Telecom Expense Management, Managing Telecom and Wireless Carriers, Telecom Cost Control and Auditing

Aberdeen released a new research report on small and medium enterprise (SME) wireless spending called, SME's Love To Spend Money on Wireless Expenses. Most of their Telecom and Wireless Expense Management research has been on Fortune 1000 enterprises, but this report provides a look at wireless spending in small and medium enterprises. The report states 45% of US employment is by SME's, so it would stand to reason that a significant portion of overall wireless spend is by small and medium enterprises. The question is, are they managing that expense effectively, and if not, what can be done to lower the expense?

Here are some of the challenges SME's face according to the research:

• Lack of full time employees to manage all aspects of corporate wireless accounts and services
• More reluctant to adopt and manage pooled plans
• Lack ability (automation) to compare contracted rates to their invoices

They also addressed some of the policy issues such as:

• No standardized rules for wireless devices and plans
  
• Appropriate use policy not defined

I think we can all agree that managing wireless expenses is challenging. So what is a company to do? The paper makes a few recommendations:

• Use pooled plans supplemented with favorable contract terms
• Centralize and standardize service orders and usage policies
• Strategically outsource or obtain managed services of wireless services

And I might add that while carriers are helpful in providing rate plan optimization, and portals for ordering, they are not the best companies to manage your wireless services. In every case we have a new client that used the carriers to manage their accounts we find them overpaying. Also there are many TEM and wireless expense management companies, each serving different sized enterprises, many focus on enterprises with 1000 or more devices and others like Vocio focus on companies with 1000 devices or less.

Vocio offers a free trial of our wireless expense management software and services. If you're interested in the trial just send us three of your latest invoices via e-mail, upload them from your browser or we can supply you with our Fedex or UPS account number to ship them to us. We'll upload them and provide access to our software along with recommendations for lowering your costs.

Blackberry's new Bold (9000), announced today, is Blackberry's attempt to stave off the iPhone popularity and keep RIM as the dominant enterprise device.

Blackberry is by far the preferred enterprise device but the iPhone user experience has some IT departments taking a look at the iPhone as as a supported device. If you are an existing Blackberry user and were considering a move to the iPhone will the new Bold keep you faithful to RIM?

According to Scott Moritz at Fortune the Blackberry is in for a brusing.

By the way if you're interested in piloting the iPhone check out the iPhone Enterprise Beta Program. The beta apparently includes push e-mail, contacts, calender and a global address book and other BES like features.

If you're interested in a discussion on the Blackberry Bold and the iPhone check out the podcast located at the bottom of this page.

Want to know be notified when the Blackberry Bold will be available to order? Click Here

What's the first step to controlling telecom and wireless costs?

It's gathering all the invoices and getting the Customer Service Records (CSR's) from your carriers. Why is that the first step? Because your invoices and CSR's will give you the most accurate view of your expenses, and it's the best source to use for building your inventory. The second step would be to gather all of your contracts so we can audit the invoices and make sure the contracted rates are being billed correctly. And lastly among the important items? A current list of employees.

With the information above:

• We can create a listing of all site locations and the inventory (lines, trunks, T-1's, DS-3's) at that location.

• We can also create an inventory for each employee along with their exact monthly costs for all telecom and wireless charges (phone, aircard, calling card, conferencing, pagers). Making it easy to allocate costs.
  

• We can list all of your account numbers, provide a pdf copy of the invoice in digital form for future reference, provide a listing of invoice due dates
  

• Give you an unlimited number of reports like, actual versus budgeted spend, quarter over quarter, or year over year cost comparisons.

All this information can be garnered from a simple invoice, which is why we created our free trial. Send us your most challenging invoices - Yes, even the 4000 page ones. We can receive invoices via e-mail, you can load an invoice in pdf format (no size limit) from our web based software, we can supply an account number and you can send it to us via Fedex or UPS.

Once we receive your invoice we'll post the results within 48 hours. See the once cumbersome paper or CD invoice come alive and be displayed in colorful graphs, charts and reports. Get an accurate view of your current costs and what inventory you have. You'll be amazed.

Click here to send us an invoice and start the free trial.

Here's sample view of a site location inventory.

In every local market AT&T has taken over rates have increased, well not in every case, some Public Utilities Commissions have denied their requests, but they have tried. And in California there was a PUC decision that allowed AT&T and Verizon to raise rates without seeking approval from the PUC. The rate increases just keep coming. For instance here's one we were notified of today.

