AT&T vows to meet or beat ISP rivals' prices
nwfusion.com
By David Rohde
Network World, 09/14/98
Basking Ridge, N.J. - Anxious to grab a
leadership share of the corporate Internet
access market, AT&T has quietly authorized its
salespeople to meet or beat prices offered by
competitive ISPs.
The special promotion
can potentially whack a
fat 20% to 25% off
AT&T's usual $2,000
starting price for T-1
Internet access lines -
even before long-term
contract discounts.
AT&T is battling ISPs
that either have lower
prices to begin with, or
promotions of their own
that discount official
prices exceeding
AT&T's.
But be prepared to
speak up if you want
the AT&T deal. The
promotion requires
documented evidence
of a better price from a
competing ISP. That
means customers must
provide a bill for current
service or a written
response to an official
request for proposal.
What's more, the
promotion is not being
advertised, and many
AT&T sales
representatives don't appear to be informing
customers of the offer unless they absolutely
have to. That's because invoking the
meet-or-beat offer often requires additional
authorization from a centralized AT&T
bid-response clearinghouse. In most cases, the
meet-or-beat promotion also reduces the sales
representative's commission.
Playing to win
Nevertheless, AT&T officials confirmed to
Network World that the meet-or-beat offer is
part of a high-priority internal sales effort
dubbed "Play to Win." While UUNet and
PSINet confirm they have been using
temporary price promotions, Play to Win is a
broader program that runs through year-end
and promises to beat all major competitors in
hotly competitive bidding situations.
The program is broken up into three parts, says
Robert Marschall, global offer manager for
AT&T WorldNet Managed Internet Service
(MIS). The first two parts are a sales
commission schedule and motivational sales
contests. The third part is the meet-or-beat
offer on 56K bit/sec through T-3 access lines
under the AT&T WorldNet MIS offering.
Counting the commissions
Play to Win is all part of an effort to kick
AT&T into the ranks of the top three to five
corporate ISPs, Marschall says. But whether a
particular user gets the meet-or-beat deal
without the intervention of the AT&T
bureaucracy may depend on his or her own
sales representative.
AT&T divides each representative's ability to
cut a deal into two levels - field-level authority
and headquarters-level authority. Most of the
time, field-level authority is enough to close a
straightforward deal, Marschall says.
But once the meet-or-beat offer hits the table,
the required discount may require headquarters
approval. "And if headquarters authority comes
in, that will affect the salesperson's
compensation," Marschall says. "They won't go
unpaid, but it does drive down the
compensation."
In a lot of areas, the local salesperson's limited
authority means Play to Win is "not showing up
on the street," says Eric Paulak, a
carrier-services analyst at Gartner Group, a
consultancy in Stamford, Conn. "They're still
doing a lot of the bidding centralized once they
get the offer. They're not trying to beat
everybody."
AT&T officials confirm they're using the
meet-or-beat portion of Play to Win for
reasons other than just winning bids. For
example, AT&T is using it "to help in gathering
competitive intelligence," Marschall says.
As a result, users may not see the benefits of
Play to Win unless they really push for it, even
on big deals.
One network manager in the South complains
that during the course of recent negotiations for
his company's entire telecom expenditures, the
AT&T representative never brought up the
promotion, even though the user specifically
asked for a deal on Internet access.
The network manager also wanted the Internet
usage bundled with all the voice and data
services in order to kick his full corporate
contract to a higher discount level, but the sales
representative refused.
Even Play to Win might not have been enough
to move the user from MCI Internet access
service unless the Internet usage counted
toward the entire corporation's AT&T
discount. "Had AT&T come up with something
and then bundled it with the other services, we
might have been able to move," the network
manager says.
Dog days of summer
AT&T is not the vendor with the highest official
Internet-access prices - an unusual position for
a company that is regularly the highest priced
supplier in other telecom markets.
For example, AT&T's standard T-1 access
price hovers around $2,000 per month,
depending on whether users order the router
configuration and management option of the
MIS service, called MIS Plus.
By contrast, UUNET's standard T-1 prices
range from $2,500 to $3,000 per month,
depending on options. On the other hand,
PSINet's service is $1,895 per month and
several other companies start closer to $1,600.
Sprint's official T-1 price also is around
$2,000, while MCI's is about $1,800,
according to spokesmen for the two carriers.
But all of AT&T's primary competitors have the
potential to undercut its bids. Several sources
say UUNET ran a cut-price promotion over the
summer, with one source claiming UUNET was
slashing T-1s to about $1,500.
"They had a very aggressive price because the
summer months seem to be the dog days," the
source says. A UUNET spokeswoman
confirms there was a summer promotion but
declined to specify the percentage discount or
other details.
Similarly, PSINet two weeks ago began a
promotion on dedicated access lines ranging
from 56K bit/sec to T-3, according to Charlie
Cary, vice president for product management in
PSINet's Corporate Network Services unit.
Until Sept. 30, the company is waiving
installation fees and taking 10% off the basic
price if the user takes a value-added service,
such as Web hosting, IP fax service or
enhanced security options.
The discount rises to 15% for two additional
services, 20% for three and 25% for four. |
