The industry for land phone lines is more mature than cell phone plans and is highly regulated. Never sign land line agreements longer than 36 months as telecommunication costs continue to go down. As contracts come up for renewal, you have a lot of leverage for renegotiation. When renewing contracts, it is common to reduce costs by 10 percent by negotiating lower rates that depend on the mix of services, spending commitment, and length of contract. Consider negotiating miscellaneous costs such as damage costs, trade-in costs, etc. Also, consider provisions for annual or semiannual price reviews to ensure discount levels are competitive. Include a price stability clause into the contract as telecom carriers are able to increase rates without informing customers.
The following specific tactics are used by companies to reduce costs relative to land telecommunication plans:
- Consider multiple levels of service offerings, such as gold, silver, or bronze.
- Have clearly defined SLAs, with defined financial penalties in the event the vendor does not meet defined service requirements. Penalties should be large enough to have an impact on the vendor but not so large as to jeopardize their ability to provide services.
- Specify contract termination conditions, such as the inability to meet defined SLAs, a merger or acquisition of the vendor or your company, or a major change in requirements or infrastructure. In general, the easier it is to break the contract, the more the contract will cost. For example, a clause to terminate without cause would be expensive.
"We saved a significant amount of money by having shorter telecom agreements. We try to keep the agreements less than 36 months as costs typically come down in that timeframe."—Joel Wiens
Regis Corporation
- Ensure that you cover all services under the SLA. Often, only outages to the primary service are covered. Also, make sure you cover other services such as service delivery or cessations with specific time frames.
- Consider using callback services to reduce international long distance charges.
- Consider cutting back leased line capacities.
- Consider getting rid of landlines and replacing them with gateway products that run traffic over the WAN, such as Voice over IP (VoIP). Once voice goes over the network, be aware that latency matters more than bandwidth, which means the details of network engineering may change.
- Consider funneling international call traffic through services like Google Voice, which can reduce the cost of international calls originating in the United States significantly.
It is complex to match the invoice to contracts and plans. Errors and overcharges are common. Bundled services and taxes are confusing. Invoicing becomes inaccurate as telecommunication vendors merge and consolidate or your company goes through acquisitions and divestures. Many companies find that at least 25 percent of telecommunication invoices contain errors in billing, usage application, overages, tax application, etc., which causes a 25 to 35 percent overpayment for services. As an example, for over two years, one company paid for 56 phone lines set up for a modem bank that they never implemented. The following are typical errors found in land telecommunication bills:
Top Tip: Telecommunication plan matched to needs
"One of the best places to look for cost savings is in the area of telecommunications. We found savings in mobile, voice, and data plans. We made sure the plan matched individual needs."
—Mykolas Rambus
Forbes Media
Forbes Media
- Paying for lines, circuits, modem lines, pagers, phones, or voice mail services that are unused or disconnected
- Changes to plans or lines that are not implemented
- Incorrect pricing or plan codes on the account
- Missing discounts or credits
- Duplicate charges
- Inaccurate service charges or charges that do not match the service record
- Services were upgraded but older services not cancelled
- Paying two carriers for the same line
- Paying maintenance contracts no longer in use
- Paying sales tax when the company is tax exempt
- Paying for optional or invalid taxes, such as the federal excise tax, which was repealed three years ago and is still found on many bills
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