Through the convergence of Voice and Data brought on by MPLS services, Data networks now represent most companies’ largest telecom expense category. Interestingly though, a large component of this spend is often ignored when negotiating WAN networking contracts. a latest report by Alsbridge Inc., a benchmarking, sourcing and transformation advisory firm – The Expensive Truth about Your International Network Contract- reveals the truth about the international network contracts that could vastly reduce network costs for companies.
According to the report, no carrier has the ability to truly be able to provide enterprises with full end-to end service entirely on their network. Instead, they purchase these circuits from local in-region PTTs, incumbent telcos and competitive providers. The telecom carriers have for some time proffered the notion that the rates charged for these local access loops represent merely a pass through charge for them. This is hard to believe coming from a group that charges surcharges for everything from their cost of collecting and remitting USF to their real estate taxes. That said, even if they are taken at their word, there is still a large area of potential, and based on Alsbridge analysis real, cost variance here.
Carriers with local in region footprint typically have better pricing than US Domestics in foreign countries. The same holds true for companies like BT and Orange when we’re talking US sites. “If you’re about to issue an RFP, and you’ve got a fair percentage of international locations, it can be advantageous to include the local foreign carriers in the bidding,” says Dieter Thompson, President, Alsbridge. “At minimum, this can help provide a view into the international local loop pricing.”
“In your networking contract, require that your telecom carrier conduct access optimization on an annual basis,” advises Alsbridge CEO, Chip Wagner. “Their network reach in foreign countries is always changing and a year or two later may allow for shorter more logical loops.” In addition, the more open international markets see natural price compression from competition much the same as the US does. The report advises clients to make sure that that install charges are waived and circuit term minimums of 12 months to avoid missing taking advantage of these cost savings. Finally, the report advises checking on the availability of Ethernet Access in international locations. Ethernet availability is greater in most countries than here in the US and is usually more cost efficient.
For further details the complete report can be downloaded here: The Expensive Truth About Your International Network Contract.