Business Downturn and Technology Clauses

While not always offered by the carrier, many businesses are now asking for, and receiving, business downturn and technology provisions. A business downturn clause would allow a customer to renegotiate the agreement if the company cannot meet its minimum commitment levels due to unforeseen changes in the business itself. Usually a carrier will renegotiate a lower commitment level in exchange for a longer term commitment.

A technology clause protects a customer if they decide to change services to more advanced technology, resulting in lowered usage levels on initial services. An example of this is a company moving from a private line network to a frame relay or virtual private network. Successful negotiation can mean a big difference in your company’s telecommunications costs. Carefully plan your contract strategy, focus on two or three key issues, and remember everything is negotiable.

Customer Service Record

No telecommunications audit or cost-reduction study is complete without a thorough review of local service records which are commonly referred to as the Customer Service Record or “CSR”. While a simple review of bills can reveal cost-saving savings opportunities, Customer Service Records contain very specific information and data. Most providers will only release a copy of a CSR when specifically requested by a customer or auditing firm on their behalf.

What is a CSR?

A CSR is a copy of how your telephone records appear in the telephone company’s database. It contains information about each separate line charge that encompasses your monthly service charge on your bill.

In addition, a CSR reveals the service location of the account, the billing address, additional directory listings, PIC designations, hunting order, features that are being charged and on which line these features appear, calling plans that may include monthly charges, and taxes applied to each of the items on the record.

Universal Service Order Codes

Customer Service Records are written in codes, commonly called USOC, or Universal (or Uniform) Service Order Codes. These codes are literally a foreign language to most, so allow yourself plenty of time to become familiar with the USOC codes used by your local carrier.

Four Main Sections of the CSR

Header Record Section

The Header Record section is found at the top of the CSR, and details information about the CSR and the account itself. While CSR’s do not always contain identical information, generally the header section will include: the print date, billing period, directory, class of service (business or residential), customer identification code, account number, USOC code and quantity of service items, description of service, unit rate, total monthly charge, and tax.

The List Section

The List section identifies whether or not the account is listed in the white pages of the telephone directory, as well as how the listing reads. Ironically, there is an extra charge for non-published listings, unless there is already another account listed at the same service address. The code NLST indicates that it is NOT listed in the telephone directory although it still may be listed with directory assistance operators. SIC defines the service industry for proper Yellow Pages headings.

The Bill Section

The Bill section of the CSR includes: bill name (BN1), bill address (BA) and tax area (TAR) for the account. The billing address is often different from the bill name.

The Service and Equipment Section

This section is the most important part of the CSR. Since this area lists all charges associated with each phone line, the bill section is also the area where USOC and nomenclature translations are necessary, in order to identify the exact line items. It is this area of the CSR where you will spend the bulk of your auditing time.

Obtaining and reviewing CSR’s is the most important part of the telecom auditing process. A thorough audit can be a daunting task, but potential savings make the effort well worth the time.

In the next part of our series ‘Guide to Business Phone Service’ - Part 5 we will go over some common telecom terms and acronyms and discuss audioconferencing solutions.

Evaluating Business Telephone Services

Before you start talking to potential phone service providers, know the answers to these questions:

1. How many phone lines will my business need?
2. Do I make primarily local or long distance calls?
3. How many call minutes do I have in a month?
4. Does my business require international calling?
5. What are my local and LD calling patterns?
6. Do I need toll-free service, or a vanity number?
7. Are my current phone numbers portable?

By having a comprehensive understanding of your current call patterns and volumes, as well as your future call requirements, you will be well positioned to select the right business telephone service provider for your company.

Successfully Negotiating Your Telecom Contract

Businesses sign contracts for all types of telecom services. In fact, you may have separate contracts in place for local, long distance, wireless, voice and data, etc. Keep in mind this information can be applied to just about any telecommunications contract negotiation. A telecom service contract is an easy way for a service provider to lock you into a pre-determined rate structure and set of conditions for a specified term.

Having contracts in place makes it easy for a carrier to count customers. Multi-year contracts also help solidify their customer base. In other words, they can count on your predictable revenue for the term of the contract. Contracts can also be to your advantage as well. Having contracts in place eliminates the guess work when conducting routine audits of your telecom services. You’ll never be able to verify that your accounts are being billed correctly without using contract terms and rates as a comparison.

Key Elements of Telecom Contracts

Listed below are some common characteristics and elements that will arise when negotiating your telecom contracts. Use them as a checklist before you begin. It’s best to know what you want before negotiations begin. Keep in mind that the best deals seem to materialize when there is the element of “win-win” involved. Concentrate your negotiations on just two or three critical items that will make the biggest difference and have the most value to you and your company, and be willing to give in on others with less significance.

1. Many carriers will combine different offerings to maximize overall volume and revenue.

Today more than ever, carriers are fighting to be your one-stop shopping for a variety of telecom services. The fact that they have the ability to offer you every telecom service, doesn’t mean you should follow their advice. Handle one at a time, then see how the overall package can be put together for your benefit and maximum savings for your company.

