User:Cyberherbalist/ACN2

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ACN, Inc.
Type	Private
Founded	Incorporated 1992
Headquarters	Farmington Hills, Michigan, USA
Key people	Charles “Chip” Barker, CEO Robert Stevanovski Chairman Gregory (Greg) Provenzano, President Anthony (Tony) Cupisz, Vice President Michael (Mike) Cupisz, Vice President[1][2][3]
Industry	Telecommunications
Products	See complete products listing
Revenue	▲ $500 million USD
Employees	1,000+ (2006)
Website	www.acninc.com

ACN, Inc., based in Farmington Hills, Michigan, is a multi-level marketing (MLM) company ^[4]. ACN began operations in the U.S in January 1993, Europe in 1999, Asia-Pacific in 2004 and is now operating in 19 countries.^[5]

ACN offers local calling, long distance, Internet, wireless and digital phone/video phone services, and wireless connection to consumers and small businesses in the United States, Canada, Europe and Asia Pacific.

Formerly ACN, through the subsidiaries ACN Energy and ACN Utility Services, operated as a gas and electricity retailer. ACN's energy assets were acquired by Commerce Energy Group in 2006.^[6][1]

Contents 1 Company structure 2 History 2.1 ACN Timeline 3 Competition 4 Compensation Plan 4.1 Phone Points and Customer Points 4.1.1 Points 4.1.2 Phone vs Customer Points 4.2 Earned Positions 5 Controversies 5.1 Court cases 5.1.1 ACN France 5.1.2 ACN Australia 6 See also 7 References

[edit] Company structure

Headquartered in Farmington Hills, ACN offices are also located in Marquette, Michigan; Charlotte, North Carolina; Irvine, California; Montreal, Canada; Amsterdam, The Netherlands; Åmål, Sweden; Sydney, Australia and Wroclaw, Poland. ACN is a member of the Direct Selling Associations in North America and Europe.

[edit] History

In 1992, the four co-founders of ACN, Robert Stevanovski, Greg Provenzano, and twin brothers Tony and Mike Cupisz, came together in a search for a new MLM opportunity, hoping to find a company with a more fair compensation plan, solid ethics, and a trusting environment. The search proving fruitless, the four men, who had had successful careers in other multi-level marketing companies, decided to build their own. One of their decisions was to base the new company's business on services rather than products. They decided to enter the recently-deregulated telecommunications service market^[3].

In formulating the business model for ACN, the four decided to draw on their negative as well as their positive experiences. Provenano, in particular, had had a very rough ride in the last MLM he participated in before the founding of ACN. At a quarterly International Conference in Baltimore, MD, in September, 2007, Provenzano stated that he was bitter enough that he wouldn't allow the terms "multi-level marketing" or "network marketing" to be used in his presence for a few years^[7].

ACN opened for business in January, 1993 with twenty initial independent representatives. The company started with just the personal bank accounts of the founders for operating funds, but in its first year achieved revenues of two million dollars, and after paying its representatives for their work had still made a profit. ACN's initial business was as a marketing arm for a long-distance reseller called LCI Communications. This relationship lasted for five years until LCI was acquired by Qwest Communications, and ACN grew steadily during that time^[3].

After five years in business, ACN had grown enough that Inc. Magazine listed it in 1998 as No. 22 in its annual list of the 500 fastest growing private companies in America^[8], with an annual revenue of $98.1 million. In 2006 ACN reported that its revenue during 2005 had been nearly $500 million, having quadrupled over the previous five years.

In mid-2006, multibillionaire Donald Trump came out publicly as an endorser of the company. Trump made appearances at three of that year's ACN Events, where he spoke in glowing terms of how he saw the company's future, and appeared in two tracks on an ACN-issued promotional video disk, in one extolling ACN's business and in the other responding to questions put to him by ACN President Greg Provenzano. The video disk was made available to ACN's sales force as a new representative recruiting tool.

[edit] ACN Timeline

• 1993 - Company founded
• 1997 - Beginning of international expansion (Canada)
• 2000 - Begins marketing its own long-distance service (as opposed to simply serving as the marketing arm of other companies)
• 2003 - Becomes its own local service provider and offers bundled local/long distance plans
• 2004 - Begins expansion in Asia/Pacific by opening for business in Australia
• 2005 - Offers new digital phone service or VoIP (Voice over IP), and introduces a videophone
• 2006
  • - Completes the build-out of its own independent VoIP network
  • - Donald Trump endorsement
• 2007 - Begins offering wireless service as a reseller of the largest wireless providers

