RESELLER CHANNEL: ASCENT to Market Wireless Resale Program

By Khali Henderson

Posted: 8/2003

ASCENT to Market Wireless Resale
Program

By Khali Henderson

The
Association of Communications Enterprises (ASCENT) has come out of stealth mode
on an innovative resale program it plans to launch Oct. 1 to enable smaller
competitive carriers to add wireless services to their portfolios.

In the works since late 2002, the
new program will allow service providers to become resellers of Consumer
Cellular Inc.’s wireless services. ASCENT, which will market the program under
its for-profit ASCENT Business Solutions unit, gets an undisclosed commission
for its matchmaking efforts.

Formed in 1995, Consumer Cellular is
based in Portland, Ore., and provides cellular services to residential customers
in 15 states through direct mail and Internet marketing. The company holds
nationwide resale agreements with AT&T Wireless and Verizon Wireless Inc.
John Marick, president of Consumer Cellular, says the ASCENT program will use
the AT&T Wireless contract because the company has committed to implement
the electronic interfaces to make it possible for Consumer Cellular to let its
sub-resellers provision their own accounts while allowing Consumer Cellular to
have oversight into the process. AT&T Wireless first developed the
capability for its then-client WorldCom, which exited the wireless resale
business last summer and filed for Chapter 11 protection. Consumer Cellular will
be one of the first AT&T Wireless resellers to use the electronic interface
and is scheduled to test it this month. Marick says Consumer Cellular also will
add staff to support its new resellers.

"I think this is a great
opportunity for all involved," says Marick. "We [Consumer Cellular]
are able to expand into a new wholesale roll, ASCENT leverages it’s
relationships, the companies that use our service will have an profitable and
simple way to quickly roll out cellular service and AT&T Wireless will
receive even greater volume through the low-cost wholesale channel."

Consumer Cellular will contract
directly with the ASCENT Wireless resellers and provide them with margins of 15
to 25 percent depending on volume — discounts they could not get on their own
because either their volumes are too small to qualify for such discounts or they
can’t get a resale deal at all.

The latter reason, says David Gusky,
executive vice president of ASCENT, was the impetus for ASCENT to issue an RFI
to provide its members and other smaller competitors with a source of supply. He
says late last year Verizon Wireless announced they would no longer do business
with resellers serving less than 5,000 lines.

"We [ASCENT] thought that
pursuing some type of legal strategy would probably be very costly and in the
end probably futile," Gusky says. "So, we decided to look at the
business side and see if we could step in and fill in the hole for these small
resellers."

In contrast to some of the large
carriers, resellers joining the ASCENT Wireless program would have to commit to
bring on about 50 customers per month, says Gusky.

ASCENT will serve as a marketing arm
and is building a separate Web site — www.ascentwireless.net — to promote the
program. "So ASCENT’s role, because we have a brand name in the
marketplace, is to inform and educate our constituency about what we think is a
wonderful opportunity," Gusky says.

Yankee Group Inc. predicts the
number of U.S. wireless users to grow from 135.5 million in 2002 to 167.5
million users in 2007.

Bundling opportunities aside, Gusky
says it could become even more critical for competitive carriers to have a
wireless offering because of the impending introduction of wireless number
portability. "It’s coming, and I think it really behooves wireline carriers
to adapt some type of wireless strategy because wireline carriers will be
required to port numbers to wireless carriers," he says. " If a CLEC
does not have a wireless strategy, if they cannot offer wireless service, then
they have no choice but to forfeit that customer to the wireless carrier who is
trying to sell them service. If a CLEC has their own wireless product and a
customer wants to transfer their numbers to wireless, then a CLEC would be able
to do that with our program."

For now, Gusky and other ASCENT
staff will manage and market the resale program and evaluate whether to bring on
additional staff once the program gains momentum.

The program was more than six months
in development primarily because ASCENT had to find a partner with an existing
resale agreement with a carrier that was interested in the program. AT&T
Wireless, Consumer Cellular’s underlying carrier, has indicated its support for
the ASCENT Wireless program.

"I think ASCENT has a lot of
very good business contacts who are interested in adding wireless service to
their products and we’re interested in partnering with them on that," says
Tim Horkan, director of resale distribution for AT&T Wireless, and the point
person for the company on the deal.

While AT&T Wireless does not
have minimum volume thresholds, having Consumer Cellular and ASCENT aggregate
resellers is an attractive proposition, he adds. "It greatly simplifies
from our end a lot of the billing and customer care. It gives us a single point
of contact with someone that we have a track record with."

Because the program is run through
the ASCENT’s for-profit subsidiary, the membership did not have to vote on its
creation, Gusky says, adding, however, it expects profits from the deal to fund
its other lobbying and educational programs. Gusky expects the wireless resale
program to be self-funding, but adds that since members pay dues that were used
to get the program put together, nonmembers will be asked to pay an annual
administrative fee — the amount has yet to be determined.

ASCENT’s wireless resale program
will cover transport, but not equipment. Gusky says there are a number of
third-party fulfillment companies, such as CellStar Ltd. and Brightpoint Inc.,
resellers can use for inventory management, and service activation and delivery.