Meet the Master Minds

PHONE+ posed some qualifying questions to master agents across the country. Most agreed a master agent must maintain a national presence, as well as a strong back office.

Most also recommend their companies - not individual agents - handle carrier contracts, for a more equitable outcome. Read on for further insights into the changes and challenges facing some of the industry’s leading master agents. The voluminous information culled from these interviews will form the basis of a new series, Master Minds, to be showcased on the [email protected] Web site, www.telecomagentsgroup.com. See below for a schedule of topics.

Find more insights and advice from the Master Minds on PHONE+ partner portal, [email protected], www.telecomagentsgroup.com. Scheduled topics in this new monthly series include:

Advantages and disadvantages of carrier diversity
September: Training programs offered by master agents
October: Commission structures
November: Holiday sales strategies
December: Contract negotiations and reviews

Greg Praske, CEO, and Bill Power, president Location: McLean, Va.
Background: Started ARG in 1991 with business partner Greg Praske.
First sub-agent: 1995.
Distribution Model: Most business is written in-house. ARG employs four sales consultants and five account managers, and works with several subagents.
Vendors: All of the major carriers, as well as some second-tier providers.
Customer Base: Commercial; clients bill $2,000 to $10,000 monthly.
Insights: Power says ARG is rapidly becoming a provider of networkbased products, offering “solutions, not just pipes.” Power recommends agents focus on customers rather than cutting deals with carriers. “I think agents need to put the huge majority of their attention on getting and keeping customers,” Power says. “If they have limited resources, they should seriously consider working through a reputable master agent.”

Of course, part of handling carrier relations issues means making sure providers pay the master agency. “Many of us have experienced a provider filing bankruptcy and our commission stream ending,” Power says. “It’s not pretty. We’re left with customers that need servicing, but no revenue to support that effort. The biggest trend that we see is the coalescing of master agents around the goal of protecting our revenue streams.
Noteworthy: ARG is among the first agencies certified by United Carrier Networks (UCN) on its InContact platform (see PHONE+ June). ARG is using the software to develop “Cool Stuff ” (that’s the product’s name), including voice disaster recovery solutions, automated surveying, voice message broadcasting and a Congressional response system.

Tod Osborne, president; Pete Mino, CEO
Location: San Diego
Background: Co-founders Osborne and Mino came from real estate and financing, and founded ATN in 1993. In 1994, they started working with the RBOCs.
Distribution Model: About 5,000 subagents nationwide.
Vendors: SBC Communications Inc., BellSouth Corp., Qwest Communications International Inc. (in region), Verizon Communications Inc., Covad Communications Group Inc.
Customer Base: “We work with the ‘mom and pops’ of the world, as well as the Boeings, PayPals [and] eBays,” Osborne says.
Insights: DSL, T1 Internet access and integrated T1s are the biggest revenue opportunities for ATN. Osborne says the movement toward convergent technologies means greater demand for higher Internet bandwidth, even for small businesses. So, as companies require more attention, ATN’s biggest challenge is finding qualified subagents.
“Time and resources are expended in signing up every subagent,” Osborne says. “Signing up subagents who do not order represents a loss for ATN.”

ATN plans to continue offering products and services through the four RBOCs it works with, and aims to double its sales volume over the next two to three years.
Noteworthy: The company pays subagents’ commissions twice monthly.

Ben Humphreys, president and CEO
Location: Richmond, Va.
Background: Humphreys started in telecom in 1990 and has been a master agent for about seven years.
Distribution Model: Direct sales, subagents and referral agents.
Vendors: Qwest, MCI, Broadwing Communications, ITC^Deltacom Inc., UCN; Comtel also has reciprocal arrangements with the Agent Alliance to represent other carriers.
Customer Base: Comtel targets customers billing $5,000-$25,000 monthly.
Insights: Humphreys says the industry “cannot ignore the fact that the prices we sell goods for are rocketing downward and our margins are staying constant.” Selling more and offering consulting services can help masters stay in the game.
Humphreys says Comtel wants to oversee the telecom acquisition, procurement and auditing for its customers. In some cases, these managed services could replace a company’s telecom department, he says.
Meanwhile, Comtel is buttering its bread with dedicated Internet access. Local access comes in a close second. The key, Humphreys says, “is being able to bring in a good selection of carriers.”
Noteworthy: Comtel is looking to move to a new software platform, and continues to develop its managed services program.

