Reason #10 Why Clients Spend Way Too Much for Telecommunications: Incorrect Rate Implementation in New Agreement

Dave Young
Jan. 21,2013 |

In our November 2012 issue of The Net Effect, we published a White Paper titled “Top 10 Reasons Why Clients Spend WAY TOO MUCH...For Telecommunications.”  This is the first in a series of blog entries that will explore each of these topics in more detail, starting with #10 Incorrect Rate Implementation in New Agreement.

You would certainly want to believe that for organizations which have been around for a very long time, implementing a new agreement into their billing systems would be a well-documented and routine process for telecommunications companies.  However, more often than not, this is not the case; and as a consumer of these services you have a responsibility to ensure the new rates you negotiated in your new agreement are being billed correctly.

To start with, it’s vital you understand what you’re signing up for when negotiating a new telecommunications agreement.  Unfortunately, you are often at the mercy of convoluted and obscure pricing tables in these agreements that make it difficult to determine what your net rate for a particular service should be before you can even begin to understand if your billing is correct.  In addition to confirming what, among dozens of service categories, you are actually consuming to find your base rate; you then need to determine what discount rate is applied, which can be a “standard” discount or a “special” discount buried somewhere else in the document.  Or, worse yet, the agreement may contain only the discount rates and no base rates at all, with references to online “service guides” that are overwhelming and very difficult to navigate to find the base rates that apply in your case.

AT&T is by far the most difficult in this case.  By default they typically only include discount levels in their agreements without the base rate to apply this discount.  Moreover, in the case of some interstate voice services, they list the discounts alongside obscure codes like A(a) or C(a).  If you didn’t somehow know what this was referring to or didn’t bravely go out to their online service guide to find this reference, you would have no idea what discount was being applied and if your new invoice was actually correct.

Compounding this problem with AT&T is their different pricing schedules for different products, with a separate schedule for interstate and international voice services, intrastate voice services, APVN for MPLS, MIS for Internet and so on, each with its own special format and organization likely attributable to the different billing systems AT&T applies to these different services.    Verizon Business is a little better, but they will bury you in a 100+ page agreement that is also difficult to navigate and understand with its multitude of pricing schedules and service configurations.

Understanding your agreement is one thing, understanding the invoice is an entirely different challenge.  Again, AT&T and Verizon take top honors for creating more complexity in the billing than is really necessary.  Often such little detail is included, or codes and strange names are used, that you have difficulty determining what you are actually being billed for and at what location.

It sounds hopeless, I know.  I’ve been reviewing telecom billing and agreements in the course of telecom expense management and negotiation for over 20 years and I still find it a challenge auditing billing to ensure my clients are being charged correctly by their telecom provider.

However, there are some things you can do to make this process easier, ensure greater success implementing your new agreement correctly, and verifying your billing accurately reflects this new agreement:

•  Request all your agreements have each rate included net of discount outlined explicitly in the rate tables.  Ideally, ask that all base rates   be included, with the applicable discount so you can see clearly what you should be paying.

•  Request a billing audit be conducted immediately following the first full billing cycle after the execution of the new agreement.  Put the onus on the telecom provider to prove the rates have been implemented correctly and show you are getting the new savings promised.  Ideally, try to get language in your new agreement that puts this request in writing.

•  Request a billing specialist dedicated to your account for the life of the agreement.  They will help you resolve billing errors and help you understand your agreement and billing so that you can catch billing errors before they get out of hand.  Remember that most telecom providers have a 12 month limitation on how far back you can recover fees overpaid due to a billing error.

•  Engage with a Telecommunications Optimization expert to help you with your contract negotiation and billing.   This specialist will understand the nuances of the telecom agreements and billing and will ensure they are easier to understand and negotiated on your behalf to take full advantage of market competitive rates and flexible terms and conditions.

•  Engage with a Telecommunications Expense Management Service (TEMS).  This put the onus on ensuring the agreement is implemented correctly on them and provides on-going assurance that billing is correct and stays that way. Further, they will be continually looking for ways to save you more money by ensuring you are using what you’re buying, using the right technology, and keeping an eye out for new deals and rates that can further lower your telecom costs.

Telecommunications services are clearly one of the more complicated purchases you can make and among the most costly for today’s businesses.  Fortunately, you have resources available to you to make this process easier by relying on the experts that make a living at navigating this wacky world of telecommunications.

NET(net) is often involved in helping our clients navigate the complexities of telecommunications, and helping them to achieve the high value and optimized costs in their telecommunications-related technology and acquisitions.  Please contact your NET(net) representative today to see how we can help you.

NET(net)’s Website/Blogs/Articles and other content is subject to NET(net)’s legal terms offered for general information purposes only, and while NET(net) may offer views and opinions regarding the subject matter, such views and opinions are not intended to malign or disparage any other company or other individual or group.

About NET(net)

Celebrating 10 years, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 1,500 clients around the world in nearly all industries and geographies, and with the experience of over 15,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client value captured in excess of $100 billion since 2002, NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact your NET(net) representative, email us today at, visit us online at, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and supplier relationships.

Read similar posts below