This amounts to a 20% increase for Single Line, and a 25% increase for Multi Line Measured Rate Service. Many other services have seen rate increases as well, for instance DSL has gone up by $5, for both their AT&T retail customers and for wholesale providers. In December they hiked their dial up service by $6.

What does all this mean? It means telecom and wireless costs must be constantly monitored, and that rate increases should be met with some resistance. Vocio provides that resistance. We are your advocate when dealing with the carriers and we educate you on the best way to procure services from them. Many times there are little known promotions or alternate sourcing methods that can lower costs 10-40% for the exact same carrier service.

Additionally clients using our Telecom and Wireless Expense Management Software would have invoices flagged if there was a change to the MRC, as in a rate increase. By detailed and granular management of costs Vocio is able to lower our clients overall telecom and wireless expenses by an average of 20% or more in 90 days.

Start your free trial today.

New Edge Networks, wholly owned by Earthlink, has recently launched MPLS over DSL. Why is this an important announcement? Any business that has multiple locations will typically need to access resources at another location. Applications like voice, and some data applications like real time ERP require packets to be delivered quickly otherwise the application will timeout or in the case of voice become garbled or have the call dropped.

Prior to the New Edge announcement if you needed MPLS with COS to access corporate applications you needed to pay for excessive bandwidth or utilize DSL and potentially deal with traffic congestion (high latency) and packet loss, since the delivery of packets over DSL is best effort. By extending COS to DSL access customers can have a true blended MPLS network.

The pricing for the DSL with MPLS and COS is $225. When compared to T-1 pricing which can range from $400 to over $700 based on the local loop mileage you can quickly see the cost savings that can be achieved for companies with a lot of small branch locations, like retail.

Now to be clear some carriers can integrate DSL into a MPLS network, but they do not allow the customer to assign priority to different applications or types of traffic. As a New Edge engineer stated: "Some providers offer LAN queuing and call it CoS, but CoS tags are stripped when the traffic hits the larger network. Also some providers offer Quality of Service and call it CoS, but tags are applied to the entire bandwidth stream, not to packets within the bandwidth."

Here is a product sheet. They also provide a pretty slick console for monitoring location traffic.

For more information or to get a quote give us a call at 888-200-8647. We represent all of the major MPLS providers and can provide recommendations on the best way to design, or redesign, your network to get the highest reliability and the lowest cost.

At five pages even if you're not a telecom geek like me you'll still enjoy the latest Aberdeen report on controlling wireless costs. It's aptly called Controlling Wireless Expenses with Contract Negotiations Tools.

Most of Aberdeen's research is written for Fortune 500 companies but I found a lot of what they wrote about applying to companies of all sizes. Such as their research reporting an 87% increase in the number of smartphones and an 81% increase in aircards the past two years. That along with the statistic that 57% of companies they surveyed had an increase in average cost per user but wireless expenses have increased for 75% of the companies. So I guess that means more employees are getting devices which would surely apply to companies we serve in the mid market.

They also discuss some best practices such as creating an "appropriate use policy for wireless devices" - which we find to be one of the most challenging areas when initially working with new clients, the often used herding cats analogy is definitely appropriate here, everyone wants to be an individual and without a strong user policy costs can quickly spiral out of control - as if that isn't already the case.

The report also provides some interesting points about the carrier-customer relationship and what to negotiate like; device and service discounts, device upgrades and replacements, accessory procurement, service and device warranties, termination fees and other services, software, surcharges and fees.

I particularly like the statement "One carrier states that over 20% of the first invoice after a new contract is in error". Hmmm... let me guess those errors aren't in your favor either.

Rarely do companies validate the charges on every single telecom and wireless invoice they receive each month. If you've ever tried to audit one you probably know why. The answer? They're extremely complicated, purposefully complicated some might argue - by being complicated they (the carriers) assume you'll just take a look and decide to pay it rather than doing an exhaustive audit. Who's got time to review and validate tens, hundreds, or thousands of pages of obscure taxes, surcharges, fees, discounts and tariffs from local, LD, wireless, Internet and numerous other telecom providers?

