Windstream has notified a percentage of its SMB customers with sub-$1,500 accounts that it is raising rates on deals that are costing it money.
This is part of the Little Rock, Arkansas-based business communications giant’s increasing focuson its enterprise unit and enterprise partners. Enterprise service revenues totaled $501 million in the third quarter, up $15 million sequentially and 5 percent year-over-year.
Jason Dishon, Windstream’s channel chief of enterprise sales and operations, tells Channel Partners that the company has segmented its customers between an SMB unit and an enterprise unit. Sub-$1,500 accounts were moved to the SMB unit.
“We have less than 3 percent of our partner base that’s being looked at, a small percentage of customers," he said. “This is a four-month plan where we will be notifying a very small percentage that they would receive rate increases. This is essentially based on market-level deals and if those deals were potentially under water, not making money."
Customers can either pay the rate increase or opt to retire services and move on without incurring a penalty, Dishon said.
According to a report by CRN, Windstream will not accept any orders for under $1,500 monthly submitted through channel partners, portals will restrict any revenue deals under $1,500 from populating quotes, and any existing funnels under $1,500 will no longer be active. Also, outstanding quotes and contracts would become null and void if not submitted by Dec. 31, 2015.
Partners are being notified of the rate hikes before letters are sent to affected customers, Dishon said.
“The typical partner is minimally affected by this; a very, very small percentage of customers are affected by this," he said. “And approximately 2 percent have decided to stay. We are having great success on keeping a large group of customers due to those rate increases."
Dave Avery, Windstream’s vice president of corporate affairs, said the affected customer accounts are in locations where Windstream incurs additional costs to lease certain network infrastructure in order to serve the accounts. The rate hikes vary depending on the customer’s location, service package and costs to provide the service, he said.
“Windstream has decided to use its channel partners to exclusively support our enterprise strategy, which is focused on customer accounts in the mid-to high-end market," he said. “It is important to note that Windstream remains fully committed to SMB, which represents an attractive growth segment for us moving forward."