Lumen Technologies took its biggest step toward clarifying recent changes in its product line and channel compensation on Thursday, but partners demanded additional details.
The incumbent local exchange carrier directed partners to its portal for a list of product SKUs that would no longer be eligible for sales starting in August, in a July 1 email to its channel community.
The move marked a strategic retreat from a sizeable voice portfolio, which includes its SIP, Voice Complete offerings and services for Microsoft Teams and Zoom. Starting Aug. 1, partners cannot sell or renew Lumen voice offerings, which will move to month-to-month agreements when contracts expire.
The shift wasn’t a surprise to many partners, who applauded Lumen’s narrowed focus. Other carriers, including AT&T, have slashed voice offerings, and Lumen has made fiber, network-as-a-service, wavelength, VPN, managed cybersecurity and the acquired Alkira cloud networking portfolio its strategic priorities. Getting out of the voice businesses — which many partners prefer to not sell through an ILEC — was a clear way for Lumen to clear debt and play to its strengths.
Voice products weren’t the only SKUs undergoing termination in the partner portal. DDoS protection, Black Lotus Labs’ threat intelligence were on the chopping block too, suggesting to many partners that Lumen’s product cuts went even deeper than anticipated. Lumen has since clarified to the partner community that it was simply sunsetting legacy SKUs in favor of modern, “strategic” versions.
Rumors swirled around the channel.
“It was actually an advisor who said, ‘Can you believe they're not doing DDoS anymore?’” Telarus Chief Commercial Officer Richard Murray told Channel Dive. “So sure enough, I went and looked at the list, and DDoS is on it. Wait a minute — Lumen's one of the world's greatest DDoS companies. Why would you stop doing DDoS?”
The company clarified the change to Murray and other partner leaders, noting that only the legacy DDoS SKU would be discontinued, and enlisted their help reviewing a July 16 email.
“This is a rational decision from Lumen, and something that we would be aligned with: that they have way too many SKUs,” Murray said.
Messaging from Lumen has lagged behind what partners are hearing. Socium IT Founder Stephen Hancock was the first to tell his client about the Lumen voice transition. He could only point them to a media article when asked where to find the announcement.
“Lumen has a great story to tell with the development of the NaaS products and with the acquisition on the network side of things,” said Hancock. “I do wish they were more communicative about their development processes, but I think that they're improving in all aspects of their move to a SaaS company.”
Lumen has been more proactive since July 1, partners tell Channel Dive.
“They're one of our strategic providers, and initial communications were concerning, and we took action very quickly to review our customers and the solutions that we had supported clients with from Lumen,” IQ Wired CEO Kelly Forsyth said. “There were a number of questions that arose based on the information we received, and I do appreciate Lumen and their partnership in that they were available to have conversations.”
Lumen declined to provide Channel Dive with the partner emails. Partners told Channel Dive the memo did not name impacted SKUs. Lumen also declined to say if partners are on the hook for migrating existing clients to the new SKUs.
“Lumen’s priority is to ensure changes to our portfolio are communicated accurately, responsibly and at the right time,” a Lumen spokesperson told Channel Dive Thursday. “As plans are finalized, we will provide appropriate information directly to impacted partners, customers and stakeholders through the proper channels. Until then, we will continue to support our existing commitments and take a thoughtful, coordinated approach to any portfolio updates.”
Partners are eager for details. Eclipse CEO Dave Dyson said his firm has millions of dollars in billings at stake.
“We're always managing risk in this business,” Dyson said. “Until they have more clarity of what it is they're doing and where they're going, we need to put them in that DEF CON 3 level of risk.”
Other vendors jumped on the news as Lumen scrambled to align its messaging. Telecom aggregators, who resell and manage internet circuits from the ILECs and provide VoIP-based services for mission-critical POTS lines, smell blood.
BCM One sent out a partner email blast highlighting the situation. MetTel introduced a special sales incentive for POTS services and launched two customer pilots specific to replacing Lumen voice.
“As Lumen transitions as an organization and stops selling voice services, I think it's an amazing opportunity for MetTel,” the company’s SVP of Channel Tim Hanley told Channel Dive Thursday. “I think a lot of people chose Lumen because they were a one-stop shop. They could handle all of their customers' technology needs, and with themselves divorcing themselves from voice, I think that we inherently become that home for a lot of trusted partners in the marketplace.”
Channel subcultures
The partner uproar caught Lumen leadership by surprise. It reflects nuances between the commission-based TA sales model and the margin-based value-added reseller model.
Rather than selling a product to the end customer for a one-time fee, TAs receive ongoing monthly commissions from vendors for the lifetime of the customer — even past renewal. The sunsetting of a product or the inability to renew it represents a material loss of an existing revenue stream.
Lumen’s newly hired EVP and CRO Jeff Sharritts and SVP of Global Partner Solutions Jim Ortbals cut their teeth in resale-heavy companies such as Cisco and VMware.
“In their world, they change what you can sell every year, and I just have to think that they don't understand that people who get paid residual versus a one-time sale for a piece of Cisco equipment are going to react very differently to news like this,” Murray said.
History is a factor. TAs and TSDs have survived numerous product sunsets and commission cancellations growing up in the service provider market. Bad news is part of the game. Lack of clarity, however, can be avoided.
“We're all conditioned after many, many years of doing this that when somebody isn't being fully transparent, we assume the worst of intentions,” Dyson said. “You're better off just saying, ‘Hey, we're screwing you on these seven categories; deal with it,’ than obfuscating because obfuscation is treated by all of us as sort of a criminal act anyway.”
