Expect the Unexpected

The economy is havoc on telecom underneath the surface. O1 just suspended its channel program. XO let a few channel people go due to lack of impact on channel sales. Moody’s released a report on B3 credit-rated public companies that Moody’s thinks will be having a bad year (see: www.huffingtonpost.com/2009/03/10/moodys-bottom-rung-list-o_n_173378.html). The telecommunications companies on that list include Global Crossing (News - Alert), Integra, CavTel, ClearWire, Cleveland Unlimited, Intelstat, Securus, Level3, and Primus (which just filed for protection in other countries recently). And these are just the publicly-traded companies. We don’t know how the privately-held companies are doing financially. I’m watching several VC-backed companies laying off and re-organizing. We just saw Charter file bankruptcy. The debt loads in the telecommunications industry is straining under a flat or declining income stream.

This presents a problem and an opportunity. The opportunity is that these companies could leverage the indirect channel more to drive sales. If they already have a channel, they need to be looking at ways to get more out of their existing agents. I’m not talking about more money either. Find out why they are selling your stuff. It could be the system to get quotes and contracts is too arduous. It could be the agents don’t know what the fit is. Ask them. Interact with them.

The problem is for the agent – or more precisely the agents – revenue stream. If you don’t know that a carrier is having financial difficulties, it will be a surprise when the commission checks stop or bounce. I don’t see a carrier letting their agents know that their commissions are in jeopardy. It would be a double-edged sword that cuts off both heads because customers and agents would flee and the company would die.

What’s an agent to do? It’s hard enough to go out and get sales closed in this economy, but to then not get paid on the sale. Defeating.

My advice is to have a dialogue with your vendor; diversify your income streams; pay attention to the industry, especially your core carriers; and not worry about what you can’t control. IT

Peter Radizeski is head of RAD-INFO (News - Alert), Inc., a consulting agency specializing in the telecom industry.

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