PARTNER CHANNEL: New Opportunities?

By Tara Seals

Posted: 1/2003

New Opportunities?
Look Overseas

By Tara Seals

MULTINATIONAL
CORPORATIONS NO LONGER consist of the Fortune 500 and similar huge accounts that
channel partners may consider out of their league. As world markets open up in
developing areas and pent-up demand for goods and services can be tapped,
companies down the street and up the road are looking to open offices across the
oceans to capitalize on booming foreign economies. And when they do, they’ll
need communications products and services to connect with home offices and
mobile workers — and channel partners stand to make a lot of money.

Singapore Telecommunications Ltd. (SingTel)
for instance recently launched a U.S. channels group devoted to capturing
multinational business.

"We’re a pure play in
Asia-Pacific, and what we’re doing in the U.S. market generates about 40 percent
of our national data corporate revenue," says Lisa Inoue, director of U.S.
strategic development. "The action takes place in Asia, we build the
networks in Asia, but it’s for incorporated U.S. entities. U.S. providers often
don’t have the infrastructure and expertise, the licenses, knowledge base or
even the network of contacts to make it happen."

SingTel offers four different
engagement models: One level comprises RBOCs or other carriers with
complementary but not directly competing products that can private label
SingTel’s offerings and bundle them into their own offerings. The company also
offers a reseller model for systems integrators and carriers, and has authorized
agents and referral partners.

"The cost of operation for a
foreign carrier to come to the U.S. market and do everything with a direct sales
force is prohibitive," Inoue says. "So, the agents are across the
country and they go to the end users they have relationships with and they sell
on behalf of SingTel — they are our face to the market."

The venture doubled its U.S.
business within three months, Inoue says. In particular, China and India are hot
markets.

ColoTraq is one channel partner
capitalizing on the trend. It offers colocation, bandwidth and managed services
overseas, and has an online comparison engine that aggregates technical and cost
information on the facilities in any given market to create a neutral,
competitive snapshot for the customer. ColoTraq receives the same standard
commission on each deal from any of its 300 providers.

"When you’re operating an
online marketplace it knows no borders, and the demand is there as well, so we
want to make sure we don’t turn away that business," says Moz Aslam,
ColoTraq’s product manager. "We’re a company that designs and builds these
networks, we handhold them, and help them sort through these various vendors, we
facilitate the process and get them in touch at the very least with an
English-speaking person," he says.

He says ColoTraq’s greatest success
comes from fragmented markets. "If there’s only one or two providers in
that market, it’s very hard for us to add value to the customer," he
explains. "You know if you’re looking for bandwidth and colo in China,
you’ve got to go to the local incumbent, China Telecom. A lot of these countries
are just beginning to become deregulated."

Anchor Communications Corp., a
channel partner that represents VoIP-centric products and services for companies
like Cirilium, sells in the United Kingdom, South Africa, Pakistan, Saudi Arabia
and Liberia.

"In telecom, there are certain
markets where the margins will still be profitable based on whether the market
is privatized," explains John Cacciatori, Anchor’s vice president.

"But I think it’s going to be
booming, and it’s not just people in these countries trying to get on net but
it’s the U.S.-based and foreign companies that are going to open up offices
there and trying to get private lines going back to their offices in Europe, for
example," says Aslam. "And there’s going to be a lot of foreign
investment into these countries eventually, and we will be very well-positioned
to capture that."

At first blush, the opportunity may
seem to be shrinking given the economic downturn. Research firm TeleGeography
Inc. says the growth rate of international Internet bandwidth in 2002 slowed for
the first time, to just less than 40 percent. The aggregate capacity between
some major cities even shrank. At issue is not demand, however — it’s upheaval
in the global carrier space.

"Much of the global
deceleration came as a result of corporate financial distress, with bankruptcies
leading to partial or complete network shutdowns," says Alan Mauldin,
senior research analyst at TeleGeography.

Telstra and Cable & Wireless plc
have voluntarily exited the market, while Global Crossing Ltd., Worldcom Inc.
and other carriers with global offerings have filed bankruptcy or gone out of
business entirely.

"Considering how much bandwidth
was taken offline by companies like Energis, Carrier1, KPNQwest and Teleglobe,
it’s amazing that international Internet capacity grew at all," says
Mauldin.

Channel partners still can take
advantage of opportunities for global sales from a number of remaining carriers,
however.

"The demand is still
there," says SingTel’s Inoue. "The corporations that we cater to are
still in business and they still have needs, and the economic downturn has
impacted that somewhat, and they aren’t making the big capital purchases they
were a few years ago but they still need to run a business."

Global Providers Seeking Partners

Despite the worldwide capacity
shakeout, a few global carriers are still going strong — and looking for U.S.
partners.