Six Ways To Reduce Your Corporate Telecom Expenses
December 15, 2009
As IT budgets come under increased pressure, addressing wasteful telecommunications spending is more important than ever. This two-part article will outline six cost reduction opportunities that an enterprise can quickly explore without compromising network integrity or requiring in-depth negotiation with its telecom providers. Savings achieved by identifying and executing on these types of opportunities can yield a minimum ten percent reduction in telecom expenses. Let's dive into the first five cost-saving opportunities.
1. Identify and eliminate casual billing
Casual Billing occurs when the enterprise, despite having a negotiated long distance (LD) contract, is charged at tariff rates for voice usage. It arises at switched access locations when voice usage is not assigned to the correct Primary Interexchange Carrier (PIC) or, less frequently, the correct billing account at that LD provider. Although identifying casual billing requires local invoice review, it is generally straightforward to quickly find the high and characteristic rate elements (e.g., $1.39/min for domestic LD service, $8.04 for international service). To resolve the issue, contact both the LEC and your LD provider, identify the relevant working telephone number or circuit, and request the PIC be changed to your preferred LD provider and enterprise master account.
2. Watch out for fraudulent voice usage
Routine queries performed on LD provider call detail records often yield unexpected call volumes and source/destination patterns. We commonly find significant off-hours call volume to destination countries and cities for which there is no apparent business need. Although this can indicate serious voice network security issues, the cause is generally more mundane: out-of-hours staff using your phones for personal calls. The situation can be controlled immediately by limiting out-of-hours international access through blocking country codes on the outbound trunks or requiring user pass codes to access these destinations. A root cause analysis should also be conducted to ensure that the issue is not symptomatic of a broader security problem.
3. Make sure negotiated rates apply to all your voice usage
Given the sheer number of potential rate elements, particularly for international service, telecom negotiations generally focus on the rates that comprise the majority of spend, with the remainder being covered under a term offering "XX percent off" service guide rates. The problem is that service guide rates are so far above market rates that even substantial discounts still leave you open to outrageous charges. This isn't a significant issue as long as such service volume remains small, but it can become a problem if and when calling habits change. To address this, periodically review your voice usage and identify calling categories with volume at these "XX percent off" rates. From there, it should be a quick conversation with your account representative to add these rate elements to your contract. The fact that a home or small business subscriber can obtain rates from the provider at a fraction of the so-called "discount" rates generally smoothes the negotiation process. For example, a client acquired a facility in the Dominican Republic that drove several thousand minutes of new international voice usage. The provider's "discount" rates were an average of $1.60 per minute, whereas the same provider's published small business rate was less than $0.25 per minute. The situation was quickly resolved by the account team, resulting in savings of over $5,000 per month.
4. Be aware of international wireless termination surcharges
A specific example of the above "XX percent off" issue involves international mobile termination. Because of the different termination rates for mobile, there are effectively four outbound rate elements to negotiate for each country: dedicated access egress to landline termination, dedicated-to-wireless, switched-to-landline and switched-to-wireless. When contract rate elements are placed in a "nx4" matrix of countries (rows) and rate elements (columns) (see chart, left), many enterprise contracts resemble Swiss cheese, with the holes principally found in the two wireless termination columns. Dramatic wireless subscriber growth across the globe means that the usage falling into the "XX percent off" category is steadily increasing for most enterprises. Again, work with your account representative to close these holes. As a rule of thumb, mobile termination should be no more than $0.15 per minute greater than the equivalent landline rate.