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CLEC’s begin the move to Wireless Offerings – helping their agent partners February 25, 2011

Posted by TelUS Consulting Services in CLEC catagory.

It’s 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, let’s face it, wireless isn’t going away.

As mobility dominates the communications world, competitive providers are being forced to adjust their financial hopes. Wireless products and services don’t look or act like wireline so mobility commissions cannot imitate their fixed-line counterparts. Companies buy analog or IP desk phones once every few years, at the most. Such sales come with little need for maintenance and certainly doesn’t carry a “new every two” expectation. That keeps margins high. With wireless,  device upgrades, replacements and service plan changes all have the power to eat into profits and scare away CLEC’s.

But customers aren’t leaving CLEC’s much choice about selling wireless — they want all of their communications services from the same trusted adviser. Thus, meeting as many of a customer’s telecom service needs as possible is the wave to ride. That’s why CLEC’s and partners must find middle ground when it comes to compensation. And in some cases, that’s 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. That’s why Cbeyond gives a one-time, per-device or per-line payment on the wireless side, while still serving up residuals on wireline products.

The method seems to work well for the Georgia-headquartered CLEC. Enough agents appear to be such proponents that they have had success in the channel. 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 don’t have to worry about exceeding minutes on any one device. If overages occur, Cbeyond charges 5 cents per minute, whether it’s a wireline or wireless service. So, even though Cbeyond doesn’t 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. Additionally Lightyear has unlimited plans to take complicated billing and coverage deficiencies out of the equation. Apparently selling (or reselling) wireless is really not that difficult.

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 doesn’t mean wireless compensation isn’t high on an agent’s list of wants.

Michigan-based BullsEye, which just launched wireless last December, has taken a tactic similar to Cbeyond’s: up-front commissions. Like many of it’s counterparts, BullsEye positions itself as a single vendor for both wireline and wireless products — that way agents and BullsEye itself aren’t 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 don’t 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 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. To  helps reduce worry for agents, TelePacific handless mobile billing, support, invoice reviews, provisioning and repairs.

The CLECs’ drive to jump into wireless, with their 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 predictions are that the number of mobile broadband users worldwide will hit 1.8 billion by 2014. It would appear that mobility is here to stay.

Joe Buck, NCE

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