Is MCI's Program Safe?

Verizon, New York, last week said it will acquire MCI, Ashburn, Va., in a transaction valued at $6.7 billion. Verizon beat out an $8 billion bid for MCI from financially troubled telecommunications provider Qwest Communications, which late last week said it could sweeten its offer if MCI agrees to reconsider. Verizon, however, reportedly said its deal with MCI is sealed.

The news of the acquisition came less than a week after MCI unveiled a new solution provider channel program, which 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.

Verizon will not discuss any channel program considerations until the merger has concluded, a company spokesperson said.

While Verizon and MCI remain separate companies pending regulatory approval of the acquisition, the merit of MCI's new partner program has been diminished by the possible takeover by Verizon, which is not a great partner, said Emmet Tydings, president of AB&T Telecom, a master agent in Gaithersburg, Md. "To accommodate the MCI program, Verizon would have to completely do an about-face from the last couple of years," he said.

Tydings said he would prefer to see Qwest, with its broader, two-tier agent program, acquire MCI because it would have better ensured the survival of the MCI program. Without MCI, Qwest's future profitability may hinge on new service options, said Angus Dougherty, president of Air Cover Network Solutions, Denver. "[Qwest] should be opening its arms to metro fiber companies like Time-Warner, as they don't have the wherewithal to compete against SBC-AT&T and Verizon-MCI," he said.

Several resellers said Qwest can persevere as a regional carrier in its 14-state domain without MCI.

With the stated prize of both the SBC-AT&T and Verizon-MCI deals being the lucrative enterprise customer base of the acquired company, Victor Kellan, president and CEO of LAN Solutions, McLean, Va., said the ability to provide customized telco solutions to the midmarket will remain the forte of VARs.

"For the customer with just five servers, the big telcos are just going to say, 'Here's your brochure,' " Kellan said.

JENNIFER HAGENDORF FOLLETT contributed to this story.