Telecom Pricing – Keep it Simple

3d graphic of a happy Dollar icon nodes in network cable chaos

Maggie San Miguel, Senior Consultant

In this day and age, why is it so difficult for a company to get a clear picture of their total telecom spend and contract landscape? Telecom rates are contained in a hodgepodge of formats that include contracts, amendments, addendums, schedule of charges, service order attachments, tariffs, service guides, discount tables, promotions, credits (both one-time and recurring) and ICB quotes. Invoicing and Billing is even a bigger quagmire. You have different names in contracts, not to mention different billing descriptors that don’t match the nomenclature for the contract usage types. My favorite is when a carrier offers lower access costs in “Lit” buildings, but then can’t tell you where those are, or even if you’re in one today. And what exactly is Type 1 versus Type 2, and Type 2 versus Type 3?

We know the answer, of course – obtuse pricing is a tried-and-true tactic vendors employ to muddy the waters and gain an edge at the negotiating table. If clients lack insight into a carrier’s pricing, they struggle to understand how Vendor X’s apples compare against Vendor Y’s oranges, and whether either offering is aligned with competitive market standards. Amidst this confusion and uncertainty, clients often leave money on the table.

Clearly, the client bears the onus to understand the contract, reference actual pricing included in the agreement and define a true contract rate as the basis of negotiation. That’s a challenge, but it also represents an opportunity – if you as a customer can establish market-based guidelines and comparative standards, and a consistent, leveraged approach, vendor negotiations can be a dialogue rather than a battle, and you can get past the smoke and mirrors.

And while vendors may not relish the thought of a more level playing field, increasing transparency and consistency will ultimately facilitate an honest, mutually beneficial relationship.

Pricing clarity is one of several initiatives discussed in a recent Alsbridge white paper that examines how the tactics of cost reduction can support the strategy of network transformation.

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