State of the Telco Channel: Partners, Suppliers Weigh in on Challenges

Plenty of opportunity exists for carriers and partners delivering network connectivity and transport services to customers, despite questions the telco channel faces around commoditization and digital marketplaces.

The technology advisor channel – traditionally known as the agent or broker channel – claims roots in telecom. Agents emerged decades ago as a way to save businesses money and time navigating carriers in the deregulated American telecom landscape. Although many channel partners have expanded their portfolios to include cloud-based unified communications, contact center and even cybersecurity, the wireline connectivity business remains a mainstay for many. The latest Channel Futures quarterly survey found that 39% of tech advisors increased their WAN/connectivity sales year-over-year. At the same time, another 27% saw a decrease in sales.

At the same time, many carriers are de-emphasizing and shrinking their direct sales forces. While lessened investment in direct sales does not necessarily equate to investment in channel partners – considering many carriers’ emphasis on building their own digital marketplaces – many of these suppliers are leaning on partners more than ever.

Airtel’s Vani Venkatesh

“Channel for us is not just a strategic initiative; it’s a critical enabler. That’s how we reach the enterprises,” said Vani Venkatesh, Airtel Business‘ CEO of global business.

Supplier Buy-In

The agent channel bears the scars of battling their carrier partners over the years. Bankruptcies, M&A and management changes frequently presented opportunities for vendors to shut off agent residual commissions. The fragmented and undersized agent community often stood by, helpless to do anything about this. Technology services distributors (formerly known as master agents) emerged out of partners’ need to generate enough spend with the vendors to protect themselves. Agents were battling to justify their own existence.

Momentum has definitively shifted in the last decade. Carriers like T-Mobile have shifted their internal compensation models to encourage sales people to work with the channel. Members of the so-called “Big 5” have affirmed their commitment to the tech services distributor channel. One partner pointed to the sales incentives and spiffs Lumen has been offering to the channel. Verizon has touted its market development funds for the TSD channel, and AT&T has built programs specifically for TSDs and tech advisors.

“I think we’re going to continue really do things that are going to help us grow with the indirect channel and as a result expand our customer relationships to places where we may not have had those relationships historically,” Chris Jones, who leads AT&T‘s route to market for TSDs and agents, told Channel Futures in an interview two years ago.

AT&T’s Chris Jones

Zayo Group is another company that’s working to revive its efforts within the channel partner community, particularly among tech services distributor and technology advisors. Zayo chief sales officer Brian Daniels said company laid a foundation for the channel in 2022 and is seeking to build on that in 2023.

“Zayo historically has been a bit hot and cold with the partner channel. I’m fine saying that,” Daniels told Channel Futures in a recent interview. “It’s a complete 180-degree shift in mentality where we’re really leaning in.”

Part of that shift stems from Zayo and other suppliers accepting agents’ third-party posture as a benefit, rather than a detriment. Daniels said partners can engage with end customers in a more consultative fashion than any provider can directly.

Zayo’s Brian Daniels

“If I’m a CTO or CIO and I’m building a network, I’ve got my team that’s going to put forth a design and a topology and a software stack and an application stack. But I’ve got a lot on the line if I’m that person,” Daniels said. “I want to engage with people that have consultative technical backgrounds and have looked across a wide range of things, and can come to us and say, ‘Yep, that’s the right decision,’ or, ‘This may be a little bit of a better one because of X, Y and Z.'”

Transactional and Transformational

Daniels noted that Zayo’s partner business exists in a spectrum in terms of …