qwest Communications.

The news came less than a week after MCI announced a new Solution Provider Channel Program. The program was designed to help MCI triple its indirect-sales volume from levels seen six months ago, said Todd Gerdes, senior vice president of MCI's solution provider channel. MCI does not divulge what percentage of its overall sales comes from channel partners, Gerdes said.

While Verizon and MCI remain separate companies pending regulatory approval of the deal, the merit of MCI's new partner program has been diminished by the looming takeover by Verizon, which is not that great a partner to work with, said Emmet Tydings, president of AB&T Telecom, a master agent in Gaithersburg, Md.

"Verizon has a very narrow, low-population channel program," Tydings said. "To accommodate the MCI program, Verizon would have to completely do an about-face from the last couple of years of paring back their master agent program."

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Tydings said he would have preferred to see Qwest acquire MCI because it would have better ensured the survival of the MCI program as it was announced. Qwest fields a broader, two-tier agent program, he said.

"Qwest knows how to perform in channels; they are a channel player," Tydings said. "Now, if [MCI] goes the way of the current Verizon model, the [MCI] program goes away ... under Verizon rules, you are Verizon-only. There may be some overlap, but the only overlap would be agents that game the system. This deal has the potential to completely collapse the MCI program."

A Verizon spokesman said that because the course of the acquisition will "take about a year to play out," the operational decisions having to do with channel partners "won't be addressed until we get closer to closing."

Meanwhile, a spokeswoman for MCI said things at the company will remain "business as usual" as the deal moves forward.

Allan Tumolillo, COO of Probe Financial Associates, Ironia, N.J., said many partners who first looked at the MCI program with enthusiasm will likely wait and see how things shake out before investing in the MCI program.

"I think partners will have to wait a bit to see if the MCI program stays in place as is. Verizon will have its own way of doing things," he said.

Ahead of the news, MCI partners expressed less anxiety over a possible acquisition, noting that such consolidation has become common in the telecom industry.

"Agents are not concerned, and agents are not indicating to us that customers are concerned," said Scott Eaton, vice president of sales at MicroCorp, a master agent in Marietta, Ga.

Channel partners typically won't feel any impact from such large-scale acquisitions for 12 to 16 months, he said.

At least for MicroCorp, Verizon's plan to acquire MCI could yield positive results since the master agent does not currently work with Verizon.

"The business benefit could be additional products and services for our portfolio," Eaton said.

MCI's new program splits the company's 1,000 partners into three partner categories, granting them commissions ranging from 15 percent to 20 percent depending on their partner level and the type of services sold.

MCI also launched its first certification program, an optional offering that provides additional commissions for partners that sell strategic services in areas such as security, VoIP, hosting and managed network services.

Representatives for Sprint, Qwest and Level 3 did not comment on the Verizon-MCI deal.