This report was first published in 1999 and is re-published here as an historical record for information purposes only.

TELCOM-TECHNOLOGY REPORT

© 1999 Michael Klimek.

CRITICAL LEARNING FOR YOU RE: THE LATEST MLM DEATH

“LocalNet is dead and eTV is alive after Compudawn foreclosed on the loan to LocalNet and acquired all assets.”

It took only 18 months for this MLM baby to become a  corpse. It was almost too predictable. The hype was deep.  The promises immense. The pregnancy… eternal.

But guess who paid?

Yes, the “little guy”. I hold in my hands the original hard copies.

LESSON #1: Avoid Hype like the Plague!

“Instant Credibility & Strong Financial backing”  – LocalNet

“Align yourself with Ted Turner Jr… son of Billionaire  Ted Turner (Turner Broadcasting-TBS-CNN-Atlanta Braves).

Jim Palmer — family founded one of the largest Paging  companies in the USA — Skytel.

Rudy Theale Jr.–started PrePaid Cellular phones.

LESSON #2: Avoid “technology” Products Like the Plague:

(i.e. long distance, new technologies, deregulation of  public utilities, etc)

>From SUCCESS MAGAZINE, February 1998:

“Twisted Pair: Teddy Turner and Rudy Theale say Super Fast  Internet access and 30 Frames per Second Video on plain old phone lines is coming plus “start anytime pay per view movies “across your phone lines”.

Can you say “Eternally Pregnant”? The “baby” was never born  — never delivered. Another “Untapped Trillion Dollar Market”  down the tubes!

LESSON #3: Don’t Believe “Lucrative Compensation Plan -  7 Ways to Earn”.

Doesn’t this have a ring of “deja vu” to it? Doesn’t Every  MLM company say this? What you have to ask yourself (and  your calculator) is:

Lucrative for WHO?

The company?

The few Heavy Hitters at the top?

Or really lucrative for the 90% part timers?

Can I have $495 from you for an “Area Representative” Training package? Sound familiar? Excell? ACN? Etc? Guess who makes the $ here?

The minority “sales types” and “big hitters”.

Lucrative? Does 2.5% payout on 4 levels fit YOUR description of “Lucrative”?

THE OLD SCHOOL MLM TRICK: BURY THE BIG PAYOUT DEEP WITHIN THE PLAN, OUT OF THE REACH OF THE PART TIMER! Why would they pay out 15% and 20% on the sixth and seventh levels?

Answer from the Hype Meisters: “That’s where the “big numbers” are from “geometric progression”

WHAT THEY DON’T WANT YOU TO KNOW: 99% *NEVER* see any significant  numbers on their deeper levels. WHY? Because the weak payout on  the first few levels create a negative cash flow for the part timer — and they quit!

SECRET: It *IS* “Lucrative” for the Company and the few “Heavy  Hitters” since the business obtained by the long-gone part-timer rolls up to them!

LESSON #4: Avoid Start Ups Like the Plague !

“LocalNet is a “Ground Floor” opportunity. YOUR chance to “Get  in NOW” before the rest of the country finds out about this opportunity”

“Once in a Lifetime Opportunity to be positioned in the Right Place at the Right Time with the Right Company”

Under the ground, not ground floor, may be a more accurate  description!

Does “AOL Goes MLM” sound familiar too?

LESSON #5: Don’t believe in the “Resurrection”… unless it’s part of your Religion! MLM history has demonstrated, time and again, that “pulling the rabbit out of the hat” is done by magicians — not businesses!

LocalNet is dead and eTV is alive after Compudawn foreclosed on  the loan to LocalNet and acquired all assets. LocalNet and eTV are kept separate.They are suppose to be different companies only they have the same owners, employees and location? Hmmm….

You may want to check out http://www.teamlocalnet.com for another side of the story.

“Hex, Lies and Videotapes”: MLM Telecommunication Companie

Michael Klimek ©1999

(Hex according to Webster: “A Spell…Enchantment”)

Most of us have been “Spellbound” at one point or the other regarding MLM and telecommunications. I know I have. I was a  cofounder and owner of an MLM Telecommunications company!

There is just one little problem — up to this point there is little $ to be made in it for most network marketers! It is NOT totally the fault of the MLM telcom/technology companies. The profit margins are simply too small.

More on this later.