[edit] Competition

ACN competes with a number of other stand-alone long-distance providers, and attempts to price its service so as to equal or beat the rates of at least 80% of these. ACN also offers free long distance calling between ACN customers within their own countries^[9] (expanding this to ACN customers calling between the U.S. and Canada in 2007), as a marketing tool to get customers to refer those whom they call most frequently. An ACN long-distance customer who engineers a calling circle such that he or she pays virtually nothing beyond the monthly service fee is clearly getting somewhere, but since ACN's customers seem not to have driven the company to this extreme, yet, the danger may be more potential than real. While ACN-2-ACN free calling seems like a cornucopia for a customer to begin making long distance calls every waking hour of every day, ACN does provide itself with an out, an acceptable use policy which says that ACN-2-ACN free calling is available for residential customers only with "typical residential calling patterns"; if ACN feels a customer is abusing the service, it reserves the right to change the plan unilaterally^[10].

In the local provider market, ACN competes with the established companies such as Qwest, AT&T, and Verizon, in the U.S., who are the ones that actually own the infrastructure, by reselling their services at a discount. This is possible due to the effects of telephone industry deregulation, which by law requires these firms to open up their networks to potential competitors. In a sense, ACN, which does not advertise, save through its independent representative force, piggybacks upon the establishment companies' need to advertise, and it is this disparity in advertising costs that provides ACN's ability to both charge its customers less than the establishment firms and pay its representatives for acquiring customers from them.

In a similar, but not identical fashion, ACN uses the existing high-speed Internet network provided by the establishment firms, including for this purpose cable companies like Comcast, to be able to offer VoIP services that are generally lower in cost.

ACN's competition in the wireless market is not the major wireless providers, but the resellers as found in the mall kiosks, wireless stores, and so on. ACN resells all of the major companies plans, with plan pricing identical to the providers's, but competes in the price of the equipment -- the handsets -- used to make the wireless calls.

As far as competition in the multi-level marketing business model, ACN makes the claim that it is "The worlds largest direct seller of telecommunications services"^[11]. Since most people have never heard of any direct selling company offering telecommunications before hearing of ACN, this seems an empty claim. However, there is such a company, called Lightyear Alliance. This company is very light in weight when compared to ACN, having only been offering an MLM opportunity in telecommunications since 2003^[12] (Lightyear Alliance is the MLM marketing arm of traditional telecommunications provider, Lightyear Network Solutions, in business as long as ACN, but only recently as an MLM parent company^[13].) Lightyear Alliance claims 100,000 customers whereas longer-established ACN claims well over a million -- so it appears that ACN's claim to be the largest holds water, although it might not be saying much.

But ACN's business model is not so much as competition in a head-to-head fashion against its fellow providers, but it is more a matter of leveraging the personal relationships between its representatives and their customers, who, by and large, are the representatives' friends and relatives -- this makes it less a competition in the arena of cold-blooded price-vs-service and more a matter of heart-to-heart.

[edit] Compensation Plan

ACN's compensation plan^[14] is a variety of the commonly seen stairstep breakaway plan. The plan has seven positions, the first being Team Trainer (or TT). Team Trainer is not earned, per se, but is the first position the representative holds after paying the initiation fee. The remaining positions required the acquisition of customers and sponsored representatives to achieve. With each higher position the representation is eligible for greater compensation as customers are obtained.

To understand the requirements for achieving each of the "earned" positions, an understanding of Phone Points and Customer Points must be achieved.

[edit] Phone Points and Customer Points

A frequent mantra in ACN recruiting literature is the phrase "No compensation is earned in ACN unless customers are obtained." Representatives are qualified in their positions according to the number of "phone points" or "customer points" they achieve, in addition to sponsored representatives obtained.

[edit] Points

Points are awarded for the sale of ACN services to customers. Generally, one service is worth one point, but a few services count for more. For example, a long distance customer counts for one point, but a VoIP customer counts for two. Cell (or mobile) phone customers count anywhere from one to four points, depending upon the plan selected by the customer.

Once a customer is obtained, the appropriate number of points are awarded to the representative, and those points continue associated with the representative for as long as the customer is retained.

[edit] Phone vs Customer Points

A "phone point" is a "customer point", but not all "customer points" are "phone points". The difference is that a "phone point" counts for qualification of position, but a "customer point" does not. The only services that currently count for only "customer points" are dial-up internet and DSL.

[edit] Earned Positions

• Qualified Team Trainer (QTT) - 8 Phone Points
• Executive Team Trainer (ETT) - 12 Phone Points and two direct-sponsored QTTs
• Executive Team Leader (ETL) - 20 Phone Points and two ETTs in two separate representative legs
• Team Coodinator (TC) - 200 Phone Points in each of three separate representative legs
• Regional Vice President (RVP) - Since July 2007 there are two levels of RVP
  • 3-Star RVP - 3 TCs in three separate representative legs and total organizational billing volume of at least $50,000.
  • 4-Star RVP - 4 TCs in four separate legs and at least $75,000 in total organizational billing
• Senior Vice President (SVP) - 6 TCs, RVPs or SVPs in each of six separate legs, with at least 3 of these six legs containing an RVP and at least $500,000 in monthly billings in his total downline organization.

