Within the past 10 years, however, the telecomms landscape shifted once more, and no event was more jolting than when the IT department and the telecomms folks entered into a sort of arranged marriage. Because IT ran data networks, and telecomms carriers were increasingly providing network-based services (for WANs and LANs), and voice could now run over networks (VoIP), all of telecomms was rolled under IT's umbrella. Networking became even more critical - computers that can't talk to each other are essentially useless - and CIOs set out to upgrade their network infrastructures to keep up.

For some enterprises, the process of upgrading their networks has become a Sisyphean task. "It's like painting the George Washington Bridge," says UPS's Nallin. "When we get three-quarters of the way down the bridge, and we look back, we know we're going to have to start painting it again when we get done."

Carriers themselves are still operating with legacy databases and networks that were designed to carry only basic telecomms services. Today, telcos are still trying to upgrade their systems to efficiently transport today's data, voice and video offerings to keep pace with new competitors. For example, Telstra is spending $2 billion on its fibre-optic overhaul (Verizon is spending $US20 billion).

Threats to carriers' once-protected revenue streams are everywhere - from VoIP companies such as Skype and Vonage to cable providers such as Time Warner in the US. And then there are the IBMs, CSCs and EDSs of the world that offer an outsourced pain reliever for all CIOs' telecomms headaches.

"There's tremendous confusion in the marketplace with all of this consolidation," says James Smith, a telecommunications attorney at Davis Wright Tremaine and a former telecomms executive. "For CIOs, the question becomes: What does the future bring, and which horse to ride? Go with the blue chips or go with the Vonages?"

Even today, CIOs still fight the entrenched executive view that telecomms costs should always decrease. What CEOs and CFOs don't necessarily understand is that the enormous productivity and efficiency gains they've seen in their enterprises in recent years have been an outgrowth of the new networked telecomms infrastructure. And their networks' bandwidth needs will only continue to grow, putting added pressure on CIOs to explain why telecomms is so vital to the company's future.

The Devil Is in the (Pricing) Details

The vexing challenge for CIOs in this new era is figuring out just how much telecomms rates should be, and then negotiating fair deals with the plethora of providers that offer various networked services. Telecomms contracts, which can contain hundreds of pages of obscure terminology and restrictions, can confuse even the most legal-minded CIO. "Sorting out the legal gobbledygook to get a contract on anything [related to telecomms] takes as long as it does to put the project in," UPS's Nallin says.

Prices can vary widely between service providers, and CIOs have no way of knowing whether the prices they are being quoted by various carriers are competitive or fair. "What becomes difficult is how do you stay current with the new rate structures and contracting approaches," says Tom Lesica, senior vice president for global information technology and business operations at Avaya. Lesica just went through an RFP with the carriers that included 12 telecomms services. "It's difficult for me or for my team to constantly go through the day-to-day, week-to-week fluctuations [in prices]," he says.

One carrier tactic that muddies the waters is called margin balancing. The telecomms carrier will give the CIO a low rate on an 800-number, but not point out that the rate being quoted on something else (such as data services) is actually 40 percent above the going rate. "It's difficult to know the price points that CIOs should be aiming for," says Charlotte Yates, CEO of Telwares, a company that specializes in telecomms contract negotiations and maintains historical data on carrier rates. "You might as well have a dartboard."

For guidance, companies used to be able to look to Deal Watch, a compendium of carrier rates published by the Centre for Communications Management Information (CCMI). Publication ceased last year because carriers stopped providing specifics - only wide ranges on services, such as voice and frame relay, even though the US Federal Communications Commission requires rate disclosure. According to Bill Goddard, product manager at CCMI, the range of rates on frame-relay service, for example, can run anywhere from $US32 to $US40,180 per month. (To see a comparison of AT&T's publicly disclosed rate contracts, go to www.cio.com/031506.) "They're posting data publicly, but it's absolutely no use to anyone," he says. The carriers are able to get around the FCC requirement that they must "publicly disclose" their rates because that term is so unclear. CCMI filed a formal complaint with the FCC, and it's still waiting for an answer. "The FCC has stuck its head in the sand and wrote a nebulous order and is not particularly stringent about the enforcement," Goddard says. "As an end user it becomes extremely difficult to determine what the market rates are."