Ten Modest Proposals For Making Subsea & Wholesale Carriers Profitable Again

Pay salesmen low salaries and 5% to 10% of on-net revenue. A good salesman does not need a high salary. He or she achieves high income by selling. It is what they enjoy doing. This is the standard Wall Street broker compensation package. New brokers end up sharing apartments with lots of other brokers and commuting from New Jersey. Real sales meritocracy is pay for performance.

Profits are not maximized by paying a high salary combined with low commission rates, and high quotas. It simply creates huge staff turnover as people charm themselves into a high paying job, produce only one or two deals over their first six to 12 months, and then jump ship just before they are going to fired. I have seen it happen time and time again. The empty suit charmers. The resume red flag is a sales guy or gal moving from carrier to carrier every 1 to 2 years. The resulting churn from these bad apples dramatically lowers sales revenue per employee. Plus it rewards a few select salesmen who were lucky enough to get the plum accounts. They become aristocratic farmers living on guaranteed account revenue. Hunters are worth 10x a farmer.

You will not ensure your company's success working with the hyperscalers. These are strictly transactional arrangements. On infrastructure sales they pay between 90% and 110% of your costs. Breakeven is the norm. Google, Amazon, and Facebook are infrastructure companies themselves. For example, Facebook is trenching across America to build a middle mile network that it will use for its own purposes. They know your costs. The sole advantage of Digital Titans cooperation is that they cover part of your infrastructure costs. Like a bank that does not charge interest. 😀 But they will not be a source of net operating cash flow. You need those private companies such as Tier 2 ISPs that are my main clients. Entrepreneurial and up and coming.

To get a good return on capital and reasonable net cash flow, wholesale carriers must do at least $750K USD per employee per year. Verizon exceeds that threshold at $1.28 million, but a competitive carrier like Lumen that is on the mend is still just above $600K Revenue per employee should be your top metric.

Departmental fiefdoms are a telecom monopoly inheritance. The PTTs operate that way and almost every competitive carrier has largely copied that approach due to a lack of vision and imagination. But wholesale carriers are not PTTs. They are asset heavy, but sell in much more competitive markets due to the fact the services are standardized to ensure network interoperability. The situation is closer to the wholesale food business than Gucci.

Departments must be better integrated with the right incentives for cooperation. For example, provisioning ultimately works for sales. Good customer service means fast provisioning even if someone has to work the weekend. Network works for sales as well. All your customers talk among themselves about outages and those NDAs you make customers sign are not worth the paper they are written on. Everyone ultimately works for sales. If you encounter the Beast of Institutional Inertia, slay it.

Subsea Cables & Internet Infrastructure