Is Local Victor After Long Distance’sFallout

Posted: 01/2000

Is Local Victor After Long Distance’s
Fallout?
Part Two of Two
By Jill Collins

As agents diversify into local services to compensate for shrinking margins
in long distance, they are finding this market is not an easy nut to crack. A
steep learning curve and provisioning woes are among the primary challenges.
Most agents are tenacious, believing local service to be a must-have for the
foreseeable future, and optimistic that affairs will improve once the dust of
new competition settles. In this two-part series, we’ll look at selling local
services as an agent. Last month’s installment focused on the origins of local
resale and its challenges and rewards. This month, we’ll look more closely at
provisioning, training and compensation.

Growing Pains

Unfortunately, after an agent sells a customer on local, the real nightmare
begins. "Selling it’s the easy part," says Bill Power, president,
Association Resource Group (ARG), McLean, Va., a CLEC agent. "Cutting it’s
the hard part," he adds, referring to provisioning local services.

The provisioning process for local is much more complicated than for long
distance, because so much is at stake, including anything from dedicated, fax
and modem lines to DSL and other services and class features. Once an agent
realizes exactly what services have to be switched–and even that is a
battle–the provisioning itself only can occur within a short, specified time.

Bill Howard is a principal in Peloton (www.peloton.cc),
a company that trains CLEC salespeople to sell local service. Howard explains
that part of the problem with the local provisioning process is that "[to
switch a service over], what has to happen is that a cutover has to be
coordinated with the operating company. There isn’t parallel service, so if it
doesn’t work, it’s really business-affecting for the customer."

The actual provisioning of local service must take place within a specified
window of time, during which a customer does not need his phone lines, and
before the RBOC shuts down for the evening. "So they have a window to
effect a cutover and deal with any problems that might arise, which is really
hard," Howard explains.

Scott Swartzbaugh, vice president of sales for Network Consulting Group,
Tustin, Calif., an exclusive Pacific Bell agent, agrees. "When local’s
down, it’s down hard," he says, because it affects not just the customer’s
local service, but all services.

Some agents have been known to lose customers because the provisioning
process was so inept. "We actually lost long distance customers because we
were provisioning local," says Mark Solomon, president of Global Systems
Telecom Inc. (GSTI), a CLEC agent based in Coconut Creek, Fla. "That’s the
last thing you want to do is give that up because of the local product."

However, Solomon has faith. "There are a lot of new things happening
where they’re going to be provisioning local a lot smoother–we’re told–and if
that happens, it’s a new ball game."

Hopefully the kinks will get worked out quickly, as the average time to
provision local service is rumored at an embarrassing minimum of 30 to 60 days
or longer, according to agents and consultants.

"Anticipate that it is going to take five times as long to get installed
as you might think, and it’ll be 10 times the aggravation that a long distance
agent is used to," says Kieren McCobb, president, TeleConfusion Removal
Inc., Milltown, N.J.

If you sell something in a Pacific Bell (www.pacbell.com)
territory, the odds are pretty good that your customer is going to get it
installed and you’re going to get paid for it," says Wayne Thomas, former
agent and AT&T (www.att.com) and RBOC
executive, and currently president of Thomas & Company Inc. (www.thomasandcompany.com)."If
you sell the same thing in the US WEST (Inc. [www.uswest.com])
territory, the odds are pretty good your customer is going to wait 100 days to
get it and then you’re going to wait another 100 days to get paid for it."

Although it depends on the company with which you are dealing, Swartzbaugh
says that in Pacific Bell territory it takes about two to four days for analog
business lines to be provisioned, about five to seven days for analog Centrex
lines and 20 to 25 business days for local T1s.

The message stands: provisioning local lines isn’t a simple scenario. It’s a
challenge because of the different amount of detail that is required, explains
Swartzbaugh, who has been selling local service since 1993. "Local [vs.
long distance] has more finite details with regard to how a line is conditioned,
configured [and] delivered. When local is not done right, and it’s not
configured correctly with voice or data equipment, then you have a higher risk
of exposure to completing an installation correctly."

"It’s not like you can just take an account and sweep it," says
GSTI’s Solomon. "It can’t be done. Everything has to be done separately and
meticulously."

Ahead of the Game

Because provisioning for local can take so long, another item for agents to
consider is contract negotiation. To stay ahead of the game, agents might want
to add a clause to their CLEC contracts to receive up-front commissions on the
local services sold. After learning how long it takes to provision a local line,
many agents don’t want to wait until the service is up to get paid.

"The problem [with selling local] is revenue realization," explains
Len Bailey, vice president, Synergic Communications Group Inc., Fort Lauderdale,
Fla., "It could take three, four months before you see any money."

Because it takes so long to get local products provisioned, unless an
up-front sum of money for local products sold is negotiated in your CLEC
contracts, Bailey says, you are out of luck.

Bailey prenegotiated with his No. 1 CLEC to give him a draw against
commissions. So upon credit approval of the order, the company gives him the
agreed-upon sum of money for that product, and once the service is installed and
billed, the CLEC will deduct that sum from his commission check.

