MCI steps up search for channel partners: carrier's program highlights importance of telecom alliances to reach businesses

America's Network,  March, 2005  by Al Senia

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MCI has undertaken a more aggressive effort to find channel partners who can help it sell voice, data and Internet services to business customers.

Todd Gerdes, senior vice president of MCI's Solution Provider channel, says the company has put 40 new channel managers in place around the country to work closely with partners to service local business clients. It is also stepping up its technical, marketing and sales support, as well as rolling out a three-tier channel program that provides additional financial rewards to partners. And it has established an online portal where partners can tap into Web-based training and information about next-generation communications solutions.

"We are trying to see how we can make this a more significant piece of our business this year," says Gerdes, adding the new program, now called the MCI Solution Provider Channel program, took six months to develop.

According to Gerdes, MCI already has approximately 1,000 VARs, integrators and other solution providers signed up as channel partners. It hopes to better serve those existing partners, as well as to recruit new ones. Current partners won't be required to migrate to the new channel program, but Gerdes figures the financial incentives will entice most of them to do so.

MCI also launched a certification program for resellers of its key IP offerings, including Private IP, IP VPN, MCI Advantage, Security, Managed Network Services, Hosting and local voice services. That effort is designed to help channel partners more easily migrate customers to IP. "We are expanding the sphere and influence of our program," explains Gerdes.

TIERED EFFORT

MCI redesigned its sales commission structure to coincide with three levels of participation: Solution, Preferred and Premier Provider. The expectation is that only between 5 and 10% of channel partners will qualify for top-tier status, which requires selling at least $500,000 in MCI products and services monthly.

On the face of it, MCI's program doesn't seem to differ markedly from the efforts of dozens of other vendors to recruit and reward partners and to financially incent the most successful of them.

Still, MCI's latest effort is interesting for a number of reasons. First, it is coming at a time when there are strong indications that businesses are starting to loosen the purse strings and at least consider some new spending initiatives. In fact, a recent Gartner survey of 1,300 CIOs showed that IT budgets are expected to increase 2.5% this year. Clearly, if the telecom sector hopes to emerge from the financial doldrums, business spending will have to lead the way. Having more partner "boots on the ground" helps to capitalize on emerging opportunities.

MEETING DEMANDS

Second, it illustrates how the large service providers are strategically repositioning themselves to respond more rapidly to changing market demands and to emphasize next-generation services that carry higher margins. MCI's chief rival, AT&T, was in fact in the process of repositioning itself from a long-distance provider to a data transmission company selling services like network security when the SBC acquisition was announced. (Now with Verizon planning to buy MCI one wonders if another strategic repositioning will be nipped in the bud.)

Finally, MCI's channel move underscores the growing importance of forging partnerships to gain success in the telecom sector. Basically, MCI is dramatically leveraging its local market presence by using channel managers to oversee relationships with its solution provider base and sweetening incentives.

MCI's tiered channel program:

Level              Monthly sales

Solution           Up to $50K
Preferred          $50K to $500K
Premier Provider   More than $500K

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