AT&T Restructures Agent Program

By Khali Henderson

AT&T Corp. says it has restructured its indirect sales program, including canceling some agent agreements as of Oct. 31.

Kate Rankin, a spokesperson for the carrier, told PHONE+ in an Oct. 8 interview, AT&T has ‘simplified’ its program both in terms of the compensation structure and the requirements to be an agent. She declined to disclose any details, saying the company was “not ready to talk about the transition” and that it still was notifying the channel of the changes.

Among the changes is the cancellation of agent agreements. Rankin did not confirm the number of canceled agreements, but says agents were notified on Oct. 1 their contracts would end on Oct. 31. AT&T’s standard agreements included a 30-day cancellation clause, agents told PHONE+.

“We are not eliminating the indirect sales channel. It still supports more than 800 agents,” she says. “We are focusing our resources on agents most aligned with our strategic sales goals.” These, she says, include a renewed focus on the midmarket and enterprise clients.

Rankin says the channel will be a “critical part of the sales force through 2005.”

Agents reported to PHONE+ some channel managers and support teams no longer were working at the company. Rankin says the layoffs were in line with the announced 20 percent cuts throughout the company.

Intelisys Corp., a master agency based in Petaluma, Calif., is one of the companies notified Oct. 1 its agreement is being canceled.

Co-founder Rick Sheldon told PHONE+ Intelisys and its subagents have represented AT&T for more than five years and its monthly base with AT&T was in the mid- to high six figures.

“My single biggest concern is that a handful of our sales partners no longer will be compensated on that business and it’s going to hurt them,” he says, adding the agency booked $100,000 in monthly recurring business on AT&T this week for which it will not be compensated.

Sheldon says Intelisys’ agreement contained a 30-day cancellation clause and the master agency advised its subagents of this risk.

Intelisys subagent Mike Oliver, president of Windward Communications, says when he started his business in September 2001, stability was a key buying criterion for his customers, whom he says bill from $10,000 to $150,000 a month. “I did not have much choice in the matter,” he says of booking business with the company his customers preferred. “And, it was a fairly safe place to be at the time.”

Oliver estimates nearly 40 percent of his base is with AT&T. He says he is concerned about the lost revenue and his ability to maintain relationships with customers he has nurtured and served over time. “I can’t move them [because they are under contract], and AT&T has made it impossible for me to place orders or manage their services,” he says.

Oliver declined to speculate on reasons for the contract cancellations, but questioned why the carrier would take revenue away from a producing agent like Intelisys.

AT&Ts Rankin says the move is “another step in simplifying and streamlining the company model.” AT&T in early October said it would restructure its business by cutting 20 percent of its jobs and writing down the value of its network by $11.4 billion at the same time it winds down its residential telephone business.

The company previously said it would cut about 8 percent of its workforce this year but on Oct. 7 said the restructuring would claim 7,400 additional employees by the end of the year.

“In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our workforce and cut costs,” says AT&T Chairman and CEO David W. Dorman.

The company’s decision to exit the consumer business followed recent court decisions striking down FCC rules governing AT&T’s access to ILEC unbundled network elements at wholesale rates.

AT&T is the largest provider of residential long-distance service with 25 million subscribers. It has more than 3 million business customers, which account for about 75 percent of its revenue.