High commitments do not improve your leverage with telecom carriers.
The carriers want you to believe that the more business you commit to their company, the more bargaining power you’ll possess, but high commitments will have the opposite effect.
This is the third installment of CarrierBid’s eleven part series on the telecom procurement process.
Lower commitments will improve your flexibility, could lead to midterm rate reductions, will make business downturn or reduction more palatable and facilitate migration to less expensive technologies, like SIP.
The first step is to know your traffic and inventories. Without that information you won’t know what figures to aim for in your negotiation with carriers, like CenturyLink, AT&T and Verizon. Don’t rely on the carrier to calculate this figure for you; they tend to overestimate and are biased.
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Lower commitments control carrier behavior. Commitments of fifty to sixty percent are realistic and available.
Beware of no commitment agreements; they tend to be per circuit agreements and can be far more onerous than revenue commitments.
Low commitments amplify leverage. If you’re not over committed, you have control and options. If you’re over committed, you’re restricted and at the carrier’s mercy.
CarrierBid can help you with any step of the telecom procurement process. We don’t charge a fee for our service or require a share of your savings.