2. Most telecom contracts require a minimum volume commitment.

This commitment is usually in terms of pre-discounted revenue per month. Variations could include annual usage, net revenue amounts or total minutes of usage. Determine your level of commitment based on previous months or years. The more volume you offer the carrier, the better rates you’ll be able to negotiate.

3. Most telecom contracts require a minimum term commitment.

Two or three year terms are most common, but contracts can be written for shorter or longer periods. Like volume commitments, the longer the term, the better the rates. Service providers are usually willing to renegotiate an existing contract, even if only half the contract remains. Before renegotiating an existing contract, be sure that no early termination penalties or fees exist in the current one.

4. Many of the listed telecom charges are often specifically waived.

Such waivers are common for installation charges and certain elements of private line pricing. Make it a point to ask to have these kinds of charges waived during your negotiations. After all, you won’t get it unless you ask, right?

5. Most contracts include a provision that is included for promotional credits.

These are applied at scheduled times to off-set costs of converting from other carriers’ services. Be sure to make specific notes of these credits at the time of negotiation so that you can be sure they were actually credited in the future just as the contract reads.

6. All telecom contracts provide for penalties if the terms are violated.

It sounds basic, but always be sure you understand the penalties and costs associated with violating the terms of the contracts you sign. Penalties and fees can be substantial so make sure all contract information is provided to new employees who will be overseeing telecommunications facilities should the original negotiator leave the company.

In the next part of our series ‘Guide to Business Phone Service’ - Part 4 we will discuss business downturn and technology clauses and the Customer Service Record (CSR).

Selecting a Business Phone Service Provider

Federal deregulation, as well as increased competition in the telecommunications service market has made it possible now to choose different providers for each element of your overall phone service. Thus, you may use one provider for local calls, a different one for long distance, and yet another one for teleconferencing. As virtually all providers use similar technology, call quality is consistently high among telecom companies. The two main factors to consider when making your decision are cost and the quality of customer service.

The lowest cost providers may seem attractive, however they often don’t offer a higher level of customer service which you may receive from a more established provider. In contrast, service from a long established provider can be quite a bit more expensive. Balance your needs for low costs with your requirements for quality customer service. Take your time during the provider selection process and determine each company’s support hours and policies. Always obtain references from other customers with similar businesses, then check them.

Billing Increments

Another important distinction between telephone service providers is the billing increment, which is defined as the smallest amount of time you can be billed for. For some companies with huge call volumes, the cost differences due to differences in billing increments can be staggering. A few providers billing increments are as large as one minute, meaning that a 61-second call gets billed as two minutes. Always negotiate to obtain the smallest increment possible; many providers offer billing increments as low as six seconds.

When reviewing billing increments, there are two elements to check for. First is the initial billing increment, which is applied as soon as your call is connected. After that, the rest of your call is billed using the additional billing increment. As noted above, both can potentially have a huge impact on your overall bill, particularly if your business makes a lot of short calls. Reducing your billing increment can save up to 25% on your overall bill. Of course, if you have a package with unlimited long distance calls, the billing increment is irrelevant.

Other Services

Another key aspect of selecting the right phone service provider is to determine the billing services each prospective provider offers. Do they simply send you a bill at the end of the month, or do they have an online service that lets you track your usage on an ongoing basis? Do they offer online payment options? Make sure the telephone service provider you choose offers the flexibility in billing options your business requires.

Most providers today include basic features like call waiting, caller ID, and call forwarding as part of their standard packages, but not all of them, so be sure to determine that as well. Some providers also include extras like auto-attendants, teleconferencing, and voice mail. If your business phone system (PBX or Key System) doesn’t include these features, consider obtaining them from your business telephone service provider.

Business Phone Service Pricing

Expect to pay $40 to $80 per month per phone line for bundled business phone service packages with unlimited local service and standard calling features. Long distance rates range from two to 10 cents per minute once you go over your allotted minutes. With all the different plans available, you shouldn’t ever have to pay more than a few cents a minute for domestic long distance.

Again, always know the billing increment.  A plan with one-minute billing increments at four cents per minute can easily cost you more than a plan with six-second increments at six cents per minute.  Some providers will require an activation fee of $20 to $40 per line, but usually they are willing to waive that charge to get your business. Always ask any prospective provider to waive all activation fees - and let them know you will be inclined to go with one who will. Other long distance plans that offer a low per-minute rate may require you to make a certain number of calls or maintenance fees may apply, which can be up to $100 or more per month.

Pricing structures for toll-free numbers consist of a monthly service fee of up to $50, plus per-call charges that can range anywhere from $0.05 to $0.20 per minute, depending heavily on call volume. Vanity toll free numbers are usually always more expensive than their conventional counterparts.  A myriad of other fees, charges, and taxes are included in every business telephone provider’s pricing structure. For example, federal taxes are about 3% of monthly charges, and Universal Service Fund fees, which is a government-mandated charge to promote quality services at affordable rates, will add another 6% to 12%. These additional charges will apply no matter which provider you choose.

In the next part of our series ‘Guide to Business Phone Service’ - Part 3 we will explore the evaluation process of different  Business Telephone Services.