It's been well documented by research firms Aberdeen, Gartner, Forrester and AOTMP that carrier invoices are wrong anywhere from 3-15% of the time, and I would add 90% of the mistakes are in the carriers favor, meaning they overcharged you, so it would make sense to review the charges for accuracy before paying the invoice. Also from the time you receive your invoice you have on average 15-20 days to pay it before a 1.5% late fee kicks in. That can add up to a lot of money so here's a few tips to quickly audit your phone bills.

• Well for starters it good to understand the different areas of your bill so you have an idea if a charge is valid or not. The FCC has a primer here. We'll go into more detail on access charges, taxes, fees and surcharges in a later post because even when companies do exhaustive audits this section rarely gets reviewed and it's one area that may provide quick results in reducing costs. As the FCC states "The FCC allows local telephone companies to bill customers for a portion of the costs of providing access. These charges are not a government charge or tax. The maximum allowable access charges per telephone line are set by the FCC, but local telephone companies are free to charge less or not at all." Learn what is and isn't negotiable and if it's possible get the carrier to lower or remove those charges.

• Have a copy of the contract and the service guide. Lets take AT&T's ABN for example, the ABN service guide is the official guide for base rates. That along with your contract, which gives you discount amounts, will give you your effective rate. Without these pieces of information there is no way to validate the correct rates or discounts. If you don't have the contract and service guide or rate deck you can't effectively validate charges.

• Maintain a list of employees (HR) and site locations (Facilities) so you can determine if the lines, trunks, circuits, devices, calling cards are being billed to current employees and active sites. While this seems like common sense we routinely find customers paying for former employees and closed sites so it must be more difficult than it seems.

• Create and maintain a list of MRC's for fixed charges. If a cell phone plan assigned to John Doe is $69.99 or a MPLS loop and port is $456 then it's just that and no more. Keeping a list of the MRC's will help you quickly validate the charges.

• Set a threshold for usage based services. If John Doe has a 3 month average for conference calling of $200 then maybe a plus/minus 10% threshold would be good. If your average long distance bill for a branch office is $3000 then maybe set the threshold to plus/minus 5%. What you're looking for here is an anomalies in usage and if you know what the average is and by what amount it varies it will make it much quicker to audit the invoice. You can set up formulas to do this, if you can get the data in a digital format. At Vocio we use OCR and scrape all of the data from paper invoices into our software, it then runs variance reports automatically. It flags amounts above or below your threshold so you can review the anomlaies but the others flow through to payment, so you only spend time reviewing questionable items and not the whole invoice.

• Keep a lookout for third party charges ("cramming") that are potentially fraudulent. Some of the companies to look out for are Liberty Online, Venus Voicemail, National Online Services, Horizon and ILAB INET and ILD Teleservices to name a few. Many of these companies are legitimate but they use slick sales tactics and employees at branch or retail locations may iadvertently authorize their service charges. There are laws but the reality is these companies work in the gray area. This used to be isloated to local phone company bills, (they're required by regulations to bill on behalf of third parties) but more recently it's spread to wireless with companies like Nationwide Internet billing for supposedly free ringtones.

Of course in order to audit the invoice you need to store the data somewhere. For most companies that means Excel spreadsheets, and for most small companies auditing a handful of ten page invoices that is sufficient. However as the number of invoices grows Excel spreadsheets become very limited, they were never designed to be used in "real time" among a group of workers, which is what Finance and Telecom/IT departments need to do. Vocio was founded just for that reason, our software was designed to be used in "real time" by multiple departments, and to replace spreadsheets and manual data entry. Just as many other TEM providers were founded to serve Fortune 1000 companies Vocio was founded to serve the mid market enterprises.

Next I'll be sharing some tips and tricks on how to quickly get a credit or refund when you find a billing error.

Even AT&T isn't immune from getting stuck in a bad telecom contract and paying for services they aren't using. As you may know AT&T merged with SBC in June 2005. Prior to the merger SBC was prohibited from using their network to provide long distance service and hence had contracted with Wiltel to provide LD service to their customers. However after the merger it was clear SBC/AT&T intended to move the traffic off of Wiltel and on to the AT&T LD network. However they were contractually obligated to pay Wiltel whether they moved the traffic or not. In fact in Q1 AT&T paid Level 3 (now owner of Wiltel) $57 million.

