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July 9, 2003
By Khali Henderson
The Association of Communications Enterprises (ASCENT) has come out of stealth mode on an innovative resale program it plans to launch Oct. 1. The program will enable smaller competitive carriers to add wireless services to their portfolios.
In the works since late 2002, the new program will allow service providers to become resellers of Consumer Cellular Inc.’s wireless services. ASCENT, which will market the program under its for-profit ASCENT Business Solutions unit, gets an undisclosed commission for its matchmaking efforts.
Formed in 1995, Consumer Cellular is based in Portland, Ore., and provides cellular services to residential customers in 15 states through direct mail and Internet marketing. The company holds nationwide resale agreements with AT&T Wireless and Verizon Wireless Inc. John Marick, president of Consumer Cellular, says the ASCENT program will use the AT&T Wireless contract for the primary reason that the company has committed to implement the electronic interfaces to make it possible for Consumer Cellular to let its sub-resellers provision their own accounts while enable Consumer Cellular to have oversight into the process. The capability, first developed by AT&T Wireless for WorldCom, is expected to be tested this month. Marick says Consumer Cellular also will add staff to support its new resellers. Consumer Cellular will contract directly with ASCENT Wireless resellers and provide them with margins of 15 to 25 percent depending on volume — discounts they could not get on their own either because their volumes are too small to qualify for such discounts or they can’t get a resale deal at all.
The latter reason, says David Gusky, executive vice president of ASCENT, was the impetus for ASCENT to issue an RFI to provide its members and other smaller competitors with a source of supply. He explains that late last year Verizon Wireless instituted a policy that they would not longer do business with resellers with less than 5,000 lines.
"We [ASCENT] thought that pursuing some type of legal strategy would probably be very costly and in the end probably futile," Gusky says. "So, we decided to look at the business side and see if we could step in and fill in the hole for these small resellers."
In contrast to some of the large carriers, resellers joining the ASCENT Wireless program would have to commit to bring in about 50 customers per month, says Gusky.
ASCENT will serve as a marketing arm and is building a separate Web site — www.ascentwireless.net — to promote the program. "So ASCENT’s role, because we have a brand name in the marketplace, is to inform and educate our constituency about what we think is a wonderful opportunity," Gusky says.
The Yankee Group Inc. predicts the number of U.S. wireless users will grow from 135.5 million in 2002 to 167.5 million users in 2007.
Bundling opportunities aside, Gusky says it could become even more critical for competitive carriers to have a wireless offering because of the impending introduction of wireless number portability. "It’s coming, and I think it really behooves wireline carriers to adapt some type of wireless strategy because wireline carriers will be required to port numbers to wireless carriers," he says." If a CLEC does not have a wireless strategy, if they cannot offer wireless service, then they have no choice but to forfeit that customer to the wireless carrier who is trying to sell them service. If a CLEC has their own wireless product and a customer wants to transfer their numbers to wireless, then a CLEC would be able to do that with our program."
For now, Gusky and other ASCENT staff will manage and market the resale program and evaluate whether to bring on additional staff once the program gains momentum.
The program was more than six months in development primarily because ASCENT had to find a partner with an existing resale agreement with a carrier that was interested in the program. AT&T Wireless, Consumer Cellular’s underlying carrier, has indicated its support for the ASCENT Wireless program, Marick says.
"I think ASCENT has a lot of very good business contacts who are interested in adding wireless service to their products and we’re interested in partnering with them on that," says Tim Horkan, director of resale distribution for AT&T Wireless, and the point person for the company on the deal.
While AT&T Wireless does not have minimum volume thresholds, having Consumer Cellular and ASCENT aggregate resellers is an attractive proposition, he adds. "It greatly simplifies from our end a lot of the billing and customer care. It gives us a single point of contact with someone that we have a track record with."
Because the program is run through the ASCENT’s for-profit subsidiary, the membership did not have to vote on its creation, Gusky says, adding, however, it expects profits from the deal to fund its other lobbying and educational programs. Gusky says the wireless resale program is expected to be self-funding, but adds that since members’ dues were used to get the program put together, nonmembers will be asked to pay an annual administrative fee — the amount has yet to be determined.
ASCENT’s wireless resale program will cover transport, but not equipment. Gusky says there are a number of third-party fulfillment companies, such as CellStar Ltd. and Brightpoint Inc., resellers can use for inventory management, and service activation and delivery.
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