[edit] Controversies

Like any entity created by human beings, ACN has its share of detractors, and like any entity engaged in economic activities legal problems must inevitably crop up, whether deserved or undeserved. Adding fuel to the fire is the fact that multi-level or network marketing has a somewhat seedy reputation, and many people regard MLM or Network Marketing as merely a step up from pyramid schemes, at best, regardless of whether or not a company's operation is technically within the definition.

It is no secret that the MLM-industry is frequently beset by shady operators, and even where there are firms that offer legitimate opportunities in good faith, human foibles frequently intervene to cause undesired results. For this reason, MLM firms find themselves under much greater scrutiny than most traditional business companies.

[edit] Court cases

In its 14-year history, ACN has had only two court cases, and those fairly recently, where the company was found to be guilty of either illegal or unethical activities. One of these, the most serious, was completely overturned upon appeal to a higher court. The other appears to have been a mere technical violation.

[edit] ACN France

On 19 March 2007, ACN France was found guilty and fined €15,000 for its use of misleading advertising. Inspectors created a simulation in which they found that only representatives with a position of "Team Coordinator" or higher (less than 1% of total qualified independent representatives) could potentially earn a satisfactory income (defined as €1345 per month). The position below "Team Coordination", "Executive Team Trainers" (less that 8% of total qualified independent representatives) could only earn a meager income or possibly lose money. Qualified independent represents consist of the representatives that have reached the level of "Team Trainer" or higher. ^[15]

In the ACN France case, it appears that the French investigators may have built an erroneous simulation, since the court documents evidence a clear misunderstanding of the ACN Compensation Plan (at least, as it appears reported in the paragraph above). In the first place, the position below Team Coordinator is not Executive Teach Trainer, it is Executive Team Leader (see section above), assuming this is not a typographical error in the source document or translation. In the second place, it appears from the report that the simulation only took into account residual income from customer billings, without considering the potentially much greater earnings from Customer Acquisition Bonuses. In any case, that ACN was only fined a nominal €15,000 suggests that the court did not consider the offense to be particularly egregious.

[edit] ACN Australia

On 15 November 2004, Australian Communications Network Pty Ltd (the Australian branch of ACN inc.) was investigated by the Australian Competition and Consumer Commission (ACCC) for alleged breaches of the Trade Practices Act 1974 in regards to provisions in the act relating to pyramid schemes.^[16] On 23 March 2005, ACN was found by Justice Selway to have participated in, promoted and induced or attempted to induce persons to take part in a pyramid selling scheme. An appeal to the Federal Court of Australia later reversed the earlier decision made by Justice Selway. The ruling indicated that the alleged "recruitment payments" did not fall under the definitions of the law. The ACCC was ordered to pay court costs.^[16]

The exact words of the court in granting ACN's appeal were:

47 In the present case, there is not present the requisite relationship between the payments in question (CABs and residual override commissions) and the introduction of further new IRs. The receipt of any payments by IRs is dependent on the activities of IRs themselves, and/or of the IRs downstream of them signing up customers for ACN and those customers acquiring ACN’s telephone services. If an IR does no more than recruit other IRs there is no entitlement to any payment. The quantum of remuneration essentially turns on the volume of customers’ business with ACN regardless of whether those customers have been signed up by an IR or a downstream IR. There is no suggestion that the services provided by ACN to its customers are of poor quality or are not commercially competitive. Further, what is payable by the new IR on recruitment is the participation fee, which is not large. The recruiter does not get any benefit from the recruit’s participation fees; they go to ACN. The benefits an IR recruiter gets come not from new recruits but from customers and ACN.

48 We accept that there is a causal connection between the rewards held out to participants and their introduction of IRs in that the reward is based on sales of ACN’s services to the customers of the downstream IRs who form part of the upstream IR’s organisation. However, for the reasons set out above, we do not regard that connection as a relevant, material or sufficient connection for the purposes of s 65AAD(1)(b). It follows that the appeal must succeed.^[17]

It is interesting that the court in the case quoted ACCC's own guideline for determining if a multi-level marketing "scheme" was legitimate^[18], and used it as part of its argument for granting the appeal. Why the ACCC did not compare ACN's compensation plan against its own guideline to find that there was no violation of the law is unknown.

[edit] See also

• Multi-level marketing
• Direct marketing

[edit] References