But here is why we get “Enchanted” with the lure of Big $ promised on those slick promotional videos from most MLM Telcoms.

How can anyone resist this?:

“Get your share of the International Trillion $ Telecommunications Industry!

• No selling!
• No lotions, potions or pills!
• No meetings!
• No $ out of pocket!
• Something everyone has to use-the telephone!!

Imagine making $ every time someone:

• Makes a long distance call!
• Makes an international call!
• Sends a long distance fax!
• Uses a prepaid calling card!
• Uses monthly paging!

Sounds Awesome…right? Well, let’s look at one example that is public record. (Note: this is the Rule, not the  exception!)

Excell Telecommunications:

$18,654,888 was Paid Out to 74,721 Distributors. Out of these, 52,287 were paid less than $100 for the year!

Fact: 7 out of 10 made less than $9 per month!

Why is this? Not enough profit margin in telcom/technology products and greedy profits by companies who bury the payout  deep in the plan in reach of “Big Hitters” only.

Do the math! Let’s say the average long distance residential bill is $40. If you get paid the proverbial 1/4% to 1% downline — there is simply not enough profit.

Every week I get asked “my opinion” on some MLM telcom opportunity. I always answer by saying “Forget my opinion, get your calculator out. You tell me how many distributors/customers you’d have to have  to make $1,000 per month… OK?”

The answer I get back is always in  the 300-600 range. 95% in MLM never see a downline of even 50!

The Solution to this Problem?

The false solution is “Coding Bonuses” — $499.99 Training packages! (By the way, the reason you will see these training packages right under $500 is because that is the price point above which Attorney Generals get VERY interested!)

The reason that this is an “empty bag” is that it’s a one time  bonus — no monthly residual income. It’s not a consumable product.

A verification of this comes from MLMTRUTH subscriber Doug Wilk:

“I’ve looked at recruiting revenue from the first 6 months of 96 and  97 and 1998 for EXCEL and have seen it drop from 149 million to 65 million to 37 million this year.”

As a former MLM Telcom owner I really appreciate why this has been  created… the intent is to allow people to make some “survival $”.

In most cases, it takes close to 2 months to see your first  commission check on long distance usage, etc.

The Bottom Line

For the record: MLM Telcom/technology companies ARE the exception to the rule when it comes to having a “compressed payplan” that pays out the 60-70% on first 3 levels. There simply is not enough profit margin in the products and services to accommodate that payout.

The dream of MLM and Telecommunications products/services is awesome.  As of today, working with a MLM Telcom is (at best) a supplement to your primary MLM Business to lower business costs. (Unless you are  a heavy hitting recruiting machine.)

This fast changing technological arena is mind boggling — who knows what the future may hold!

Technological breakthroughs will see today’s MLM Telcom Icons brought to their knees with massive defections, the likes of which have never been seen before in the industry.

Here are some “hints”

Excerpts From World News Tonight:

* INTERNET IS REVOLUTIONIZING LONG DISTANCE CALLING:  5 Cents Per Minute from ABC’s “World News Tonight”

***NOTE: This is NOT using an “Internet Phone”!

GINA SMITH, CHARLES GIBSON 06/18/98 © Copyright Federal Document Clearing House. All Rights Reserved.

GINA SMITH, ABC News: (voice-over) Larry White’s long-distance phone bill used to be enormous, then he discovered Internet telephony.

LARRY WHITE: It’s amazingly easy to use. You do have to dial a few extra numbers, but the cost savings is tremendous.

GINA SMITH: (voice-over) Using a new service from the IDT long distance company, White gets long distance at a rate of ***five cents a minute.****

That’s about half the rate of the cheapest long distance calls today, and it’s possible because it routes the calls through the Internet.

Unlike phone calls that travel through the traditional telephone network, this new method lets callers use a local number, which sends their voice over the Internet and then back to a regular phone line to the person on the other end.

(Voice-over) IDT works in more than 60 U.S. cities, making it the  largest Internet telephone service, but not for long.

*** Most major carriers are planning similar services nationwide***.

Thanks to that and the resulting competition, analysts say that within a year, all long distance calls will be cheaper.

VIK GROVER, Analyst: It will help bring costs down across the board for consumers, both from their homes and via prepaid calling card platforms.

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© 1999. MLMTRUTH. All rights reserved.