Global Systems Telecom
Key Executives: Mark A. Solomon, president; Paul Silicato, vice president
Location: Pompano Beach, Fla.
Background: Solomon entered the telecom business in 1990, and formed GST with Silicato in 1993.
Distribution Model: Approximately 500 agents; GST also has exclusive VAR relationships.
Vendors: At least 30, including Sprint, Qwest, PAETEC Communications Inc., XO Communications Inc. and Acceris Communications.
Customer Base: Mostly commercial accounts nationwide.
Insights: Carrier diversity is important to GST. While one of the agencys biggest challenges comes from dependency on providers, Solomon says offering more solutions gives GST an edge over competitors.
But, he notes, “Since we do not control the fiber, the service and/or how financially proficient a carrier is, we live with a higher degree of risk than we would prefer.”
GST is finding its biggest long-term revenue in data network solutions.
“Voice traffic typically is less stable whereas data customers have a much higher retention rate,” Solomon says. “As we have shifted our focus, we are attracting more sophisticated data-oriented agents.”
Solomon says the master agent’s role is becoming more important as the telecom industry rebounds. “Most providers acknowledge that the agent channel is a less costly, more efficient means of procuring business,” he says, noting that carriers are having a hard time maintain direct sales forces. “The agent model gives a carrier faster impact without the benefits and turnover associated with a direct sales force. In addition, agents tend to protect and preserve accounts for a longer period of time.”
Noteworthy: Next March, GST will award an agent an all-expenses paid trip for six to the Dominican Republic; the getaway includes a private jet and villa. The company also is paying for an agent’s two-year lease on a Mercedes, and will pay a cash bonus for selling a $50,000 account.

Rick Dellar and Rick Sheldon, Co-founders
Location: Headquartered in Petaluma, Calif.
Background: Dellar and Sheldon both worked direct sales before they started Intelisys in 1994. Dellar was with Cable & Wireless USA for five years, while Sheldon worked for LDDS WorldCom and DialNet Inc.
Distribution Model: Intelisys never sells direct. It supports approximately 350 subagents, and has 600-plus agent, telecom consultant, VAR, systems integrator and interconnect partners.
Vendors: 27, including AT&T Corp., Sprint, New Edge Networks, and Primus Telecommunications Group Inc.
Customer Base: National enterprise, small and medium accounts.
Insights: For agents trying to penetrate accounts today, Dellar and Sheldon offer three pieces of advice: be correctly positioned with the decision maker before investing in time-consuming proposals; be educated on the new IP-based technologies for voice, data and CPE; clearly articulate why what you offer is not available from anyone else. The co-founders especially see the onset of IP services as a key way to make money, and say that agents who position themselves as complete solutions providers will reap the most.
To support its agents, Intelisys has invested in personnel and systems over the last few years; “Now the challenge for Intelisys and other master agencies is to use these resources wisely to deliver meaningful improvements to their agent communities,” Dellar and Sheldon say.
Noteworthy: Intelisys recently rolled out its turnkey Affiliate Master Agency Program, which helps sales organizations avoid the costs and administration of building a competitive master agency (see PHONE+ May).