Greg Praske, CEO of ARG, doesn’t mind the wait on commissions, which he
estimates as generally taking 60 days to turn up. "We [have] found that
ultimately the CLECs will pay a very competitive commission, so you don’t have
to settle for something inferior," he says.

A quick note on receiving local commissions from RBOCs: Getting paid on
residuals is not standard as it is in long distance. "The RBOC compensation
system is much more complicated," Thomas says. "Some of them pay
one-time payments, others pay a combination of some residual. But mostly you get
paid up front and that’s it–you don’t see it later."

Training

Before actually contracting with a CLEC or RBOC to sell local service, agents
need to examine the opportunity for formal training on local service from these
entities. Agents can receive training directly from the RBOC or the CLEC, in
varying degrees. Subagents may find agents who are willing to guide and be a
mentor to them in the business of selling local; in addition, there are trade
shows to attend and books to study.

"If you don’t make that investment, you’re just going to screw up the
accounts and you’ll lose everything," says ARG’s Praske, who explains that
getting training in local service will take a good two weeks of being off the
streets selling. He feels, however, that the loss of sales in those weeks is
worth "getting educated any which way you can."

Network Consulting Group’s Swartzbaugh believes that if an agent wants to
sell local, he or she has got to be proactive and seek out training. "If we
have somebody who truly wants to sell local underneath us and wants to be more
formally trained, we’ll put them through [training]."

"The RBOCs probably have the largest, best-framed agents right now, and
the RBOCs usually provide a fairly robust training program," Thomas says.
He uses Bell Atlantic as an example, which provides a minimum of 11 days
training, several courses of which are the same the company’s direct salespeople
take.

"CLECs on the other hand, unfortunately, have rather limited training
ability," Thomas says. "Not that all the RBOCs are great, but the
CLECs have less capability."

In terms of selling for an RBOC vs. CLEC, according to Thomas, "With the
CLEC, you have to know your way all around that company plus all the labyrinths
of the RBOC. And there is quite a difference in terminology and paperwork and
all that kind of stuff, between the two [types of] companies."

The CLECs, Thomas says, are having growing pains because they are new.
However, "the RBOCs have been in this business since 1984, of grooming and
growing and investing in agents. And they have had the benefit of the tariff and
the return on investment to cover many of their costs to groom their agents over
the years. The CLECs are able to spend less money and are able to get
less-experienced people."

How Are the Bells Taking It?

Although selling local is an immense challenge, it seems that many agents are
turning toward it to build on their product mix. However, there are mixed
reports about how the Bell companies are taking on the challenge of competition
after having been the strong arm in this industry for so long. Some people feel
the Bells intentionally are wreaking havoc with the carriers to retain their
customer bases or just to be difficult. Others believe the Bell companies are so
gargantuan that it is too hard to effect change–that they have no choice but to
be a slow, mechanical beast with an ungreased chain.

"I think it [their reaction] depends on the CLEC," Swartzbaugh
says. "If the CLEC is pushy and arrogant, then the Bell is going to push
back."

Swartzbaugh believes that dealing with the Bells in an effective manner is as
easy as being polite and professional. "If you know how to treat people,
even if you’re politely competing with them, they’ll treat you the right
way," he says. From his experience, the more successful CLECs and indirect
telecom companies don’t have a problem getting the local exchange providers to
deliver the services they’re asking to receive in a timely fashion. "If you
act as if you’re a partner, they’ll take care of you," Swartzbaugh says.

According to Peloton’s Howard, the Bells’ own projections indicate that in
five to six years they are going to lose a significant portion of their business
revenue. In light of this news, he says, "It’s a very schizophrenic thing,
because on the one hand, they’ve got to open their market to competition in
order to be qualified to sell long distance. On the other [hand], it’s really
not in their best interest to cannibalize their customer base. The whole
business is in a chaotic state. Even if they were eager and willing to set up
secondary channels, they’d still be bad at it."

ARG’s Praske says that although he’s "suspicious" of Bell
companies’ cooperation with resellers, it does seem that they can perform in a
quicker, cleaner fashion on their own. For that reason, he is hesitant to
recommend a Bell reseller to clients because it’s more complicated to get
service. "On the other hand," he says, "If you’re bringing a
circuit directly into a CLEC, our experience has been that you get better
service from the CLEC than you do from the Bell company."

Some CLEC agents have found that CLECs promised more than they were able to
deliver, Thomas says. "As a result, many agents who began selling CLEC
services to their best customers began to back off until the CLECs got their
acts together and met the promised cutover dates." However, once installed,
agents report that non-Bell installations are highly reliable.

Some people, like TeleConfusion Removal’s McCobb, feel strongly that
"the Bells are actively doing everything they can to drag their feet and
sabotage [the process] every way they can, while at the same time lying through
their corporate teeth that they want competition."

But the lesson remains. No matter how bad the Bells are at playing nicely
with the new kids on the block, they still are the incumbents and, as such, rule
… for now.

"I’m not fully sold on anyone as yet as a true alternative to
Bell," says Synergic’s Bailey. "Bell has, what, 100 years’ head
start?"

Jill Collins is agency channel editor for PHONE+ magazine.