With Converged Solutions dead, its former rivals battle for its remains

REGION – In a complex game of musical chairs, a piece of the region's telecommunications business was briefly up for grabs this spring when provider Converged Solutions closed its doors.

Ann Arbor-based Great Lakes Telecom managed to get most of it. But virtually every other firm in the field was out of the running for the business almost from the very moment it became available – thanks to a series of moves to corral the business.

The first one was Converged Solutions' own abortive effort to steer its customers to the telecom provider it favored: the Oklahoma-based industry heavyweight Xeta Technologies. Converged notified its customers via email that Xeta was ready to handle their telecom needs, using former Converged staff. But that that option apparently fell apart when Great Lakes made its move.

The Ann Arbor firm hired much of Converged Solutions' staff and began contacting and servicing their suddenly orphaned customers.

Dale and Gail Zuelch, the owners of Converged Solutions, could not be reached for comment on why they tried to steer business to Xeta – or why they shut down their operation in the first place.

"I am sure that they just overextended themselves," says Russ Madsen, president of rival Anavon Technologies. "They had too many technicians and trucks."

The hiring of the ex-Converged employees apparently revived a Great Lakes Telecom office that, for months prior, had only had a skeleton staff. The company established an office in Greilickville in January 2008, says Ron Houghtaling, a former Traverse City resident and the new Ann Arbor-based director of business development at Great Lakes.

"But it wasn't fully staffed. We had a branch manager and a sales person," he says. When Converged shut down, his company hired a half-dozen former Converged technicians and other specialists – some of whom he knew from his earlier work in the local telecom industry.

"The six new people from Converged are pretty well entrenched throughout Northern Michigan," Houghtaling says. "The idea is to support those customers who have lost their support mechanism."

Among other model lines, Converged had been selling and servicing Mitel products – the system of choice for the hospitality industry.

Sign of the Times

The loss of Converged Solutions and the re-emergence of Great Lakes Telecom is a sign of the fierce competition in Northern Michigan's telecommunications business – a contest that has left many small players along the wayside over the years.

At least a dozen local, state and national players compete to provide small businesses, nonprofits, schools and government with voice, data and Internet services, sometimes getting into scraps with local governmental units about access to their contract bidding process.

Madsen estimates that Converged Solutions had about 450 customers, and he has gone after them with advertising. He has attracted some to Anavon, but the effort has become more difficult with Great Lakes Telecom's indirect takeover of the defunct firm's business.

"With Converged going out of business, [Great Lakes'] interest in the Traverse City market was rejuvenated," Madsen says. "All their technicians are running around to clients – because they know who the accounts are."

Madsen's firm is arguably the largest player in the region with 3,500 customers, mostly small businesses.

Great Lakes apparently circumvented the Zuelches' plan to have their employees move to Xeta Technologies, a publicly traded heavyweight in the sector.

On March 22, the day that Converged was closed, an email bearing the Zuelches' names went out to a list of clients, saying that "many of the same telecommunications professions that have provided service and support from Converged Solutions will continue to do so with Xeta."

But a spokesman for Xeta declined to comment on the Converged Solutions email, except to release a written statement saying that the company "is not aware of Converged Solutions' business situation and has no partnership with it."

Xeta does not appear to have an office in Traverse City, and a spokesperson for the company would not say whether the company had plans to establish one.

But that would not prevent a major corporation like Xeta from providing services in the region.

A national firm would not necessarily need offices locally, says Jim Gregory, owner of Traverse City-based Commnorth, a provider of telecom services primarily to the Cadillac area.

Major national providers already use technicians and small firms on the local level to do work on their behalf, he says.

Gregory ought to know; just five years ago, 90 percent of his telecom work was for his own clients – and his firm did contract work for national telecom providers just 10 percent of the time. This year, his contract work on behalf of the national firms has risen to 40 percent.

"There are a lot of local companies that have gone belly up, and the national companies have moved in," he says. BN