Partner - Touch America Ignites Agent Backlash

By Tara Seals

Posted: 07/2001

Partner Channel

Touch America Ignites Agent Backlash
By Tara Seals

A spark has ignited controversy around what master agent Rick Dellar, co-founder of Intelisys Inc. (www.intelisyscorp.com) describes as an underhanded holding hostage of commissions in exchange for business. Touch America Corp.’s (TA,
www.tamerica.com) agents, he and others say, have been the victims of a manipulative campaign that has cost them thousands in revenue.

In the wake of Qwest Communications International Inc.’s (www.qwest.com) FCC-mandated (www.fcc.gov) divestiture of its long-distance business within the 14-state US West territory, TA purchased Qwest’s accompanying agent contracts, which include a tiered structure relating commission percentages to revenue thresholds. Agents now are receiving less commission in the aftermath of the merger, stemming from an FCC injunction against aggregating Qwest and Touch America revenues and thus reducing the base, says Randy Crane, TA’s partner program director.

“So taking Qwest revenues out of the equation, most TA agents then drop to a lower commission tier as specified in the contracts,” he explains. “We are bound by the FCC ruling, and abiding 100 percent by the way the contract reads.”

Rather than adjust its commission structure to keep agents at the same levels they were accustomed to, the company is offering new agreements that stipulate bringing additional business to the table to regain those past commission levels.

“Where it makes good business sense for us to sign contracts with master agents to sell services within our territory, we will make sure we will provide those individuals with an aggressive, competitive commission or royalty,” says Crane.

“With individuals whose bases are dropping or are not focused on selling Touch America, we need to make sure we do the right thing for our business, which is pay a percentage of commission appropriate for those individuals, and based on their contract.”

But the new contract is lopsided and unfair, agents say.

“We’re here to do what we can; to, number one, treat [agents] ethically and honestly,” says Crane. “We utilize almost verbatim the exact vernacular that Qwest had in their contracts. In fact, it’s almost the same contract that we’ve placed in front of them, so it’s interesting that they would take issue with it.”

Ted Schuman, CEO of master agency

U S Telebrokers Inc. (www.ustelebrokers.com) disavows this, citing an addendum that states that if revenues fall

below $50,000, commissions will be reduced and it will be grounds for immediate termination.

The move shows TA has no appreciation for its inheritance of some of the largest and best-established agents in the country; agents TA would have never benefited from in normal circumstances, Schuman says.

“These guys wouldn’t have gotten through my receptionist to solicit me if it hadn’t been for the Qwest factor,” says Schuman. “If Qwest had not found them to essentially take the deal off their hands at the 11th hour so they could clear regulatory approval, they would still be obscure.”

Adding insult to injury, explains Schuman, “To get us to sign this, they’re resorting to the unethical strong-arm tactic of not giving us information and holding our commissions hostage.”

After allegedly being paid incorrectly since the merger with no explanation, Schuman’s first red flag went up last fall after receiving a letter stating the FCC ruling. But it contained no indication of TA’s future plans or the ramifications of the ruling, he says.

“When we finally got the commission reduction notification there was not even a courtesy phone call, letter or e-mail of warning,” says Schuman. “It came with our statement and we had to call and ask why we were reduced, and only after about four or five calls did we get to the heart of

the matter.”

Schuman says TA strung U S Telebrokers along for four months, indicating it would pay the back commissions up to that point, until TA finally told Schuman it would not reimburse the agency, unless a new contract was signed.

Dellar says the Intelysis story is similar,. alleging that TA has paid his company incorrectly since the transfer last summer. After being told TA was “working on it,” Dellar says he began to be shut out. Phone calls were not returned and conference calls were missed, until TA finally said it may or may not back pay the missing commissions, and that there was nothing it could do until the new contract was signed. After declining a new contract, TA decided to pay only half of Intelisys’ commission, Dellar says.

“The manipulation is the heat of this anger,” explains Schuman. “Yes, I’d like the money back, but that’s really not the most disturbing part of this.”

John Heaps, a TA regional partner program sales manager, says Qwest and TA sent a letter in January explaining the consequences of the FCC ruling and made multiple contacts via a newsletter.

“This should not have been a shock to anyone,” he says.

But Schuman surveyed approximately 1,000 subagents and found the same path was followed in general.

Intelisys and U S Telebrokers will move their base over, say the agents, but the

revenue lost will be impossible to recoup.

U S Telebrokers was reduced by 62 percent. Dellar, who made the decision not to

pass the reduction along to his subagents, says the debacle cost Intelysis more than six figures.

However, Heaps says, “The majority of Touch America partners are pleased with the service.”

A new website, www.touchamericasucks.

com, will put that statement to the test. It is an online, anonymous forum dedicated to the discussion of the TA issue. The traffic has been brisk, Schuman says.

The buck does not stop at TA: Many agents, including Dellar, say that Qwest also has culpability in the issue.

“Qwest is my largest supplier and I have a very strong relationship with them, but from what I can tell their hands are pretty dirty in this as well,” he says. “I am looking forward to discussing with them what

actually occurred in the final hours of

this merger.”

Qwest declined to respond to the assertions. “Unfortunately, Qwest cannot provide comments on another company’s business decisions,” says Qwest spokeswoman Claire Maledon.