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Cheaper Rates Don’t Always Mean Lower Costs

telecom carrier tactics

Whether it’s local, long distance or even wide-area network (WAN) services, you have agreements and get billed from a variety of carriers in a variety of ways.

In a perfect world, this would be standardized across carriers and predictable. But if that happened, it would hurt the carriers’ profits. As they say, the devil is in the details. The more complex the agreements and bills, the easier it is for carriers to pad their pockets at your expense.

Below we will look at some common ways that carriers routinely take advantage of their customers like you.

Surcharges and fees

This may come as a surprise, but not all fees and surcharges are local, state and/or federal. Some are simply to help the carriers keep the lights on or pay for CEO bonuses. Examples of these are recovery fees, regulatory compliance fee, access recovery, federal access reform and dozens of others.

The truth is you may be quoted a local PRI at $450 per month, but by the end of all the additional fees it really costs you $650 per month or more. This is true for internet services, long distance and WAN services. No telecom services are immune.

This practice is unfortunately employed by most providers sooner or later. The question to ask is not whether your carriers charge unnecessary fees, but to what degree they participate.

Ask your carriers to outline all the charges you can expect. Or even better, ask your agent to find out for you.

While some taxes and fees can’t be given in an exact amount prior to signing a contract, you should be able to get a reasonable estimate and a summary of fees.

If you aren’t sure which fees are legitimate versus which ones are bogus, consider having an experienced telecom professional review your bills and contracts to eliminate unnecessary costs.

Auto-renewals

When signing a telecom agreement, there are a few basic terms that are involved regarding the business components: the rate, the commitment and the term. The rate and commitment are relatively cut and dry, so we will focus on the third: the term.

When it comes to the term of an agreement, the devil is in the details. Most agreements have a primary term of 1, 2 or 3 years with a subsequent renewal term that can be auto-renewed on a month-to-month basis (annually, or worst case equal to the primary term).

Most telecom agreements have clauses that require prior written notice of 30, 60 or even 90 days to the primary term’s expiration or the customer will be auto-renewed for an additional renewal term. This auto-renewal clause is an additional means for the carriers to lock-in customers for a subsequent term if the customer is not on-top of their agreement renewal dates.

It has been our experience that most customers have IT departments with so much on their plate that managing carrier agreement auto-renew clauses is quite difficult.

Whenever possible, we recommend that a client have this language removed from the agreement prior to signature. This allows the customer the ability to negotiate or change providers at the time of renewal.

The bottom line:

Ending auto-renewal clauses puts the customer in a position to better negotiate terms or seek a new vendor at the time of contract expiration. In the case that an agreement auto-renews, most clients have no position and are at the mercy of the current carrier. Don’t be that customer! Trust us when we say it can be a frustrating situation and severely limit your ability to explore potentially more reliable and cost-effective solutions for your business.

Guaranteed discounts instead of guaranteed rates

Without listing names, you should know that some providers will guarantee a discount in the agreement. They won’t guarantee a rate, just a discount.

Do you see the problem with that? 

They will even go so far as to tell you that the underlying rate will change, but the discount will remain the same. Make sure your agreements always guarantee a rate and not a discount.

Inbound 8xx service charges

Another widely adopted carrier practice is to charge for features related to toll-free (8xx) inbound services, especially on dedicated services that would allow for time of day/week/hour routing, percent allocation, geo-routing, super trunking, etc.

Be careful because these charges are often associated per number, which can be quite costly for call centers with hundreds or even thousands of 8xx numbers.

If, for example, you have 50 8xx’s and you are routing to separate facilities using percent allocation, you could pay $100, or even more, per 8xx to use this feature. In this example, the company would pay $5,000 per month for this service. It’s a feature they need and they will use, but all of these fees can and should be negotiated up front, so you’re not at the carrier’s mercy when you need them.

In the eyes of the carrier, your ignorance is their bliss. Knowledge is power so be sure to ask the right questions and get everything in writing up-front.

8xx Resporg charges

Lastly, carriers have a monthly charge that is billed by the entity that provides the national 8xx database.  You may be surprised to learn that they charge the carriers $0.01049 cents per 8xx in order to route in the 8xx SMS database.

Most carriers charge between $1/month and $5/month for each 8xx. This is generally a negotiable charge, especially when you’re dealing with hundreds or even thousands of 8xx’s.

These are just the tip of the iceberg, but very common among telecom bills and agreements. Passive billing long distance, paper-billing fees and countless other potential made-up charges could be dragging your IT budget down.

In an era where IT professionals are constantly asked to do more with less, be sure that you aren’t throwing money away and lining the pockets of your providers unnecessarily. If you aren’t as familiar with this process as you want to be, get somebody involved who knows how to look at these bills and contracts and discern fact from fiction when it comes to charges and fees.

Contact EnableIP today if you have questions.

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