Cost savings are always wanted in any business. As time passes, some technologies or features become outdated. It is still a good idea to review the existing phone and internet costs and see if there is any scope for some savings here and there.
You will be surprised to know that even minimal actions can lead to huge savings without undergoing a technology overhaul. So without further ado, let’s look into some quick and easy to implement telecom cost reduction strategies, followed by those that leverage competition and finally, the nuclear solutions of a technology overhaul.
When it comes to reducing telecom expenses, the first thing that businesses worry about is, implementing a technology overhaul. However, there are many ways, you may call them best practices, which will reduce the costs without any significant expense, investment or overhaul.
Inside wire maintenance covers the wiring on your side of your carrier’s demarcation point. It’s almost always inside your office walls, and once it’s installed, there’s very little that can go wrong.
Most businesses have a phone system and a service vendor that maintains that system. If there’s an issue, that’s who they would call. Wire maintenance costs approximately $5 per month per line. If you have ten phone lines, you could have $50 per month by eliminating a service you don’t need.
Call Waiting, Call Return, Anonymous Call Rejection are examples of phone features that probably shouldn’t be on a business phone line. If you’re paying for these features, call your provider and have them removed. Phone features average $3.50 per feature, per month.
With technological advancement, most of these features have become a part of phone systems. Therefore, don’t pay the phone company for the functionality you’re receiving from your phone system.
Review your phone bill to determine if your business is paying for such functionalities. If you’re not sure about a feature, contact your phone vendor.
If you use some features, but they’re being billed for individually, ask your provider if they offer relevant packages. Many phone companies offer phone line packages that include up to three phone features and the phone line at a lower rate than buying those services separately.
If your business has several business phone lines, but you haven’t checked your rates in years, you’re definitely paying more. Call your phone company and inquire about the availability of discounted line rates.
Competition in the telecom industry is high, and phone companies have responded with more aggressive pricing. It’s possible to cut your line rates in half without making any physical changes to your service or switching to a different provider.
Possible Combined Savings From Above 4 (1-4) Telecom Cost Reduction Strategies:
Let’s say a small business has five business lines from the phone company and a separate cable internet connection. They were paying $5 for Wire Maintenance, $3.50 for Call Waiting (on four of their lines), and $5 for Caller ID. If they eliminated the Wire Maintenance, Call Waiting, and the charge for Caller ID and were able to reduce the cost of their phone lines by $5 per line by subscribing to discounted phone line package (that included the Caller ID) – they could save $17.80 per line, per month, or $89.
If you’re receiving your Internet and phone service from separate providers, consider using the same provider for both. Most carriers offer discounted bundle pricing.
If you’re still using a separate long-distance carrier, have your current phone service provider provide you with long-distance services. Not only should you be able to achieve a lower per minute rate, but you can also eliminate some of the duplicate taxes and surcharges that show up on telecom bills.
If you are paying for deluxe internet packages that include services like web hosting, anti-virus protection, vanity email addresses, or any service that you’re already receiving from another provider, eliminate the services or drop down to a less expensive plan that doesn’t include unneeded features.
If you are receiving multiple bills from the same provider, have that company consolidate your billing. It’s estimated that it cost a company between $15 and $25 to administer one bill payment. If you can consolidate ten bills into one, your company could reduce its administration costs by over $100 each month.
If you’re receiving business phone service from a local phone company, like CenturyLink, AT&T, or Verizon, make sure you analyze each month’s phone bills. Phone companies operate as third party billing agents. Third-party billing charges are typically for services you didn’t order and don’t want. If you don’t routinely scan your bills, you could be paying $10 to $25 each month for a service you’re not using and don’t need.
It’s essential to review your business phone bills each month, especially if you are receiving your service from the local phone company.
Be on the lookout for third party billing charges. More often than not, those are fees for unwanted services that you didn’t order.
Possible Combined Savings From Above 5 (5-9) Telecom Cost Reduction Strategies: The same small business could save another $35 per month by replacing their deluxe cable internet package with a no-frills internet connection added to their existing phone service ($10 to bundle, $10 for more basic internet service and $15 in bill processing).
