Telecom contracts are not only a good thing, they are a necessity. But not all contracts are equal. Here are five common issues to consider before you sign your next telecom contract. Addressing these issues before you sign on the dotted line can help you greatly improve your business
Limit the length of your agreements
Don’t get locked into a contract for longer than two or three years. Technology changes and market dynamics shift so quickly that you don’t want to be trapped in a contract based on old norms. Most agreements are 36 months to 60 months; make sure that the term length is clearly stated in the document and have a telecom contract specialist review the document to look for any “gotchas” related to the actual “term” of the agreement such as auto-renewals or annual price increases.
Make sure you have an “out clause” in your agreement
This clause can be valuable in many ways. For example, contracts can include:
- Site move addendum
- Performance Guarantees (SLAs)
- Anniversary date cancellations without termination penalty
- Installation guarantees
- Special Construction addendum
All these addenda and terms are carefully negotiated ahead of time to ensure your business is getting what it needs from the contract you’re negotiating. If the vendor doesn’t perform, it’s important to have a way to terminate it without undue penalty or pain.
Consider business flexibility
A change in business conditions, such as a market downturn, unexpected growth or mergers and acquisitions changes your telecom needs. Make sure you have language in your agreement that supports organizational or business changes.
Don’t get locked in to any technology or product
A technology refresh clause prevents you from being penalized if your needs change and you have to move to different products within their portfolio. This may be tied to maintaining contractually committed volume levels, but you should be able to change as the technology does.
Make certain there are explicit service levels stated in the agreement
This is your security that you will not be left with outages or unreliable services, and if you are, there are contractual remedies.
Go for a Term not an Annual Revenue Commitment
This gives you the flexibility to expire a contract should your spend with the vendor grow quicker than the anticipated 2 or three year term and allow you to better manage your telecom spend based on your current business circumstances. So, if you find you’re falling behind in those commitments, penalty avoidance can be a topic of discussion during a contract renewal discussion.
We recommend you start with committing only 60% of your current spend with a new carrier. This is especially important when you migrate from TDM services to SIP/VOIP technology which can reduce spend and complicate you meeting your contractual financial commitment.
Billing Error / Dispute reviews.
Make sure all billing errors and disputes agreed to by the vendor will also pay lost interest.
Reciprocal Billing Errors
It’s important to ensure that the period of time in which you can dispute charges is consistent with the length of time your vendor can charge you for “unbilled charges”. Don’t let them have the entire contract period, for example, while they limit your dispute period to, say, only 6 months.
Poor Account Management & Assignment
You should have first right to review your account management team and even to have them replaced if they are not meeting your needs.