CLECs Add Wireless for One-Stop Shopping

CLECs adding wireless services are easing agents reluctant entries into the mobile market by offering them a single source of supply.

Kelly Teal, Contributing Editor

February 16, 2011

5 Min Read
CLECs Add Wireless for One-Stop Shopping

Its no secret that a number of wireline agents have, for several years, shied away from selling wireless products and services to their business customers. The blame rests on the traditional mobility profit model, which has featured no residuals and low margins on devices a recipe for disinterest among many channel partners. Nonetheless, some CLECs have grown savvy to that reluctance and started to respond with new tweaks on old thinking because, lets face it, wireless isnt going away.

Even so, as mobility dominates the communications world, competitive providers and indirect partners alike must adjust their financial hopes. Wireless products and services dont look or act like wireline, so mobility commissions cannot imitate their fixed-line counterparts. For example, companies buy analog or IP desk phones once every few years, at the most. Such a sale comes with little need for maintenance and certainly doesnt carry a new every two” expectation. That keeps margins high. With wireless, though, device upgrades, replacements and service plan changes all have the power to eat into profits and scare away agents.

But customers arent leaving agents much choice about selling wireless they want all of their communications services from the same trusted adviser. Thus, meeting as many of a customers telecom service needs as possible is the wave to ride,” said Rich Powers, senior product manager at TelePacific Communications Inc. Thats why operators and partners must find middle ground when it comes to compensation. And in some cases, thats already happening.

Some CLECs have sold wireless for several years and others are new to the game. For those in the sector a few years, like Cbeyond Inc., enticing agents from the beginning was key. Having partners on board has grown even more important since that time in 2006, as wireless substitution has spread from consumers to SMBs and enterprises. Now, businesses want an entire communications package from one supplier. For Cbeyond agents, then, mobility grew into an add-on to wireline. Thats why Cbeyond gives a one-time, per-device or per-line payment on the wireless side, while still doling out residuals on wireline products.

The method seems to work well for the Georgia-headquartered CLEC. Enough agents are proponents that weve had success in the channel,” said Brent Cobb, chief revenue and customer officer for Cbeyond. Part of the reason is that Cbeyond takes a unique view toward voice billing. It views landline long-distance minutes, toll-free minutes, conferencing minutes and mobile minutes as all the same. Users dont have to worry about exceeding minutes on any one device. If overages occur, Cbeyond charges 5 cents per minute, whether its a wireline or wireless service. So, even though Cbeyond doesnt offer residuals on mobility, its partners receive ample incentive overall.

Lightyear Network Solutions went with wireless in July 2008 as it realized that sticking to wireline-only meant it and its agents were missing out on new revenue. The Kentucky-based provider contracted with several wholesale operators; at the same time, it constructed a different kind of reimbursement than peers such as Cbeyond. Instead of a one-time check, Lightyear dishes out an up-front bounty” and residual commissions on wireless deals. That, combined with education and support, has helped calm wireline agents fears about mobility being out of their comfort zone,” said Kevin Parker, vice president of sales. Plus, Lightyear has unlimited plans to take complicated billing and coverage deficiencies out of the equation for partners and end-users, Parker said. Selling wireless is really not that difficult. The hard part is selling the first wireless account. After that, it gets much easier.”

The companies newer to wireless seem to be taking their cues from peers lessons learned and agents input. And all of them are considering wireless a complement to their other voice and data services for SMBs and enterprises. Still, that doesnt mean wireless compensation isnt top of mind. There seems to be a real need for a different approach,” said Charlie Aldis, director of product management and strategy for BullsEye Telecom Inc.

To that point, Michigan-based BullsEye, which just launched wireless last December, has taken a tactic similar to Cbeyonds: up-front commissions. Tony Walterhouse, BullsEyes director of partner relations, didnt want to cite specifics; however, he did call the amount very competitive.” Then, like its rivals, BullsEye positions itself as a single vendor for both wireline and wireless products that way, agents and BullsEye itself arent relying on just one type of sale. At the same time, BullsEye includes wireless invoice analysis and pricing flexibility that serves as a built-in telecom expense management, so users dont have to account for overages or unused lines after the fact. BullsEye further inventories CDMA modems and air cards, not just mobile phones.

Finally, TelePacific, too, is another relative newcomer to wireless. The CLEC, which targets California and Nevada, late last year incorporated mobility. And like Lightyear, TelePacific ponies up a per-line spiff as well as residuals. We tried to find the right balance,” said Powers. TelePacific declined to give its wireless residuals percentages yet, as Powers noted, they go a long way toward easing concerns.” And in another move that helps reduce worry for agents, TelePacific handless mobile billing, support, invoice reviews, provisioning and repairs. 

CLECs drive to jump into wireless, with channel partners in tow, is important, because everyone stands to make money. After all, multiple studies indicate companies are using more smartphones, not just the venerable Research In Motion; and Infonetics Research predicts that the number of mobile broadband users worldwide will hit 1.8 billion in 2014. As Powers put it, mobility is here to stay.”

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About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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