3/21/2005 -- With all of the big news announcements coming out of San Jose over the last thirty days, it’s not surprising that a joint reseller announcement by Cisco and MCI got lost in the shuffle. At the same time, analysts say, the arrangement could bear rewarding fruit for both companies.

Cisco and MCI announced a non-exclusive partnership under the terms of which Cisco channel partners can sell MCI’s IP-based next-generation services—e.g., MCI Advantage VoIP service with Cisco’s Call Manager and Call Manager Express—to small- and midsize-business customers. The two partners announced plans to create tools, training and programs to help channel partners sell, deploy and support hybrid hosted and premises-based IP solutions.

According to Kate Gerwig, a principal analyst for network services with Current Analysis Inc., the deal is a win-win for both companies.

“[T]he partnership extends the reach and service spread of both companies in the small and midsize market space via Cisco’s channel partners,” she notes. “MCI has talked of extending its services through channel partners for more than a year, and Cisco also wants to build up its SMB customer base, since both companies are heavily invested in large enterprise customers. Extending channel products and services down market can be a cost-effective way for both companies to reach those markets.”

The partners say that the market is primed for such a solution: The overwhelming majority (94 percent) of SMB customers are currently served through value-added resellers, Cisco and MCI argue, which makes Cisco’s extensive channel reach a natural vehicle for the new offering.

“Their chances of doing that together through Cisco’s channel program are good, provided that the companies can provide the proper tools and training for channel partners to sell what may prove to be increasingly complex solutions that could include business applications,” Gerwig speculates. “The question of who owns the customer is always a concern, particularly with a VoIP service like MCI Advantage, where the customer may feel more comfortable getting support from MCI or Cisco than from a channel partner.”

There are the usual concerns, however, starting first and foremost with the non-exclusive nature of the partnership, which means that not all of Cisco’s channel partners will become agents for MCI’s services, Gerwig notes. “Since the deal is non-exclusive for both parties, Cisco can bring in other service providers and offer channel partners a list of service providers. What's more, channel partners are not required to push every product line, and if they have established relationships with another carrier, they may choose to take a pass on selling MCI services alongside their Cisco gear,” she says. -Stephen Swoyer