Now if you were a SBC attorney negotiating the Wiltel LD contract wouldn't the possibility of merging with another telecom company, particularly one with a LD network cross your mind prior to signing a long term deal with Wiltel, then a small player and most likely willing to do anything to earn your business i.e. sign a shorter contract

It's not huge commitment and AT&T probably saves money now that the traffic is on their network rather than being resold by Wiltel but the point is when buying carrier services like voice (local, LD, Cell phones), data (MPLS, VoIP, PtP), and Internet (T-1, DS-3, OC-X, Ethernet) companies need to take extra care and evaluate the benefit of a long term contract versus the potential long term liability should the business change owners, have a slowdown, or need to change technologies (i.e. migrate from frame to MPLS).

Many companies have closed offices and laid off workers the past 12 months. How many employee cell phones, office phone lines, data connections, maintenance contracts are not being used but still being paid for month after month because the company is contractually obligated? A lot. How many companies could have avoided paying for services they aren't using? A lot. How? Using a company like Vocio that specializes in negotiating with carriers to provide long term contract pricing on shorter term contracts with "out" clauses.

If AT&T could end up with an unexpected liability 3 years after a merger it could happen to anyone.

Level 3 Q1 Report 

SBC Contract Services
SBC Contract Services revenue was $57 million in the first quarter 2008, a 31 percent decline compared to the year earlier quarter revenue of $83 million. Fourth quarter 2007 SBC Contract Services revenue was $73 million, which included a $16 million quality of service bonus, the last such bonus for which the company was eligible.

As previously disclosed, SBC announced its intention to migrate the services provided under the agreement to its own network facilities in accordance with terms previously negotiated by WilTel Communications, LLC (WilTel), a company subsequently acquired by Level 3. Under the terms of this agreement, SBC agreed to pay WilTel a minimum amount of gross margin regardless of the actual revenue generated under the contract. Accordingly, while the company expects future SBC Contract Services revenue will be difficult to predict, the gross margin contribution over time is fixed.

As of the end of the first quarter, there was approximately $15 million of gross margin commitment remaining on the contract. The company expects the gross margin commitment to be met in the second quarter 2008 and will evaluate the approach to external revenue reporting under this agreement going forward once the commitment is satisfied.

Each day we talk with many companies on the pros and cons of having a corporate cell phone plan versus expensing employee’s cell phone usage. Here are some of the top reasons companies tell us they want to continue to have individual’s expenses phones:

• Belief that costs are lower because expenses are capped. Financial liability is capped to amount expensed i.e. $50, $100, $150
• Employees are responsible for the device. If they break the phone or it gets lost or stolen the employee is responsible to replace it
• They do not have the staff, resources or necessary software to track, monitor, and analyze wireless usage and rate plans, ESN swaps, invoices, and RMA's (return merchandise authorization)

Here are a few caveats with having individual liable plans.

• The employee retains the numbers. You may lose business if an employee leaves the company and goes to work for a competitor with their existing cell phone number.
• Lack of security. What if an employee loses their smartphone with confidential contacts and company documents? How is data protected?
• Could be exposed to a tax liability as the IRS is cracking down on companies expensing personal use for cell phones. Business expense must have supporting documentation.
  
• Employees expense cap amount but the actual invoice is less.

We could create a list a mile long and debate the rationale for each method but the bottom line is the expense needs to be managed to be controlled and with smartphone adoption and wireless costs increasing by over 30% a year there’s no better time than the present to set a corporate wireless policy.

Last month Sprint announced the $99 Simply Everything which includes, as the name implies, everything your phone, PDA or smartphone can do nationwide — text, surf, email, listen, watch, find and, of course, talk, plus their slick Telenav GPS Navigation service. AT&T and Verizon Wireless responded with their own plans, although Verizon's combined voice and data plans start at $129 which is 24% higher than Sprint.

Are these plans a good fit for your business. The quick answer is if you have 50 or more users on a corporate liable plan probably not, but if your employees expense their phone bill each month and on average spend over $100 a month then yes, these plans offer a great way to cap costs.

Now the quick answer is just that, a rule of thumb. To truly know what plan is best your invoice will need to be analyzed. Vocio has optimization templates built into our software to help analyze each wireless account allowing you to quickly determine what plan would be best. Feel free to send us a few invoices and we can load your data into our template and show you how best to optimize your wireless services.

During the month of April Vocio has teamed with Sprint and RIM to offer a free Blackberry 8830 with any new activation. You can learn more about that here.

For more info on the unlimited plans see below:

AT&T Unlimited Plans

Sprint Unlimited Plans

Verizon Wireless Unlimited Plans

Voice Only

Voice & Data