Is it time to negotiate a new telecom contract?

Excellent! After reading this article, you’ll be ready to negotiate your next telecom contract like a seasoned pro. The first steps to successful telecom contract negotiation begin with simply understanding the key areas on which most contracts are based.

Simple sound? It is, so let’s get started!

Telecommunications contracts: do we really need them?

Companies sign contracts for all kinds of telecommunications services. In fact, you may have contracts in place for local, long distance, wireless, voice and data calls, etc. Please note that the information in this article can be applied to almost any telecommunications contract negotiation.

A telecom service contract is an easy way for a service provider to lock you into a predetermined rate structure and set of conditions for a specified period of time. Having current contracts makes it easier for a carrier to count customers. Multi-year contracts also help solidify the customer base; in other words, they can count on predictable income.

Contracts can also be an advantage for you. Having current contracts takes the guesswork out of performing routine audits of your telecommunications services. You will never be able to verify that your accounts are billed correctly without using the contract terms and fees as a comparison.

The 7 key elements included in almost every
Telecommunications contracts you will sign

Listed below are seven common features and elements that will arise when negotiating your telecommunications contracts. Use them as a “checklist” before you start. It is better to know what you want before negotiations begin.

Keep in mind that the best deals seem to materialize when there is a “win-win” element involved. Focus your negotiations on just two or three critical elements that will make the biggest difference and have the most value to you and your business.

1. Most operators will combine different offers to maximize volume and overall revenue. Today more than ever, carriers are fighting to be your one stop shop for a variety of telecom services. Just because they CAN provide you with all telecommunication services doesn’t mean you should follow their advice. Drive one at a time, then see how the overall package can be put together to your benefit and maximum savings for your business.

2. All telecommunications contracts will require a minimum volume commitment. This commitment is usually in terms of pre-discounted monthly income. Variances could include annual usage, net revenue amounts, or total minutes of usage. Determine your level of commitment based on previous months or years. Note that additional sub-commitments are often included for specific service items. FACT: The more volume you offer the carrier, the better rates you can negotiate.

3. All require a minimum term commitment.
Two- or three-year terms are most common, but contracts can be written for shorter or longer terms. Like volume commitments, the longer the term, the better the rates. Service providers are generally willing to renegotiate an existing contract, even if only half of the contract remains. Before you renegotiate an existing contract, make sure there are no penalties or early termination fees on the existing one.

4. Net fares are generally expressed in terms of specific discounts off regular published fares.
However, some express specific rates instead of the service guide prices. Bottom line? Make sure you know which is which during negotiations! Always make sure you know the EXACT terms of the agreement before signing on the dotted line.

5. Some published fees may be specifically removed.
These exemptions are common for installation charges and certain elements of private line billing. Be sure to request a waiver of these types of fees during your negotiations. After all, you won’t get it unless you ASK!

6. Most telecommunications contracts include a provision that is included for promotional and other credits.
These are applied at scheduled times to offset the conversion costs of the services of other operators. Be sure to make specific notes of these credits at the time of the negotiation so that you can be sure that they were actually credited in the future as read in the contract.

7. All telecommunications contracts provide for sanctions in case of non-compliance.
Sounds basic, but… ALWAYS make sure you understand the penalties and costs associated with violating the terms of the contracts you sign. The fines and fees can be substantial, so be sure to provide all contract information to the new hires who will oversee telecommunications in the event the original negotiator leaves or transfers.

Business and technology recession clauses

While not always offered by the carrier, many companies are now asking for business recession and technology provisions.

For example: a business downturn provision would allow a client to renegotiate the agreement if the company is unable to meet its minimum commitment levels due to unforeseen changes in the business itself (ie bad economy, layoffs, etc.). Typically, a carrier will renegotiate a lower commitment level in exchange for a longer-term commitment.

The Technology Rider protects a customer if they decide to switch services to more advanced technology, resulting in lower usage levels on initial services. An example of this is a company moving from a private line network to a virtual private network or frame relay.

A successful telecom deal can make a big difference in your company’s “bottom line” telecom spending. Plan your strategy. Familiarize yourself with the basics and always remember: Everything is negotiable!