One of the more significant developments in the paging industry this year was the announced merger between ProNet Inc. and Metrocall Inc., expected to create the second largest paging carrier in the country.
Of the many ramifications this mating will likely have, one in particular that has raised questions is how ProNet continues to do business with its resellers. Metrocall, the controlling company in the merger, is known for its preference of retail distribution and has been on record in the past as stating its intention to “rethink” its resale distribution channel. While many paging carriers see some 50 percent to 60 percent of their distribution mix going to resellers, Metrocall’s is closer to 40 percent.
ProNet, on the other hand, is known for its resale prowess. The company’s partnership program allows resellers to benefit from discounts on airtime by committing to a certain number of sales a month. Its most recent reports show some 60 percent of its distribution mix is on the resale side.
Exactly how these two philosophies will blend when the companies merge is something that remains to be seen, but already the finger pointing has begun. Typical of the never-ending debate between carriers and resellers, ProNet said it has done nothing to alter its current way of doing business with resellers, while some resellers believe the company is out to get rid of them.
Alexander Ott, president of the New York-based reseller giant Affordable Message Center, claims that in the months preceding the merger announcement, ProNet radically altered the way it did business with his company.
“It looked to me that they were making it harder for resellers,” he said. “They are trying to find ways to end big reseller agreements.”
Ott claimed ProNet offered him contracts with “absurd” stipulations which he wouldn’t sign. As a result, he said the company withheld billing statements for months and then demanded the full three month payment in seven days once the statement was delivered.
“I said something’s wrong. Why are they behaving in this manner?” he said. “I was their largest New York reseller and they were just totally turned a blind eye to me. They basically told me to go away.”
He believes ProNet was primping itself to attract Metrocall by taking his customers for its own, thereby boosting the company’s direct subscriber numbers. “They were after my customers.”
Ott’s ProNet subscribers dropped from 10,000 to 4,500 in three months.
David Vucina, ProNet president and chief operating officer, said the company hasn’t changed its reseller philosophy and doesn’t expect the merger to affect it either. He said Metrocall likes ProNet’s partnership program with resellers. “They have found our reseller program is very complementary to theirs.”
Vucina admitted ProNet wants to increase its direct subscriber numbers and even out the distribution percentages, but is doing so by adding subscribers on the direct side, not by slashing away at its resellers. He pointed to the company’s recent agreements with Columbia Health Care and the State of Texas, both direct distribution accounts with a high volume of subscribers.
He said the industry as a whole has made some changes to its reseller contracts, such as taking over more of the collection end and filling in areas where resellers are weak, and some resellers may misconstrue this as toe-stepping and a result of the impending merger.
“Today, we’re selling as many reseller numbers as we ever have,” he said.
“You’re always going to have little changes, but nothing has changed in a major way.”
