4 Great Ways to Overpay for Telecom Services

Operating within the telecom category is a game of cat-and-mouse. The carriers shake things up just often enough that you can never feel like you've reached homeostasis. In order to have a fighting chance, there are some fundamentals that need to be exercised, but are often overlooked or poorly executed upon due to the dynamic operational nature of the category. Unfortunately, failing to follow these best practices means money is left on the table, often in significant sums. Being aware of but failing to exercise best practices is disappointing enough, but too often we see clients flying in the face of them on rare occassions for otherwise practical or imperative reasons, but more often than not for reasons completely inexplicable. It's those companies we ought to take a look at in order best explore what not to do when managing telecom spend.

Over-consolidate

There are a lot of benefits to consolidation: improved supplier relationships, reduced costs, increased efficiency, gained visibility, simplified infrastructure, etc. And while consolidation comes with risks, it also comes with a loss of leverage. As you consolidate and focus on your "preferred" carrier, you are losing touch with alternates and lack the ability to posture or demonstrate a willingness to move services away from your preferred carrier. This is not to say you cannot compete business; you can definitely still do that, but don't expect your preferred carrier to come to the table with as attractive an offer as they would if they were routinely tested against one or preferably a few of their competitors.

Be a Captive Customer

Not to be confused with consolidation, you will compromise leverage as a captive customer by consuming critical services that cannot be easily decoupled from the rest of your infrastructure. Large-scale custom fiber builds to support head ends of an MPLS wide area network (WAN), deeply integrated SIP and Cloud-connected services, carrier provided colo space with restrictive cross connect policies/costs, etc. are all good ways to make sure the carrier knows you're unlikely to go anywhere anytime soon. Similarly, allowing the carriers to spread service/circuit terms across multiple years leaves you in a similar bind. Through service deployments and contractual hooks, the carriers will gain the upper hand and can confidently be more reserved with their renewal proposals.

Renew Near the End of Term

Waiting too long to begin working on a renewal will compound your consolidation and captive customer woes. The best way to enhance your leverage is to leave yourself plenty of time to identify and move services to an alternate if your incumbent won't come to the table. Often, that means planning about two years before renewal and starting sourcing and negotiations about 18 months out. Any longer a deferment will show your incumbent you're not serious about moving and likely can't move within the timeframe you have, so you should expect any offers you receive from them to reflect that.

Don't Mind the Market

The telecom market is notoriously challenging to keep up with. Mergers are happening all the time, new services are being rolled out and rolled up daily, and as technology shifts, so does pricing. Anyone who has worked in the telecom category knows that pricing trends downward. What's more difficult to track, though, is how much pricing has shifted downward, and if a renewal for existing services makes sense or if an upgrade may be possible with an alternate technology while still saving money. These types of questions are not easily answered internally as being tuned into the market over the entire course of a 3 year agreement is impossible while keeping the lights on and all the plates spinning.

It takes a lot of time to plan for and manage these facets of your telecom spend. Even with the best laid plans can be easily sent off track by carrier tactics, operational imperatives, and other priorities and distractions. For help developing and managing a long-term telecom category approach, contact Source One.