TNCI Case Study Part 1: A Historical Look at Agent Equity Programs & Telecom Carrier Bankruptcy

By Dan Baldwin, Editor
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If you've got any sort of stake in TNCI you've no doubt heard about their Chapter 11 bankruptcy filing last week.

As an agent, I've not personally sold TNCI much myself - but only because I hooked up with a few other resellers before I heard much about TNCI.

In all honesty though, had I not had most of my business customers with another reseller, I would have sold more of TNCI as they've always had a very competitive agent compensation program.

When I first heard about TNCI, I was very attracted to their "100% Upfront Bonus Plus Residual" program where, in addition to normal commissions, TNCI also paid out 100% of the first month's billing as a bonus. Then in 2008 they "upped the ante" by rolling out their much heralded Agent Equity Plan. Very aggressive stuff!

Now they've filed for Chapter 11 bankruptcy protection. What does it all mean? Will TNCI agents keep getting paid commission? Will they ever get any "equity"? What do we learn from this TNCI event to better help our business customers choose the right voice and data carriers in the future?

Did Something Go Wrong at TNCI? Is It My Business To Find Out?

I'll be the first to admit that I don't know because I'm not an expert in running a phone company, designing an agent equity plan or taking a business through bankruptcy. As a run-of-the-mill telecom sub-agent though I can offer my own opinion and that initial opinion is, "Something went wrong". But what went wrong and does it matter?

Since TNCI is a private company, most of whatever happened will likely not become known to outsiders like me who don't have a "place at the table". Like the rest of the non-TNCI croud, I'm a "looky loo" bystander at the scene of a traffic accident being pushed back behind the yellow warning tape by the police and fire department people on the scene.

"What happened" at TNCI does matter to me though because I want to learn whatever agent lessons are available to learn during this teachable moment so I can avoid involving myself or my business customers in a future "telecom traffic accident".

Is learning what happened at TNCI really any of my business? Yes. Why?

Because in general, business customers expect telecom agents to use their "industry experience" to balance the customer's "risk & reward" and to recommend placing the customer's telecom service with "the best provider" for that business. In addition, telecom agents generally hold themselves out as "vendor neutral" partners of multiple telecom providers.

Finally there is usually an implicit understanding that when a telecom agent makes a carrier recommendation to a customer that recommendation places the customer's best business interests above the agent's financial interests.

If an agent recommends a provider that the agent has an equity interest in, and that provider ends up filing for bankruptcy, did the agent make a mistake? I want to know the answer to this question.

To try to answer this question and to help TA's 3,800 members learn what there is to learn, TA is going to sort through past articles and publications regarding both agent equity programs and carrier bankruptcies, we're going to come up with a list of questions to ask TNCI and other carriers prior to making customer recommendations, we're going to publish the thoughts of telecom agent opinion leaders and then present a multi-part "here's-what-there-is-to-learn" case study series.

What are Your Thoughts?

Are you a run-of-the-mill sub-agent like me or a respected telecom agent opinion leader? We want to publish the thoughts of all players. Feel free to share your own thoughts on this matter by clicking on the comment link below or emailing them to [email protected].

We'll publish anything useful on these pages in the weeks ahead.

First a History of Carrier Bankruptcy & Agent Equity Programs

TNCI did not invent bankruptcy protection for telecom carriers, nor did they invent agent equity programs. Before learning what TNCI has to teach us through their current experience, it's useful to learn what their predecessor peers had to teach.

Click the links below to examine past articles on the subject of carrier bankruptcy & agent equity that should create a proper frame of reference to better appreciate the situation that TNCI and their agents currently find themselves in. (Special thanks to the editorial staff of Channel Partners Online for keeping such a great searchable archive of past news articles.)

It's from this historical framework that I'll create whatever "lessons learned" from the TNCI situation. Feel free to email your thoughts about the historical background to [email protected] and I'll include them in this series.

Join TA To Get Updates to this TNCI Series

Visit www.TAjoin.com to join TA to make sure you do not miss getting email updates to this TNCI "lessons learned" series. You can also bookmark www.TNCIcaseStudy.com.

News Items Regarding Agent Commissions in Bankruptcy

TNCI FILES CHAPTER 11 BANKRUPTCY Channel Partners, October 10, 2011

TNCI Tells Partners Commission Payments To Continue Despite Chapter 11 Filing CRN, October 11, 2011

You Phone Company Declared Bankruptcy: What Should You Do? Business Phone News, October 13, 2011

MicroCorp Introduces Commission Assurance Program Phone+, November 2009

Platinum Equity Ceases Commissions to Bankrupt Trinsic's Agents Phone+, October 2007

Bankrupt VarTec Abandons MLM Agents but Pays Business Agents AgentsPhone+, January 2005

Is The Agent Protected in the Event of Bankruptcy? Phone+, March 2004

Cable & Wireless Uses Bankruptcy to Dump Agent Commissions Phone+, February 2004

How Bankrupt Carriers Treat Agents Phone+, December 2002

Global Crossing Bankruptcy Teaches Agents Lesson Phone+, April 2002

Understanding the Risks & Responses to Vendor Bankruptcy Phone+, October 2002