Much has been made of the potential opportunities for resellers when convergence finally kicks in and the local loop telecoms market is liberalised.
So why is everyone still waiting? The problem is that bringing together voice and data has been a lot more complicated than anyone imagined (apart from the poor systems integrators that will have to do the technical work, but who listens to them?).
Another factor is that gaining access to the local loop may not be the catalyst for convergence that everyone expects it to be. After years of being told that the UK's IT and communications industries were being hamstrung because rivals could not put their equipment into BT's local exchanges, the local loop has now been opened up.
So will we see a host of new, competitively priced services? Early indications are not good. WorldCom, NTL, Uunet and Telewest have told telecoms regulator Oftel that the number of new customers they could gain by accessing the local loop would not justify the expense. This means that the broadband 'explosion' could turn out to be a damp squib.
But there is strong evidence to suggest that multimedia is going to be 'the next big thing'. Video streaming is hugely popular in the US, which means that similar enthusiasm will probably transfer itself over the Atlantic in about 18 months' time.
As resellers look for some sort of high-margin business, whether in application service provision or voice/data convergence, it is likely that they will need to partner with one of the telecoms companies. But their choice of partner is as important and perilous as ever.
Survival of the fittest
There are currently hundreds of these telecoms companies on the market, which means that, inevitably, some will fold, some will merge and some will flourish. So resellers face the age-old challenge of backing the right horse.
Suddenly, BT no longer appears to be such a bad bet. Like the BBC, it had a unique position in a sector which, when opened to competition, it was expected to consume.
But in the same way that the idea of replacing the BBC has been compared with throwing out a silver service to replace it with hundreds of plastic spoons, the quality of services provided by the new telecoms companies has also been called into question.
Early indicators show that the UK may have more telecoms services available now, but many of these are 'plastic spoons'. In other words, most of the new carriers will offer customers only elements of the total telecoms picture.
John Thornhill, BT's general manager for the indirect channel, claims that the problem with such market cannibalisation is that it will be difficult for resellers to add value to these new services. "Few carriers have the full spectrum of [telecoms] products, so their partners won't be able to offer end-to-end services," he warned. "This will be damaging because the reseller won't be able to sell up the value chain."
In a market that is constantly in flux, being caught in a niche can be damaging, and many of the carriers are 'ghettoising' their resellers, he attested. "I was amazed to read that Cable and Wireless [C&W] has used Compaq's and Microsoft's partners to sell its ASP (application service provider) offerings. What do C&W's traditional partners think about that? If you say to people: 'You can sell this, but you can't sell that', you're not going to win their long-term loyalty, are you?" he said.
Thornhill claims that BT is now doing a lot more to win over the channel because it has come to realise that this is the only way to get coverage. But the other carriers are now making the mistake that new vendors often do: they are trying to use the channel to mop up the remaining business they have been unable to accumulate directly themselves.
As a result, BT is putting greater emphasis on training so that partners can migrate to new areas, attests Thornhill. "Resellers want a supplier to help them address the whole market, not stovepipe them. You do not address a new market by signing a load of new resellers. That is short-termism. The best thing to do is help migrate your existing players to new opportunities," he said.
And consultancy has never been more in demand as customers seek to take advantage of the greater choice of suppliers and services. But with more carriers on the market (there are currently 170 different types), choosing the right vendor is increasingly difficult for resellers, and this is one reason why more distributors are evolving in this space.
Companies such as Network Partners, for example, carry out a similar function to IT distributors by assessing the different offerings and assembling their own portfolio of suppliers. This frees dealers from needing to have an encyclopaedic knowledge of the entire spectrum of available telecoms products.
Network Partners has 25 different carriers on its books and assists its telecoms customers by narrowing down the options for them. Vince Potter, sales manager at the company, said: "It's increasingly difficult to know who the dealer should be partnering. They often shy away from recommending telecoms companies."
This new breed of distributor hopes to help dealers by narrowing their choices to three options, based on the specifications that the dealer has sketched out. This provides resellers with time to concentrate on understanding customers' business needs. Once this consultation has taken place, the distributor can sort out the technologies and tariffs.
If datacoms resellers find themselves at a loss after losing their traditional business, conventional wisdom says that they will be able to move into the convergence market.
But although they are often told by vendors that assimilating a knowledge of datacoms will be a breeze, in reality it is unlikely that communications and data resellers will compete against each other in this new, high-growth business area.
Grahame Smee, founder of solution provider EquIP, said: "Convergence is a massive opportunity for dealers from both sides. The market for these services will be big enough to support both telecoms and data resellers."
Genesis, one of the UK's more successful telecoms dealers (named dealer of the year by C&W and BT), sees IP as the key to winning new business. Sales manager Alan Lloyd said: "The big growth areas next year will be IP, virtual private networks and managed and unmanaged services."
Partner of rival?
But the biggest challenge facing dealers, he warned, is the way that communications suppliers are changing they way they behave - sometimes they will act as partners with each other, and sometimes they will compete.
C&W is a good example. Last year, it bought Jaguar Communications and now provides managed network services on a per-port basis. So while it competes with Genesis on one level, it is its technology partner on another.
This illustrates a key point that dealers should bear in mind when they deal with carriers in the future. Rob Sims, channel manager at Swedish telco Telia, believes that dealing with suppliers that are not totally channel-oriented does not work.
Telia has been in the UK since 1994, and claims that its focus on the third-party channel makes it the only viable option. "In the UK, everything Telia does has to be re-badged and provisioned to go through the channel. It is the only way to initiate a meaningful relationship with resellers and get them committed," claimed Sims.
As a result, the company tries to pitch its prices so that its 65 UK resellers can charge 20 to 30 per cent less than they would have to if they sold products through BT's discount scheme.
But Daryl Pile, Telia's resale product manager, believes that price is just one of three elements that will make a difference as newcomers try to buy their way into the market.
"Availability is important too, but it will not be an issue for us. Half a dozen operators are ready to make their presence felt in the local exchanges, and operators like ourselves are building their own networks," he said.
Despite the fact that BT is losing its monopoly over the network, there are some resellers insisting that ownership of the local loop does not mean that other carriers are now on an equal footing.
"Whatever you might think, there is still an additional step involved when you're not directly on the BT network," said one BT reseller. "The local loop issues will not be resolved overnight."
But Mark Nixon, channel director at Uunet, dismissed this view. "Anyone who peddles that line is being disingenuous. It's just a way of spoiling the pitch for the competition. What's changed is that there are a lot of carriers that are global players. Even the ones that were London-based offer national coverage," he said.
Account management is one of the biggest concerns among partners of carriers, but Uunet is attempting to solve this problem by appointing distributors.
However, what Eddie Johnston, channel manager at MCI WorldCom, believes the channel really needs is greater support from carriers, not distributors. Because nobody knows where the market is going, carriers need to make their offerings flexible.
As ever, according to Johnston, this means keeping as close to their customers as possible.
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