A Year In, Comcast Channel Program Looks Like A Hit

When Comcast Business Class launched its channel program roughly a year ago, Craig Schlagbaum knew he had a challenge on his hands.

Schlagbaum, vice president of sales, indirect channels for the business unit, not only had to convince skeptical master agents and telecom stakeholders that the idea of Comcast as a business channel vendor was very much for real but also needed to carve out Comcast's place amid the ongoing convergence of the IT VAR, integrator and telecom agent channels.

That convergence is a subject of much debate in the channel these days, save for what everyone seems to agree on: solution providers are tempted by -- though not totally convinced of -- the potential for lucrative recurring revenue streams with customers that want their IT and connectivity services from one trusted advisor who can handle hardware, software, telecom and cloud.

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"A VAR becoming an agent and selling carrier services is a model that's becoming much more en vogue now -- much more common," said Schlagbaum, who has been one of the IT VAR-telecom agent channel convergence's most vocal advocates. "You're seeing that transformation with this dawn of the cloud era, and seeing a partner who is much more of a communications solution provider than just a VAR or an agent. We see a symbiotic partner community growing around this."

Comcast Business Services is a $1.8 billion unit of Philadelphia-based Comcast, the $55 billion cable powerhouse that remains the country's largest cable operator and home service Internet provider.

The unit launched its channel program in March 2011. Solution providers participate in one of three ways: as basic referral partners passing on leads and receiving referral fees, as recurring revenue-focused partners under one of Comcast's master agents, or as partners doing high volume sales and working directly with Comcast.

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Comcast's channel order volume increased by a magnitude of more than 15 times over the past year, following the 100-or-so orders Comcast had a month after the launch, said Vice President Schlagbaum.

"We're starting to gain a lot of traction in the solution provider worlds," he said. "Our program started with 10 people and it's now a multitude higher than that. We've doubled the size of our channel manager salesforce to cover all 16 regions of Comcast, and also added an engineer ratio of between two- and three-to-one per channel manager to help support partners on complex Ethernet solutions."

Comcast Business Class is adding people, from the engineers Schlagbaum mentioned to partner support coordinators, who keep track of orders and their status, and account coordinators who handle Comcast's post-sales process for channel partners. A lot of the company's recent investment has also been in tools, including a range of enhancements to its order-entry portal, WebTop. Solution providers and agents are now able to check on such things as service availability and the status of customer orders in real-time, without having to specifically request that information from Comcast.

"These are fairly baseline tools -- table stakes in many cases -- but we've needed to build them from scratch," Schlagbaum explained. "The whole plan is to continue to make doing business with Comcast easier and easier."

Comcast's expanded services portfolio necessitated a lot of those additional people and tools, he said. Last September, for example, Comcast launched Metro Ethernet services for the channel following a slow rollout with a handful of partners. The Comcast Metro Ethernet network offers 147,000 fiber miles across 20 major metro markets in 39 states, and it is available with four levels of service, from dedicated Internet to virtual private line -- meaning more complex deals for many business customers than lower-touch, coaxial cable-type ("coax") offerings.

With the foundation laid and the support tools in place, Schlagbaum said Comcast's priorities are growing its base of partners and convincing more traditionally IT VAR-oriented solution providers of Comcast's service provider value proposition.

The "trusted advisor" role that many solution providers have with their customers, particularly in SMB and upper midmarket accounts, is what makes nurturing the VAR channel so important for a vendor like Comcast, he said.

"When there's an issue, those customers call the VAR first. They don't call the carrier," Schlagbaum explained. "That makes them the one-stop shop to solving a problem. The customer goes to the solution provider."

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According to partners, Comcast's bet on building channel mindshare appears to be paying off.

Edward O'Connor, vice president of network sales at Total Communications, an East Hartford, Ct.-based solution provider, said that channel partners' survival depends on them being able to offer both hardware and integration and connectivity services.

Total Communications has been a network service provider for 23 of its 32 years in existence. The company sold AT&T carrier services exclusively for 20 of those years, but O'Connor said it made sense to diversify its portfolio as it grew beyond its New England footprint. It added Comcast's services after the program launched last year.

"We have several carefully selected network partners," O'Connor said. "In a world where a lot of our solutions are Ethernet-based solutions, you have to be looking at how those needs [overlap] with disaster recovery and business continuity. Mother Nature taught us all some valuable lessons last year. So you're always looking at different ways of providing services to clients."

Comcast's $55 billion size backing up of the Business Class program was one factor in Total Communications' adoption, but O'Connor added that the pace at which VP Schlagbaum's team is adding resources has also made it a good fit. Total Communications offers the full Comcast portfolio, from lower-end coaxial cable solutions on up to the Metro Ethernet services.

"We've been doing this for a long time and we've seen it all," O'Connor said. "When you look at a cable play, it's a different architecture, but it provides us the ability to provide a strategic solution for the client and complement it with carrier solutions from an AT&T or a Windstream."

O'Connor agrees that the trend of traditional VARs looking to add carrier and telecom services is increasing. But, he sees that cross-disciplinary approach as well beyond the "nice to have" stage.

"To remain competitive in this marketplace, you have to realize that people's time is very precious. We're all very busy. If I was a VAR today and I didn't have a network partner, I'd be worried about my survival," he said. "So much of what we're addressing is Web-based solutions. You have to do this to stay a step ahead and address cloud."

NEXT: Comcast's Agency Partners Confirm Interest

Several of Comcast's agency partners confirmed increasing interest in the program, as well.

"They're probably the fastest-growing single service provider to enter the channel business," said Jay Bradley, president of Petaluma, Calif.-based master agency Intelisys, which is one of Comcast's four current masters. "There are challenges for anyone coming new into the channel, but they've had a lot of attention and a lot of traction already. They seem committed to doing the basic things well."

"With Comcast, you get a $55 billion player with a contract that is better than most of the players at that level," said Vince Bradley, president and CEO of Malibu, Calif.-based World Telecom Group, a Comcast direct partners. "They got into it and were asking right away, 'Who are the VAR relationships? Who do we need to focus on?' It wasn't even 'who are your biggest agents' -- they wanted to get strategic with the VAR community immediately."

WTG began discussions to onboard Comcast in late 2010, and WTG -- being Time Warner Cable's first master agent -- had a good experience negotiating terms with cable companies seeking channel expansion, Bradley recalled.

"We had a pretty good understanding of what was happening in the MSO space, and Comcast did a great job of being extremely thorough with their onboarding," he said. "With the Metro Ethernet coming on last fall, that's the opportunity I think a lot of us were looking to attack. Coax is fine -- it's the bread and butter -- but we all want to focus on the fiber."

VARs remain WTG's No. 1 profile of new agents, Bradley said, and soon, VARs will comprise about 40 percent of all of its partners. The trends Comcast's Schlagbaum and other VAR channel-focused service providers have keyed in on are definitely real, he said.

Intelisys is seeing a similar uptake and interest from the VAR community, said Intelisys' Bradley -- recent Intelisys moves like its acquisition of the integrator-focused Cloud Services Coalition will further help that effort.

Bradley commended Comcast for staking out the territory and being clear about its channel ambitions.

"This is the largest cable provider in the land opening up a new opportunity to take their products and services to end users that previously couldn't get them," Intelisys' Bradley said. "They've done a great job, Craig in particular, of getting that message out there, and they've got a lot of folks watching what they're doing now."