If you are like most businesses you have significant telecom costs. Between internet, telephone, data, long-distance, and wireless the costs can become quite high.
In our experience, the vast majority of businesses are overspending on their telecom expenses and don’t know it.
As we pointed out in our article on customer service records, the telecom industry is quite complex. Unless you have an expert consultant working on your behalf there’s a good chance you will overspend.
Below are 5 ways you might be overspending on your telecom costs.
1. Misapplication of Tariff
A telecom tariff exists as an agreement between the telecom company and the public. Government regulations require that these tariffs exist for the telecom carrier to provide service. The tariffs are also approved by the government and become the binding force governing what a telecom company can and can not charge the client.
These documents can range from 50-500 pages and are often quite complicated. We have seen dozens and dozens of instances where employees of the telecom companies themselves can not properly understand the charges. This results in the charges being misapplied to the customer account, which in turn can create large billing errors.
Proper investigation of the tariff to see if it is applied correctly is paramount to ensure you are getting what you are paying for.
2. Incorrect Application of Fees and Surcharges
As most people who have seen a telecom bill know, there can be a dizzying amount of fees and surcharges applied. These range from 911 surcharges to Universal Service fees and everything in between.
How can you know which ones are valid and which ones are profit centers for the telecom providers? This can be very difficult to discern.
Furthermore, even the valid fees and surcharges are often misapplied incorrectly.
3. Incorrectly Applied Taxes and Fees
Many aspects of the telecom industry are highly regulated. These regulations govern how every line item can and should be charged. These companies are human though and they make errors.
Below is an example of an access recovery charge. After our audit began, our experts identified this as a potential error. Upon investigation, it was determined to be billing inaccurately based on the tariff and regulations.
After an in-depth look at the customer service record and tariff, it was determined the PRI was being billed incorrectly. The vendor had mistakenly applied the fee at 12 times the legal rate. Because of the complexity of the existing tariff the vendor was convinced they had billed it correctly.
After several phone calls, and escalating it up the ladder, we were able to show the vendor where they had made a mistake.
The vendor initially offered a 3-month credit. Certain types of billing errors are legally allowed more of a refund per the tariff. In this particular case, we knew this error should be refunded back to the point of error.
After a thorough billing history review, it was determined this error occurred almost 8 years prior. The incorrect charge was removed from the bills immediately resulting in substantial monthly savings.
The vendor, after many months of follow-up on our end, reluctantly refunded over $150,000 back to our client to account for the 8 years of billing error.
4. Make Up Charges
Telecom providers often charge ‘make up charges’. These charges are not ‘made up’. They are real and valid charges per the telecom tariff.
The issue is, that they are often applied incorrectly, or they are often being utilized in a way that is costing the customer a large amount of money inadvertently.
An example might be where that hidden somewhere in the contract and customer service record a client has a MARC (minimum annual revenue commitment). If the customer spends less than that commitment the difference in charge between what they spend and their commitment is ‘made up’. This results in a large additional fee that can be quite costly.
Knowing how to identify and remove (where applicable) these can go a long way to driving down costs.
5. Disconnection of Unused Lines
This may sound simple to do, but even the smallest organizations have phone lines that have ‘rat nested’ themselves in complex and confusing ways.
Route treeing, extensions, faxes, security lines, and alarm systems are just a few of the things that phone lines run off.
Untangling this mess, and ensuring you are only paying for what you need and use can be very confusing and time-consuming.
Many times you have to have the vendor come out and ‘tag’ lines to physically figure out where they go. Everyone has seen what it looks like behind their entertainment center.
Imagine what a business with even 15 employees looks like. What about 100 employees?
There are lines for countless things, and figuring out what is needed/not needed and what goes where can take an immense amount of resources.
Furthermore, we have seen clients who have tried this on their own inadvertently disconnect lines for fire alarms and theft protection systems.
However, if there are savings to be had, and if executed correctly, it can be a very good way to drive costs lower.
How P3 Can Help
These are just 5 of the 12+ different cost areas we look at for our telecom audits.
If you would like a professional and risk-free telecom expense audit we’d love to help out.