So happy together

DSL providers ally to chase customers To Regina Wiedemann, senior vice president of business development for residentially focused DSL provider Telocity, the idea "seems so obvious to me I don't know why we didn't do this before."

The idea is to share and swap customers with business-focused DSL service provider MegaPath Networks. The two companies have formed an exclusive joint referral program that includes online links for customers seeking small business or consumer DSL solutions, e-mail referrals, "warm" transfers between call centers, channel partner introductions and cross-selling opportunities.

"We decided we wanted to work a little bit smarter and work together as opposed to wasting potential leads that we can't service, or we choose not to service because of our business focus," Wiedemann said.

Telocity receives numerous requests for the built-in safeguards and quality-of-service (QOS) guarantees of business connectivity, which it does not offer, Wiedemann said. On the other hand, MegaPath has potential customers who shudder and flee from the cost of a business connection but would be amenable to a less expensive residential service that gives them high-speed access and always-on connectivity.

"It's really about focusing on the segments and what it would take to excel at those segments," said Dan Foster, MegaPath's chief sales and marketing officer. "There's enough demand out there that we don't believe we need to go into each other's space."

The executives agreed that today's work-at-home, small office/home office (SOHO) business/residential market makes it difficult to sharply define a line between what each company offers.

"There is a gray area, we're not going to debate that," he said. "But we feel there's such a large market out there that if, in the gray area, we compete a little bit that's fine. In fact, it serves us both well to go after that segment."

MegaPath trains its sales force to recognize the "upper and lower bounds of our offerings," so that potential customers can be signed up or moved to Telocity, Foster said.

Telocity provides service in more than 140 major metropolitan areas and 1500 cities nationwide. Subscribers get an always-on Internet connection, a 10 Mb Web site and up to five e-mail accounts. MegaPath offers DSL Internet access, security, unlimited e-mail addresses and Web hosting to small and medium-sized businesses in more than 150 metropolitan areas nationwide.

"If you have somebody that is a SOHO, but the company says they absolutely need to have guaranteed bandwidth, then that's where you start to see a little bit of differentiation with Telocity," Foster said. "They're going to beat us on price and functionality for the residence every day of the week. Depending on their line distance, they're going to beat cable as well because it's a super product."

The possibility of keeping customers in the DSL fold fuels the alliance, Wiedemann said.

"We've had a lot of customers where we exhaust the possibilities with our product and how it serves them and end up hanging up the phone saying, `Sorry, I can't help you,'" she said. "In this case we're making good use of the sorrys. We're helping the customers, but we're also becoming more efficient in our own businesses and collecting potential leads for our partners."

It makes good business sense, she concluded. "We all know how expensive it is to go out and market and get attention and build your brand. You can do it smarter between two leaders in the industry. I think it'll pay off in the long run," Wiedemann said.