How Is the Agent Channel Organized?

By Khali Henderson

The indirect channel for communications network services has evolved somewhat differently than those for voice and data telephony gear. Those channels have a relatively straightforward structure with the vendor working directly with a dealer/reseller or using a distributor to supply product to its indirect sales partners. In the carrier world, there is a more complex structure (see graphic, Communications Services Supply Chain). Understanding the different players will help an agent understand his role in the supply chain.

Carriers

Carriers, also called network service providers, are regulated companies that provide wide area network (WAN) communications services. WAN services are those beyond the customer LAN. (Think telephone and Internet services.) These companies are facilities-based, i.e., they own fiber/copper infrastructure and/or switching equipment. (Think telephone company.) Carriers fall into a few primary categories:

Local Exchange Carriers (LECs) provide local telephone service. The largest of these are the former regional Bell operating companies (or RBOCs), which include Verizon Communications Inc., Qwest Communications International and AT&T Inc. There are other independent operating companies, such as CenturyTel and a number of rural telephone companies.

Interexchange Carriers (IXCs) provide domestic U.S. long-distance services. In the past, this was a company like AT&T, MCI or Sprint. Today, almost all interexchange carriers also provide local service.

Wireless Carriers provide mobile wireless services, e.g., cellular wireless service. Today, the leading U.S. wireless carriers are Verizon Wireless, Sprint, AT&T and T-Mobile.

Competitive Local Exchange Carriers (CLECs) are LECs that are competitive to the RBOC or incumbent LECs. These companies are facilities-based (e.g., they own switching facilities). They may own some fiber/copper, but often lease ILEC facilities for local termination. Examples include PAETEC Communications, One Communications, TelePacific Communications and many of the cable TV providers, such as Comcast.

International Carriers provide connectivity from the United States to other countries. Some of these are based in the United States, e.g., Global Crossing, Sprint, Level 3, AT&T, and others are non-U.S. operators, e.g., China Telecom America, that have set up points of presence in large U.S. hubs like New York City, Miami or Los Angeles.

Wholesaler or wholesale carrier is a term you might run across that refers to a provider that sells services at wholesale to other carriers or resellers. There are some providers that do this exclusively, but most do it to varying degrees alongside their retail business. Usually, agents do not buy directly from wholesalers because that would make them a reseller (see below), but there are exceptions (see “How Is an Agent Paid?”).

Service Providers

There are a number of companies that offer voice and data communications services that are only loosely regulated.

Internet Service Providers (ISPs) offer access to the Internet through dial-up or dedicated connections. There are some pure-play ISPs, like America Online and Earthlink, but most telcos and cable TV companies also are ISPs. Internet access services can be wireline (e.g., DSL, cable modem, T1, Ethernet) or wireless.

VoIP Service Providers also called Internet Telephony Service Providers (ITSPs) deliver voice over the Internet (e.g., Skype or Vonage) or over private IP networks. VoIP providers may also deliver PBX-replacement services, or hosted IP telephony. They are subject to CALEA, USF and E911 regulations. Most carriers and cable companies also provide VoIP services as do many resellers, since the cost of entry is relatively low.

Resellers

A word about resellers: In the carrier world, reseller is used differently than in the hardware/software world. Resellers of gear and software buy at a discount and mark up the product and bill the customer. Value-added resellers (VARs) add value by wrapping professional services around the product. In both cases the vendor branding remains intact. Compare that to these reseller models:

Facilities-based Resellers provide the services of a telephone carrier by combining their own switches with lines leased from an incumbent carrier. These services are purchased wholesale and billed as part of a total service. If they provide local, long-distance or international voice services, they must be certified as a regulated telephone company. Early competitive long-distance companies and most CLECs are facilities-based resellers.

Switchless Resellers also provide the services of a telephony carrier but without facilities. They rebrand, market and rebill those services. Again, the end user usually is not aware of the underlying network provider, although in some cases they understand that the service rides one or more of the facilities-based carrier/reseller networks. A primary value proposition for a switchless reseller is being able to provide local services nationwide. Examples of switchless resellers include TMC Communications, TNCI and Airespring.

Aggregators are similar to switchless resellers, but tend to refer to companies that aggregate broadband services from multiple providers to provide a national footprint. Examples include Covad, MegaPath and New Edge Networks.

Virtual Network Operators (VNOs) are switchless resellers by another name. This term is used more commonly in the wireless market, e.g., Mobile Virtual Network Operator.

Other Service Providers

There are a host of other service providers that offer non-regulated WAN and related services.

Enhanced Service Providers offer specialty services, such as audio/Web/video conferencing, fax mail or fax broadcast, etc. However, many carriers and resellers also offer such services.

Colocation Providers offer space for telephone switches and servers. There are neutral providers of colo, but most carriers also offer colo space in their central offices or data centers.

Web Hosting Providers offer shared or dedicated hosting of end user Web sites. These companies often are pure-plays, but many carriers also offer Web hosting.

Managed Services Providers (MSPs) provide delivery and management of network-based services, applications and equipment. That said, the definition of MSP is evolving. Generally, it involves outsourcing of IT and communications service in the enterprise WAN and LAN environments. Both carriers and pure-plays offer managed services.

Software as a Service (SaaS) Providers deliver desktop applications to subscribers on a hosted basis.

Cloud Computing Providers provide hosted computing resources or “virtual servers” on an outsourced basis. They also may be known as utility computing providers. This is a relatively new offer and the descriptive terminology is evolving.

Agents

As with the service providers, there are many types of indirect sales partners or agents as follows:

Independent Agents are individuals or companies that have a direct agreement with a service provider and do not serve as a master agent for other indirect sales partners. In some circles, they are known as Independent Marketing Representatives.

Brokers have contracts with many vendors, carriers and/or master agents and sell through all other levels. Brokers also are middlemen in carrier-to-carrier deals as well as carrier-to-business transactions.

Master Agents are companies that have negotiated agreements with suppliers to sell a large volume of services and to manage a network of subagents beneath them. Master agents are similar to distributors in the hardware/software industry.

Subagents usually are individuals, but may also be companies, who sell telecom services through a master agent. They are supported and paid by the master agent.

Referral Agents, also known as affiliated agents, usually are individuals, but also may be companies, who refer business to a service provider, master agent or agent in exchange for a one-time bounty. Referral agents often are in a related field, e.g., PBX dealers that don’t want to become full agents, or a complementary one, e.g., premises security companies.

Consultants are individuals or companies who recommend telecom services to their clients. In some cases, they are part of an agent program in order to get help with quoting and provisioning even while taking a 0 percent commission.

Looking for more information on getting started in the telephony business? This article is from the PHONE+ Fact Book 2010 Edition. This compilation of advice, tutorials, glossaries and best practices from the editors of PHONE+ and other contributors provides basic information on becoming an agent, getting started and building business. To download your free copy, click here.