Negotiating the Best Telecom Deal

The one constant in the world of telecom is that everything is negotiable. If you plan to spend $100,000 in usage every month, you can probably press to get installation fees, as well as small monthly recurring charges, waived. Thousands of carriers out there want your business, so check out a handful of them to see what kind of a bidding war you can start. Here are some tips to help you on your way to finding the right telecom fit for your company.

Getting the timing right

The landscape of telecom has been getting more and more competitive, with rates dropping, so don’t get stuck in a lifetime commitment. Opt for a contract that lasts only 12 months. With that in mind, the best time to start looking at a new carrier is probably about eight months before your contract is up. That may seem like a lot of time to kill, but investigating a new carrier and determining whether it has the pricing, service, and support that you require can take a bit of time.

If you have dedicated circuits, it will take almost two months to install the replacement circuits on the new carrier. It will also take a month or two to work through the wording and negotiate the contracts. This is especially true if you are a busy company and cannot devote all the required personnel in your company to focus on this one task. The four months it takes to actually make the move to activate service is probably the same amount of time you will spend looking at new companies and weeding them down to the one that interests you.

 Remember  Of course, these are ballpark time frames that can vary quite a bit. The point is to allow more (not less) time. If your company is growing and has little time to meet on issues like this, it may take eight months to get everyone together who has to approve the change to meet enough to make a decision. You could also be in a remote location where dedicated circuits may take three months to install. You will have to crunch the numbers and see whether the savings are worth the effort. If you are only looking at a $200 savings per month on a $5,000 bill you can probably renegotiate that with your existing carrier. If it is a $10,000 savings on a $120,000 monthly invoice, you will probably want to pursue the new carrier.

Dealing with least cost routing over several carriers

If your company is large and can use several dedicated circuits, you can maximize your savings by adding on more long-distance carriers. The wonderful thing about long-distance carriers is the fact that they are like snow flakes; no two are exactly the same.

This rule also applies to their pricing plans. Every carrier has areas in the U.S. and internationally where calls are inexpensive and other areas where they are not so competitive. If you currently have two or three dedicated circuits and a good phone system, you can build a least cost routing (LCR) table into it that identifies which carrier has the best rate. Then route those calls by using the appropriate carrier. There are two main things to bear in mind when you are going to activate an additional carrier to use in this kind of routing:

• Make sure you will meet your commitment levels on the old carrier. Most long-distance contracts for dedicated service give you a great per-minute rate, but they require a monthly minimum usage from you. After a ramp-up period of 30 or 60 days, you have to bill out $2,000 in usage per month to get your 2.5 cents per minute rate to Texas (or wherever). If you don’t make enough calls, something bad might happen.

   Remember  Carriers don’t make a habit of charging shortfalls, but shortfalls could invalidate your contract. The carrier is within its rights to assess the shortfall to your company or raise your rates. If you bring in a second carrier to save some money on your international calls as well as select areas in the U.S., you need to be sure that when that traffic is moved, you can still hit your commitment level with your primary carrier. Can you imagine telling your employees to make more calls?

• Ensure that you set up the LCR table correctly. Long-distance carriers have many different breakouts for pricing. Some may charge you a flat rate for all calls within your state, and another flat rate for all calls out of state. Regardless of where you dial, what time of day you dial, what day of the week you dial, and so on, the rate is always the same. Other carriers may break down the pricing per state, or base it upon smaller geographic regions within each state called a Local Access Transport Area (LATA), or even base it on the specific local carrier that receives your call. You want to make sure that you understand the level at which each carrier bases its rate so that you can build your LCR table accordingly.

For more information on how long-distance carriers determine the per-minute rate, check out Chapter 6.