Brad Miehl, president and CEO
Location: Marietta, Ga.
Background: Miehl started in telecommunications in 1989, providing data networking solutions for medium businesses. MicroCorp was founded in 1986 and became a master agency in 1990.
Distribution Model: Large system integrators, master agencies, professional telecom consultants, smaller VARS and voice-centric agents.
Vendors: Sprint, MCI, Qwest, BellSouth, XO, ACC Business, New Edge Networks, Acceris, Metropolitan Telecommunications (MetTel), Broadwing, UCN, Access Integrated Technologies Inc., Raindance Communications Inc., Primus and more.
Customer Base: Agents, vendors and end users; small to medium businesses.
Insights: The challenges MicroCorp faces are not that different than those of the carriers the company represents. “We have to contend with eroding margins, competing against unsound business models and the commoditization of network services,” Miehl says. But, those issues present opportunities; for example, MicroCorp is profiting from sales of dedicated Internet access, and expects to continue doing so when voice becomes an accepted application on an IP network.
Miehl advises agents to remain relevant to clients by acting as telecom IT managers. “[Agents] have to be able to provide value that goes beyond providing multivendor solutions. You have to own their telecom- related problems and headaches so that your clients can focus on other things.”
Noteworthy: MicroCorp is taking technology it has developed to vertical markets, to provide more profit potential for its channel and vendors.

PlanetOne Communications Inc.
Key Executive: Ted Schuman, president and CEO
Location: Headquartered in Scottsdale, Ariz.
Background: Schuman founded PlanetOne in 1991; prior to that, he worked for Frontier Communications Inc. and 3M.
Distribution Model: Exclusively through agents. PlanetOne has approximately 850 agents nationwide, including VARs, interconnects and system integrators.
Vendors: 19, including ACC Business, Z-Tel Technologies Inc., InfoHighway Communications Corp., SAVVIS Communications, Covista Communications, MCI, Qwest and XO .
Customer Base: Medium businesses and enterprises.
Insights: PlanetOne is seeing evolution within the master agent segment and its multiple tiers of indirect distribution, Schuman says. “You have a few high-producing ‘super’ agents and then there are newcomers attempting to become a master agent,” he says. “Knowing how hard we have worked to get where we are today, and the massive amount of money we’ve invested in our own business, I wouldn’t want to be the latter in today’s industry.”
As carriers have downsized, PlanetOne became more selective in choosing its vendors. “Our challenge is finding providers who continually support PlanetOne to the level we require in order to manage our portfolio professionally,” Schuman says.
PlanetOne does very little switched long-distance these days; roughly 45 percent of the company’s sales last year came from data and IP products, Schuman says.
PlanetOne is looking ahead, hoping that as the channel becomes more sophisticated, “the carriers will continue to drive more of their resources and business in our direction,” says Schuman.
Noteworthy: PlanetOne recently hosted approximately 35 people, including vendors, at its President’s Club event, held in Cabo San Lucas. Schuman says, “We love technology here at PlanetOne, but it’s the relationship we have with our agents at the end of the day that will continue to successfully drive our business in the future.”

Mark Wittenmyer, president; Douglas Boyce, vice president of sales and finance
Location: Holland, Ohio
Background: SVMG started in 1993 as a Metromedia agent, but started operating as a master agency in 1995.
Distribution Model: A nationwide network of independent subagents.
At least half are in the Great Lake states, and others are in the Mid- Atlantic, Southeast and Corn Belt states.
Vendors: MCI, Qwest, UCN, eMeritus Communications Inc., LDMI Telecommunications, SAVVIS and Z-Tel. SVMG also is the primary agent for Buckeye TeleSystem’s local fiber optic telephone service in northwest Ohio. For wireless services, SVMG represents Sprint PCS and AT&T Wireless nationwide.
Customer Base: Primarily SMBs, but also some Fortune 500 accounts.
Insights: SVMG still finds local service to be its top lead-in product, although Internet access is giving local a run for its money. There is the challenge of decreasing rates (“It’s hard to make a realistic return on such low rates,” says Boyce), but SVMG maintains strong back-office operations and steers subagents toward the local and VoIP markets.
To agents, Boyce relays these thoughts: “Build a solid relationship with your customers. Lead with local - with dialtone, you have a much stickier customer. Provide multiple services and products and yet be their one point of contact. Make our industry look more simple to the customer than it really is.”
Noteworthy: SVMG will continue solidifying its portfolio, focusing on local, local bundles and VoIP.

