What to Look Out for When Conducting a Telecom Procurement

business phone and internet service providers

If you’re a IT or procurement professional and responsible for conducting a RFP for your company’s phone and internet services, here are some items to look out for:

Auto renews:

Auto renew clauses will come back to haunt you.  They are typically in competitive local exchange carrier contracts, like XO, TW Telecom or Paetec.  You want to be in control and have options when you contract approaches expiration.  Read through your carrier’s terms and conditions and have them eliminate any auto renew clauses.

This is the seventh installment of CarrierBid’s eleven part series on the telecom procurement process.

Circuit commitments:

A single, realistic revenue commitment is far less onerous than many circuit commitments.  If you have a revenue commitment in the 50 to 60% range, you should be able to negotiate rate revues around mid term.  Individual circuit commitments that expire at different times reduce your leverage and are difficult to manage.

Inflated carrier traffic estimates:

If you rely on a carrier to determine your voice and data traffic levels, most likely you’ll have commitment levels that are high and difficult to achieve and be more likely to experience short fall penalties.  Higher commitments will reduce your leverage and flexibility.

Incumbent team going over your head:

If you’ve been assigned the task to negotiate new pricing for your company’s telecom services, expect your carrier account team to engage their executive management for assistance – who will approach your company’s executive management and undermine your efforts.

Delay tactics:

You need time on your side of the negotiating table.  Incumbent providers, like AT&T, CenturyLink and Verizon, know this and will do whatever they can to delay the process and evaporate your time.

The Phone Company is Not Your Only Option

Reneging:

Agreeing to terms and then reneging, works in two ways.  It delays the process and forces you to renegotiate for terms.  By agreeing to terms a provider can place itself ahead of the competition.  You might find yourself with fewer options because you moved forward in the telecom procurement process due to false or misleading information.

The introduction of new commitments, terms or fees late in the negotiation:

Same as reneging, the telecom provider verbally agrees to terms but then places paperwork in front of you that reads different than the terms you agreed upon.

Adverse terms addressed in the service guide or tariffs:

If you receive a streamlined agreement with a limited number of terms and conditions this is because the bulk of the provider’s T’s and C’s are spelled out in their service guide.  It’s important to understand what’s contained in the service guide and negotiate terms that override the adverse terms in the guide.

Sales people saying yes:

Telecom carrier sales people say “yes” so you’ll say “yes”.  Nothing communicated verbally during the negotiation overrides what’s written in the carrier’s agreement or service guide.  Make sure everything you negotiated for is written into the agreement.

Relax after the deal’s signed:

After you pick a business phone and internet service provider and sign an agreement, you need to make sure you receive all the pricing, terms, credits and incentives that you negotiated.  It’s best to tabulate all the key terms and pricing to use as a checklist, to facilitate this process.

If you would like to receive more information regarding CarrierBid’s telecom consulting and procurement services, please complete the form on the right side of this page.

About John Gelhard

Cofounder of CarrierBid - 20 years of experience in telecommunications - working for local phone & cable companies, competitive carriers, VARs and interconnects - including CenturyLink, AT&T, Cox & TelePacific.

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