More and more employees are utilizing cell phones and email, subsequently reducing the number of long-distance minutes their company bills each month. With Voice over IP, long-distance rates have dropped precipitously.
Paying for a bundle of long-distance minutes might have made sense a few years ago but not anymore. Check your bills to see if you’re paying for a bundle of long-distance minutes. If you are, compare the amount of bundled minutes to the number of minutes you actually use. Most likely, it would be more economical to pay for long-distance minutes individually.
Check a few months’ bills to make sure you have an accurate sample. If the number of minutes in your bundle is more than the amount you’re using, contact your provider to see if there is a smaller bundle available or if it would make more sense to pay per minute.
Possible Savings: The company could save an additional $30 per month by reducing their prepaid long-distance bundle to 1000 from 2000 minutes. You might even spot and eliminate some charges that you have been mistakenly paying.
If you have voicemail as a feature of your phone system, make sure you’re not paying the phone company for that service. If you have a phone system with conferencing, you shouldn’t pay the phone company for 3 Way Calling. If you have a Find Me feature with a Unified Communication service, you don’t need to pay for Call Forwarding. Don’t pay for AOL if you have a broadband internet connection.
this small company could reduce their phone and internet costs by $164 per month, or $1968 per year. Not bad, right? Let’s say it was a larger, multi-location company with 100 locations, all with the same setup. Then the savings could be 100 times more significant.
Larger companies are more careful, and what I described above probably wouldn’t happen. However, typically, businesses grow slowly, one office at a time, over the years.
Administers don’t look twice at a $3.50 charge for Call Forwarding. They don’t see the bigger picture and simply process bills. Costs grow exponentially; no one charge sticks out, but they mount up.
Next thing you know, your company is paying thousands of dollars more than they should be for their telecommunication services. It is best to nip such costs in the bud.
However, sometimes a little more effort is required to save costs than these simple tricks. The same are explained in the below sections.
When times change, newer players come into the market. They can provide better services at much more competitive rates. Being aware of such industry changes helps businesses save a lot of telecom related costs. Below are some such cost reduction strategies in telecommunication:
If you haven’t shopped your business phone and Internet services in three or more years, you’re paying too much. Prices have come down dramatically in the last few years.
Telecom salespeople can be annoying and tend to show up at inconvenient times; it would be easy to become overwhelmed and standoffish, but doing so could cost you.
Even allowing just one company to bid could cost you. If the one salesperson is aware of the competitive situation, they could provide pricing slightly below what you’re currently paying.
Your current provider might offer you a lower rate if you renew your business phone and internet services with them. Still, you won’t maximize your savings unless you shop your services with multiple carriers.
If you do shop, don’t limit yourself to your local phone and cable company. There is a slew of smaller carriers that can be more responsive and aggressive with their pricing. If your business is utilizing business phone lines and broadband, that’s one thing. If it requires more sophisticated services, there are probably several other excellent options available.
Sticking with incumbent providers, like AT&T, Verizon, and CenturyLink, can cost you. The phone company’s competition offers more competitive pricing and typically better service. The phone company is just too big to match the level of service smaller competitors provide.
Phone company salespeople will attempt to scare you away from the competition by pointing out that the smaller companies resell their local loops. Don’t be afraid, local loops are dormant stretches of Cable, and the phone company’s competitors can get a problem fixed much faster than you will be able to.
If you don’t want to waste time and shopping for your phone and Internet services seems comparable to a root canal, use a telecom agency.
A telecom agent will shop your services for you and provide multiple pricing examples. In the future, they’ll monitor your pricing to keep you at market leading rates. Best of all, most agents don’t charge a fee for their services.
There is a difference between a reseller and a competitive local exchange carrier (CLEC). CLECs, like TW Telecom, XO, and Integra, have their own networks and utilize the incumbent’s local loop. Resellers buy in bulk and resell the service at a discount. Resellers sell a national provider’s network at a lower price than the national provider. Sometimes they can re-price your network without making any physical changes to your service.
Month to month pricing is always more expensive. Why not lock in lower rates for a period of time? If prices drop, usually you can migrate to a different pricing plan by agreeing to a new term. Some businesses have an aversion to term agreements because they’re afraid they might go out of business and be stuck with a termination penalty. Don’t prepare for failure. If you go out of business, your telecom services will be the least of your worries.
