New Alliances Reinvent Wireless for Channel

Wireless resale has been a vexing proposition from the get-go. Few competitive telecom providers have found themselves on the upside of the wholesale agreement if they could meet the required volumes in the first place. And for the big brands that were expected to deliver subscribers in droves, the MVNO model has turned sour again and again (witness ESPN and Disney). That may be about to change with a new wholesale offer from Verizon Partner Solutions.

Lightyear’s Sherm Henderson and Verizon Partner Solutions’ Mike Millegan forge first-of-its-kind wireless resale deal.

VPS, the wholesale arm of Verizon Communications, has entered into a deal to resale the Verizon Wireless network. In turn, it is able to offer its landline resellers the seemingly elusive ability to sell mobility solutions. The big a-ha for VPS resellers is they don’t have to meet the same volume commitments as they would by going direct to the mobile operator.

“I would say the name of the game is having critical mass – whether that’s handsets or overall customers in order to make the margins companies would like to make. What we help to do is aggregate the critical mass so they can be successful whereas if they would go after this on their own, it would be more difficult for them to accomplish,” said Mike Millegan, who became VPS president in October 2007.

The catch? All sales of the new Verizon Wholesale Mobility Solutions suite through VPS must bundle Verizon’s wireline services.

The former is not much of a downside for VPS resellers, which reportedly have been clamoring for a wireless product for a number of years. As evidence, the company announced its first contract with Lightyear Network Solutions LLC along with the product release in mid-July. Agreements with other existing VPS resellers also were in progress, said Quintin Lew, VPS’ senior vice president of product marketing.

“We have companies like Lightyear that look at this as a value-add and not just a wireless mobility play,” said Lew, noting it offers them a bundle and the ability to realize margin across multiple products (although he declined to reveal what those margins might be). “That’s the advantage we bring here. We are not just pushing a resale of Verizon Wireless or a resale of mobility services; it’s more of an integrated portfolio that we are positioning to the small/medium business segment.”

Sherm Henderson, Lightyear president and CEO, said bundling is what the business customer is looking for anyway. “They want the bundle and we want the bundle,” he said.

That focus on bundling products for business customers is among the likely reasons Verizon Wireless has come to the table. Verizon Wireless already offers a wholesale agreement to competitive service providers serving both consumers and businesses. While the company was not forthcoming about the reasons for the deal, a spokesperson did confirm that “VPS is a complementary distribution channel.”