Geoffrey Shepstone, president
Location: Headquartered in Prospect Height, Ill.
Background: Shepstone has been in the master agent business for 14 years. He left LCI/Qwest as the country’s top-producing distributor manager to join TBI in 1999 as president.
Distribution Model: TBI has 600 subagent contract holders. Most agents are organizations with subagents, so sales people actually number more than 600.
Vendors: 44, including eMeritus Communications Inc., Appia Communications, Mpower Communications Corp. and TelePacific Communications.
Customer Base: End users come from Fortune 100 companies (including GE, Lucent, BP and FedEx), and small and medium businesses.
Insights: TBI is looking to bolster profits through its Managed Network Services program. At the moment, though, the company is recording a big increase in reseller volume, and CLEC sales of PRI and integrated access. “VoIP is coming,” Shepstone adds. TBI has offered a VoIP solution for more than a year now, and is increasing cellular and ASP options.
Shepstone says more direct sales people are moving to the alternate channel side, and carriers are viewing channel agents as the future sales force of the telecom industry. “The master agent model is becoming more sophisticated,” he says. That still leaves challenges, such as dealing with masters who “take advantage of agents by not delivering commissions as expected,” Shepstone notes. “Agents need to be very careful of where they place their book of business.”
Noteworthy: TBI has added hardware including VoIP phones and CPE-based security devices to its portfolio. The company is an authorized distributor of Servgate products for networks.

Tim Basa, vice president of business
Location: Headquartered in Troy, Mich.
Background: Started selling long-distance door-to-door in 1994; now develops and manages Telegration’s partner network.
Distribution Model: A national network of agents - ranging from one-man operations to VARs and interconnects - uses Telegration for its SBC services.
Vendor: SBC
Customer Base: Primarily medium businesses
Insights: Telegration takes a different viewpoint from the companies representing dozens of vendors. It represents just one because, as Basa puts it, decision makers do not want to waste time researching all of the companies and services available to them. “They are not necessarily interested in the cheapest or the latest; they simply want reliable phone service at a fair price,” he says.
Basa notes other changes in buyers - they already know what they want to purchase, thanks to Google and other readily available sources of information. They do not want to be sold. In light of that, agents need to stay on top of industry changes. Basa proffers this wisdom:
“Right now in the telecom world you need to be a learner. Learn what customers really want. Learn what you can do to help them. Learn what is coming down the pipe.”
Noteworthy: Telegration is considering expanding to include all of the RBOCs; the company only represents SBC. It also is looking at extending its reach beyond the Midwest.

The Fionda Group
Key Executive: Kenneth Rotman, founder and managing director
Location: Santa Barbara, Calif.
Background: Rotman started Fionda in 1996; became WorldCom’s fastest-growing agent.
Distribution Model: Contract with affinity groups, membership organizations, network marketing companies, charities, retail stores and traditional master agents.
Vendors: Six local and long-distance bundle providers, including MCI Neighborhood and Z-Tel; several Internet and traditional long-distance providers.
Customer Base: 90 percent consumer, 10 percent commercial.
Insights: Local and long-distance bundles, and mobile phone number portability, have re-ignited Fionda’s sales and revenue growth, Rotman says. “In the Internet realm, lower underlying carrier costs and bolt-on services - like accelerators and filters - have strongly added margin potential,” he says. He adds the possibility of losing UNE-P remains distressing, however.
For now, the people at Fionda express gratitude for having come so far. “Having been lucky enough to succeed and survive over the past several years, we feel we have much to offer all those associated in our indirect sales channel industry,” Rotman says.
Noteworthy: Fionda is working to show the industry there is a place for consumer marketing.
The agency also is planning to work with RBOCs to generate residuals in the consumer space.