If the above changes are not giving you the desired savings, then it’s time to go nuclear. You have reached a dead-end and need a technology overhaul.
These are revolutionary changes that require time. You might have to switch from the existing equipment or technology; however, the long-run savings would overpower the momentary inconvenience caused.
Why spend $30 to $40 per month for a phone line and all the costs associated with owning and operating outdated technology? Scanning, emailing, and eFax services are smart alternatives to faxing. Here are the reasons to ditch your fax machine and start using eFax.
eFax companies allow you to retain your fax numbers. There’s no reason to maintain a fax machine and pay for a dedicated phone line, paper, and ink. With eFax, your faxes are sent directly to your email inbox, where they can be printed or saved on your computer.
DSL and Cable internet services are oversubscribed and don’t offer Service Level Agreements, but they provide potentially 50 times faster speed than T1. It’s also possible to add a second connection for redundancy (Cable if you’re using DSL, DSL if you’re using Cable) and still cut your internet charges in half.
SIP trunks are less expensive, they don’t carry as many taxes and surcharges, and are more scalable than analog business lines. here are the benefits of converting to SIP.
If you have multiple locations spread across a wide geographical area, you’re probably receiving phone bills from several phone companies. Aggregators offer discounted pricing and can provide the same service on one bill and a single point of contact. Aggregators facilitate inventory management and can help you save on the administrative costs of processing multiple bills.
If you have multiple offices located in different cities, utilizing technology like MPLS can eliminate long-distance calling between offices, allow your company to aggregate phone lines and internet bandwidth (to realize economies of scale) share software and other programs.
if you’re renting phone equipment from a hosted VoIP provider, it might be more economical to purchase a phone system. With purchase, you can eventually eliminate the monthly costs associated with your phone equipment. If you don’t currently own a phone system, you can eliminate the need to pay for conferencing, voicemail, and other phone companies’ call features.
Hosted phone systems have one thing in common, you never stop paying for them. They’re considered a “sticky product” because removing a system requires retraining and some upfront costs.
But a premise-based system can be paid for overtime, and at the end of your term, that expense goes away. It’s typically cheaper to purchase a system and pay for your business phone service separately. After the system is paid for, the savings is significant.
Firewalls, modems, and other routing equipment can be purchased for a lower cost than paying a monthly fee to rent the equipment from your phone company or internet service provider.
It doesn’t matter if your company is under the contract; you can still reduce the size of your wireless bill. Wireless optimization and cost reduction is a risk-free proposition. Unless certain savings thresholds are met, you don’t pay anything.
If you have more than ten phone lines, PRI should be the way forward. Ten business phone lines will cost north of $300 per month. That’s just about what a PRI, offering 13 additional call paths and greater phone number flexibility, would go for.
Many businesses have separate Internet and voice T1s. This is so because there was a time when bandwidth on an integrated circuit was fixed or segmented. You had 24 channels, and if you needed 12 voice paths, you were left with only half a T1 (or 768k) for Internet.
Also, multi T1 (N x T1) integrated T1s were not commonplace. You can now receive 3, 4.5, 6 Mbps, and more with an integrated T1, and prices can be much less than purchasing separate circuits. Partly because an integrated circuit only requires one, not two, pieces of equipment, but also because the people who price circuits feel that there is an upside to selling a voice service because of the potential usage and are more aggressive with pricing.
If you only require an Internet T1, consider an integrated circuit:
Defying all logic, it is often cheaper to purchase an integrated T1 with a minimum number of phone lines than a standard Internet T1. You don’t need to use the voice service. Again, this is due to the upside of voice service, related to potential long-distance and local usage rates.
So now that you know all three kinds of telecom cost reduction strategies, we hope you know what your next course of action should be. Most times, the ‘no technology overhaul’ telecom cost reduction technique works. However, at times competitive and disruptive techniques are required. So figure out what you need.
If you are not sure, please contact CarrierBid and let one of our professionals conduct a complimentary, no-obligation bill audit. We don’t charge a fee for this service or ask for a share of your savings. If the best solution is with another provider or technology, CarrierBid can help to manage that transition for you.