Report: Scant reward for reselling telco services

Report: Scant reward for reselling telco services


While more than 60 per cent of IT resellers are helping SMBs with telco services, less than half are getting a return for their efforts, according to a new report.

The iProvide Indicator 2006 was conducted by Frost & Sullivan on behalf of AAPT's channel arm, iProvide.

It reported 35 per cent of service providers were actively selling a telco service onto SMB customers. A further 29 per cent were recommending a telco service but not receiving any direct revenue.

iProvide managing director, Phil Sykes, said service providers were taking an active role in the provision of telco services for SMBs. But there was a general discontent with the way carriers were providing support to resellers.

"Service providers are advising customers on which carrier to use, but the carriers are then servicing the end users," he said. "This means a large proportion of service providers are giving advice for free."

Managing director of Allcom Networks, Andrew Leigh, agreed with the survey findings. He said it was not uncommon for dealers to receive little or no reward.

"It's a reasonably low-value spend to begin with, especially when you are talking about SMBs," he said. "If you have 1200 customers and you are chasing $10 month from each of them, it's just a lot of little pennies."

The iProvide survey was conducted among 450 IT&T resellers between January and February. Sykes said one of the major challenges identified was the time and effort being spent by service providers in understanding and providing carrier offerings.

"A key finding was the need for carriers to make it easy for service providers to take up a product and present it to end users without necessarily having to get their head around the products," he said.

Country manager of 3D Networks, Chris Luxford, said trailing commissions were a standard feature of all its dealings with telcos.

"We have relationships with all the carriers and as a reseller, with Telstra, Optus and Verizon," he said. "We have been very comfortable working with them all."

But a new Optus plan, recently presented to the IP and voice solutions provider, was looking to remove trailing commissions if the reseller had assistance from the telco in signing a deal.

Luxford suggested the telco had taken this step to encourage resellers to be more autonomous.

"[As a telco] you always want partners that are autonomous because you don't need to supply resources to support them," he said. "But it's a double-edged sword because sometimes the partner won't fully understand a product and will simply sell the cheap and cheerful package instead of up- or cross-selling."

Luxford said 3D Networks was still reviewing the document and was undecided about whether to sign. A decision would be made in the next fortnight.

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