Updated: Mar 25, 2020
Research shows that up to 20% of telecom charges are incorrect, and yet a whopping 85% of telecom bills are paid in full without question. This translates to millions of dollars lost by organizations who lack an effective process for reviewing and tracking telecom invoices against their contracts and actual usage. The situation is now worse than ever with the advent of mobile devices. We’ve compiled a checklist below to help you get a better handle on these rampant, runaway expenditures.
Charges for Wireless Services
Invoices must be routinely analyzed and inspected for components not needed or used. If you’re getting multiple invoices from one carrier, ask them to consolidate. And if you’re using a TEM or WMM (telecom expense management or wireless mobility management company ), ask them how they identify waste, and what process they use for implementing cost-saving measures.
1. Plan Components
Plans used to focus primarily on text messaging, voice and data plans, but now corporate plans tend to be all-inclusive. Many companies opt for all-inclusive plans because they think it’s easier and cheaper in the long run. This is a dangerous assumption because quite often, only 5-10% of users need all-inclusive unlimited service, which means you’re paying for a lot of service you’re not using.
Plans should be mapped to user need in the organization. Consider if it makes sense for usage components be shared across all devices, or segmented (e.g., one plan for the iPhones and another for the iPads).
Examine how your plan handles international communication. These calls can be extremely costly without the right plan in place: we have seen instances when calling another country might cost $1/minute to a landline, and $150/minute to a mobile device!
2. Device Management
How do you order, track, and cancel your mobile devices? Is there one person or team doing it, or is it lots of different people in different places? In organizations where the responsibility is dispersed, we see 10-20% of the devices they’re paying for are not in use. These firms are being charged for expensive monthly services for devices that should be cancelled, but are not being tracked.
How do you handle BYOD (bring your own device) users? Many organizations think it’s less expensive to give workers a $40-$50/month stipend rather than put them on the corporate plan. Reality tells a different story: you can often drive the price per device down significantly by putting them on the corporate plan, and take control of use and security, for which the corporation is liable.
3. Taxes and Fees
Taxes vary widely among the states, but this fact is rarely considered when mobile devices are purchased. For example, in New York, the tax on mobile service is 18.5%, while in nearby Virginia it’s only 6.9% -- an 11% difference. If you were to purchase 200 or 300 iPads through your Virginia (or similar low tax state) office, you have an opportunity to save 11% a month on these devices.
Other fees to put under the microscope include early termination fee (ETF) waivers, discounts, data overage charges, incentives and loyalty bonuses.
Charges for Landline Services
We have identified three areas to focus on: inventory, invoices and renewals.
There is a tremendous amount of waste involving the amount of voice circuits, data circuits, internet circuits, voice services, analog lines, etc., that companies are paying for any not using. To avoid this, we recommend a detailed, granular inventory.
We often see disconnect orders that are “didn’t go through,” but because people are doing just a cursory review of the bill, the service continues to be paid for. Just because you placed a disconnect order for something, don’t assume it happened. These orders must be followed up to make sure they occur, and are accurately reflected on the invoice.
2. Invoice and Contract Review
We recommend having a formal process for reviewing and identifying questionable service changes. If you are work with a TEM, examine the onboarding process. You must make sure your TEM has a cost-savings process and is not just an expensive bill paying service. (FYI, companies typically hire a TEM when they get beyond 20 locations, or $50K/month in telecom spending.)
Is your organization (or your TEM) simply comparing bills to last month’s, or are you cross-referencing them to your inventory to make sure you’re only paying for services you’re using? Is the process centralized or decentralized? If it’s the latter, there’s a high probability that incorrect charges are slipping through.
Like the above-mentioned disconnect orders, we see many instances where customers put in a “trouble ticket” but don’t follow up to make sure the carrier has resolved the issue. Experience has shown that carriers can take months (or forget) to fix problems, and in the meantime, they’re making a fortune on them.
3. Renewals and Relationships
Many times, telecom contracts include an “Evergreen Clause” which means the contract automatically renews itself at end of term. This is scary when it comes to data circuits because cost for this service is going down. An auto-renew can result in three more years at a price that was high to begin with and has since gone way down, which can be financially devastating.
Contractual addendums that address a particular service type must also be analyzed. We have reviewed contracts with 30 or 40 addendums – this is way too many to monitor. At this point we recommend you press re-set: look at the business as a whole and start fresh with a new contract.
Sometimes the customer has been using just one telecom carrier for many years, and the carrier has become too comfortable in the relationship. It’s important to benchmark their components, rather than rely on their claim that you’re getting a good deal. Similarly, if you’re working with a TEM, make sure they’re identifying red flags and have the resources to do benchmarking.
Tracking and reducing telecom costs can seem like an overwhelming task. But if you’re disciplined and systematic in your approach, there’s a huge opportunity to clean up inventory, demystify invoices and significantly drive costs down. To learn more about conducting a telecom audit, contact your ClearEdge representative.
Dean Rowen is a ClearEdge business partner with more than 25 years’ experience in the telecom industry. He is founder of his own Telecom Auditing Company, and has overseen hundreds of telecom auditing projects.