Agents Voice Concerns, Hopes for Master Agent Consolidation

Channel partners are closely watching master agents to see how consolidation impacts them.

Last week Channel Futures discussed the growing trend of consolidation in the agent channel. M&A has impacted several prominent master agents, including MicroCorp, CNSG, Telarus and TCG. The article featured commentary from national and regional master agents, in addition to some subagents. Their reactions ranged from extremely positive to cautiously interested to extremely negative.

An incredibly comprehensive look at telecom and master agent consolidation courtesy @JamesAndersonCP. A ton of master agents and analysts weighed in. @IntelisysCorp @TBImasteragent @AnuragTechaisle @PlanetOneComm @TCGPartners https://t.co/CxDEZnYiBW

— Craig Galbraith (@Craig_Galbraith) April 1, 2021

However, we’re focusing on subagent reactions in the second installment of this series. We asked partners who represent the channel to end customers about how consolidation makes them feel. Which aspects concern them? What excites them? Moreover, what do they hope to see? Note that in the following paragraphs, we will use the terms “subagent,” “direct selling agent” and “channel partner” synonymously.

Carrier Accountability

Christopher Scott, principal owner at StratoNet, said we need to talk about carrier M&A when we talk about master agent M&A. The accelerating agent channel consolidation comes after a long series of transactions between carriers. For example, CenturyLink bought Qwest, which had merged with U.S. West, and Level 3, which had bought Broadwing and TW Telecom. Fusion Connect bought Birch Communications, which had bought Cbeyond. Charter Communications bought Time Warner Cable, which had bought DukeNet Communications. Countless purchases occurred in the wireless space, including AT&T buying BellSouth, Verizon buying MCI WorldCom and most recently T-Mobile buying Sprint.

You get the idea; consolidation has occurred all across the board. Moreover, it has come with consequences.

“Carrier consolidation, like airline consolidation, has created an end-user customer service gap that I think should have involved the FCC and FTC a long time ago,” Scott said.

StratoNet’s Christopher Scott

Scott said that his firm must engage very differently with carriers than it did five years ago. Previously, he could have more easily turned to a competitor if a supplier treated him poorly. But in 2021, his choices are slimming.

“Today the answer is, ‘Oh yeah, we bought all those companies. So sit down, shut up and get up when we tell you,'” Scott said.

Barrier to Entry

Scott in last week’s article pointed to an increasingly high barrier to entry for signing a contract with a supplier. Scott, who sometimes seeks out direct contracts for StratoNet, said it’s “near to impossible” to sign one with the largest carriers. In some cases, they require a minimum $100,000 in new monthly billings, he said.

Thus, carrier consolidation sets a precarious stage for master agent consolidation. Now more than ever, channel partners need master-agent partners to go to bat for them with these large providers. Will this advocacy decrease as master agent competition decreases and the remaining master agents enjoy more exclusive privileges with the carriers? Will they keep the suppliers accountable?

Scott said no particular acquisition troubles him; however, he expressed concerns about the broader impact of carrier consolidation paired with agent consolidation.

“No one thing is really a terrible ill. It’s the way that they all fit together that is putting the end user – our clients – and subagents at risk, and limiting the degree to which we can …