As part of my participation in the PHONE+ Advisory Board, I'm writing blog posts for the Peer-to-Peer blog on the PHONE+ site.  The latest can be read on the PHONE+ Peer-to-Peer page and is reproduced below:

My initiation into the ethics in the telecommunications industry was not unlike a fraternity hazing. I began as a subagent of a master who ultimately decided that my commissions were better suited to his bank account than mine. I then moved to another master and within a year was told that they couldn’t pay me because, well, they needed the money more than I did. Surmising that simply operating ethically could be a major competitive advantage, and not wanting to continue buying Italian sportscars for the CEOs of slimy master agents, I decided to found Telephony Partners and try to do it right.

Since then the industry has grown up a lot, but it seems like the question of ethics is still lurking beneath the surface. The nature of the business and the way the incentive systems work, it’s naïve to believe that simply talking about ethics will bring about change. In this and my next two blogs, I’ll discuss some of the characteristics of our industry that appear to encourage ethical abuse, and I’ll make some suggestions on how we as an industry can try to turn the tide.

It’s important to start by looking at how ethics can be so seemingly unimportant to the main actors in our market. Our industry – like most other technology industries – sows the seeds of its own demise by commoditizing its products and services. In a commoditized industry, soft values like customer service and pre-sales support lose their luster, and what’s left is a rabid focus on more and more new sales. How often have you had the “what have you done for me lately” conversation with your carriers or agents?

The resulting culture is not unlike that of a stereotypical car salesman, whose common refrain is, “What can I do to have you drive this baby home tonight?” However, even the auto industry has picked up on the problem and begun putting incentive systems in place that meticulously measure and reward customer satisfaction and loyalty. In telecommunications, the incentives that are being stressed are almost entirely based on sales accomplishments – our inboxes overflow with SPIF offers, but when is the last time you saw an SPIF tied to retention or to customer satisfaction? Indeed, we can all recall instances where carriers specifically penalized renewals with lower commissions.

When we do see incentives based on retention or customer satisfaction, they usually comprise the stick portion of the carrot-and-stick system. We suffer the consequences of poor customer service by losing the customer and are penalized for poor retention rates. Even if your business is based on residual incomes, as ours is, the security of our collective incomes is driven fundamentally by the acquisition of new business.

We’re not going to stop the commoditization of technology products and services, but we as an industry have control over the market we make. We will always have commodity sellers, but it’s not inconceivable that the rewards system could be changed to move the focus away from the churn-and-burn status quo and favor instead a longer view. The question is whether the industry as a whole could achieve such a change.