Steve Braverman, CEO and president; Dennis Fioretti, CFO; Steve Snure, COO/CTO
Location Corporate offices: Chicago, Ill.; operational headquarters: Wooster, Ohio
Background: The X4 partners - Communications Industries, Telelink Communications and UteleSys - have a combined tenure in telecommunications of more than 35 years. Partners have previously worked with Ameritech, AT&T, Cellular One, Qwest and 360 Networks.
Distribution Model: Subs: more than 200. X4 also works with independent agents, VARS, telecommunications consultants and other partners.
Vendors: 30, including CIMCO, McLeod USA Inc., TTI National Inc., Webley Systems and ZTel.
Customer Base: Agents, who are located nationwide.
Insights: Outsourcing promises to be the future of the U.S. economy, Braverman says, as carriers become more dependent on master agents. To that end, X4 works heavily with CLECs that allow the agency to sell multiple services to the same customer at lower prices than the ILECs, X4 executives say. The company also focuses on selling large volumes of dedicated Internet access as prices keep falling, and customers rely on the Web for communication and e-commerce. X4 officials predict a growing number of master agents will embrace back-office systems as they provide higher levels of support for subs and independents.
Noteworthy: X4 is wrapping up installation of its back-office system that will automate at least 90 percent of its quotation, order and commission processes and management.

Venicom Inc.
Key Executive: Rob Goble, president and CEO
Location: Headquartered in Scottsdale, Ariz.
Background: Goble has been in the master agent business for 12 years, with Venicom for six.
Distribution Model: About 400, some direct sales teams and VARs.
Vendors : A total of 30, including SBC, SBC West, Qwest, BellSouth, MCI, Global Crossing, Verio Inc. and T-Mobile.
Customer Base: “All across the board,” says Goble, from mom-and-pop shops to Fortune 100 companies.
Insights: There is no question that carriers value the role of master agents more than they used to, Goble says, although it is hard to stay profitable and competitive when carriers dictate whats around the corner. Agents should strive to bring value to clients, and be proud of being in the channel, he says. He advises agents never to bring up a question of credibility, because the direct side represents only one carrier, one basic solution. “Our play, if you will, is, we want to become an extension of our customers’ telecommunications department,” Goble stresses. “We look out for their business…we’re always representing our clients’ interests and not the carrier’s.”
Noteworthy: Venicom is toying with the idea of private-labeling VoIP services. The agency could then increase commissions and margins, passing the benefits along to business partners. “We want to get into scenarios where we have more ownership of the end-user customer,” Goble says. One day, he says, he wants to be writing the carriers’ checks, instead of waiting for theirs.

Vince Bradley, CEO
Location: Malibu, Calif.
Background: Bradley started with Addtel Communications in 1993; he and his business partner founded WTG in 1996.
Distribution Model: WTG works with more than 750 agents - many of whom are VARs and interconnects - nationwide.
Vendors : Several dozen, including Verizon, Broadwing, Equant, Boingo Wireless Inc. and Airespring Inc.
Customer Base: Agents’ customer bases of more than 10,000 SMBs, mid-market and enterprise customers.
Insights: Two of the most important steps master agents can take are automating systems and diversifying portfolios, Bradley says.
Automation is crucial so agents can have instant access to information any time of day, and portfolio diversification helps agents bring the right solutions to customers.
WTG specializes in wireless, equipment and cost containment. In fact, the company maintains an order fulfillment team dedicated to wireless, a technology that is proving very profitable, thanks to number portability, 3G and Wi-Fi, Bradley says.
Noteworthy: WTG holds weekly Web conferences, and gives agents updates, monthly newsletters, product releases and quarterly regional training. “Anything that furthers the channel is something that we advocate,” Bradley says.