Telecommunications Cost Management: 1/16/11

Analyze the cost effectiveness of buying and supplying mobile devices, or have individuals record their business costs on a regular basis. It is typically more cost-effective to use a corporate-wide strategy for purchasing cell phones and cell phone plans than to have employees buy them. However, small- and medium-sized companies may find it is less expensive to reimburse employees for the actual minutes used for business on their personal phones. For company-owned cell phones, document and enforce cell phone usage policies. When deciding if cell phones will be company owned or individually owned, consider the following:

The competitive threat of personnel interfacing with customers. For example, salespeople have customers calling their cell phones for all requests. If a salesperson then leaves and goes to a competitor, your customer may call to order from your company but end up ordering from your competition. Alternatively, the competitor has an easy prospect list as customer contact information is often stored on the cell phone.
IT policy and support. If employees can get any phone they want from any carrier, they will expect you to support such features as company e-mail on their cell phone. In addition, if you want to enforce security, support email, roll out custom applications, or decrease support costs, this will be difficult on employee-owned phones.

Cellular phone plans are extremely expensive, dynamic, and confusing by design. Cell phones and plans are a less mature industry than land phone lines. There are thousands of plans, and costs vary significantly more than land telecom plans. Even off-the-shelf rate plans exist in the carriers billing system not normally offered to the public. For example, there are ways to reduce the roaming costs from several dollars per minute to pennies per minute. One company saved 30 percent by getting the appropriate plan from a wireless carrier. Many companies find they are on the wrong plan or significantly overpaying for cellular services. Companies that audit cell phone charges find that companies typically overpay 20 to 40 percent.

You can save a tremendous amount of money by accurately matching cellular calling plans to individual usage patterns. Although it is time-consuming, do this by reviewing phone usage and make sure you have the plan matched with the need. For example, if an employee's job requires texting, and the company is paying a tremendous amount for text messages, getting an unlimited text plan would save money. Similarly, if employees require navigational downloads, and these are not included in the plan, businesses are paying significantly more. The cost and use of international mobile calls is another area to review as costs mount with increasing global business. The cost of roaming calls and text messages vary significantly by country.

Make sure you are using the features that you are paying for. You may be paying for international calling for an employee that does not travel or call internationally. You may be paying for roadside assistance but the employee does not have a company car.

Cell phone contracts should be no longer than 12 months in duration, but you are able to renegotiate cellular contracts at any time, regardless of the length of the contract. The following are ways that companies have reduced costs for cellular services:

Service level agreements are much more difficult to get for cellular service and can cost more than they are worth.
After completing an audit and meeting with the carrier for corrections, review the subsequent invoices to ensure changes were completed accurately, rates were adjusted, and expected refunds were processed. Most cellular carriers have language in their contract allowing you to go back three months for retroactive credits. However, many companies have examples of cellular carriers having to go back 12 to 39 months for credits on mistakes.
For international travel, consider purchasing SIM cards with local carriers and use rental phones. Using a SIM card and buying prepaid minutes reduces the cost of an international call while roaming from $4/minute to $.25/minute.
To reduce costs of international calling, use one global phone that can be shared by international travelers.
Consider using rental phones with prepaid minutes to save roaming charges.
Consider offering the company's cell phone program to employees' families. When one company did this, it drove up participation and reduced rates.
Note any early termination fees. Although it is difficult to eliminate or obtain deals in this area, try to get caps or protections. For example, cap line terminations at one year, have fees decline as the end of the commitment is reached, prorate charges, grandfather minimum service periods, have a waiver pool, and provide the ability to change plans or equipment without renewing the term.
Understand your traffic patterns so that you can negotiate accordingly. Consider pooling minutes, flat-rate plans and plans with free off-peak and mobile-to-mobile minutes. Negotiate reduced overage charges. Consider enterprise plans with domestic roaming and long distance included.
Enforce policies on international usage, off-peak, data usage, Internet usage, texting, and personal usage. Communicate with employees so there is a heightened awareness of waste, fraud, and abuse. Manage company wireless devices and, if they are lost or stolen, remotely activate them to wipe them clean. Ensure that only company-approved applications are loaded on devices.
Review acquisition and renewal credits.
Consider having multiple mobile service providers for increased leverage and maximum coverage. However, too many carriers will result in loss of in-network calling benefits.
Review rates for BlackBerry, Windows Mobile, and data cards because rates are decreasing. Negotiate the rate for tethering BlackBerries to laptops for Internet access.
Consider integrating mobile devices with the office network so that wireless calls placed in the office go over the office network.

Many companies are overcharged on their cellular telecommunication invoices, yet few have a regular and effective audit of their bills. Even more than land telecom invoices, mobile telecom bills are typically very long and confusing. As in land telecom, there are specialized consulting companies that can conduct an audit of your cellular expenses, and they are well worth the expense to employ. One company saved 30 percent of their annual telecom costs by an audit, implementation of managed services, and review of invoicing.

The following are some common areas of cellular overpayment: