Taming telcos

Top 10 things to look out for in telecommunications contracts

Mobile phone contracts, IP connectivity services, PABX maintenance contracts, corporate IP telephony networks. Telecommunications services are the lifeblood of most modern businesses, and the terms of supply are very often provided on standard form conditions that are favourable to the telco.

Next time you are tempted to give them a cursory glance or just confirm your order without reading them, here are 10 things you will be glad you checked first.

  1. Service availability

    Telco contracts invariably make it clear that the telco is not promising there will never be any faults or outages; these are inherent in the technology. What you should check is what happens when there is a fault, when planned outages can occur and what happens when there are unplanned outages.

    Can you notify of a fault 24 hours a day? How? If not, when? How quickly will they check the fault? How quickly will they restore your service? What happens if a telco misses its promised deadlines? Do you receive service credits? Can you get out of the contract altogether if the service availability is not as promised or are service credits your only option? Are you prepared to pay more for a higher level of service assurance or is the company charging you for a higher level than you need? Can they say it is a ‘force majeure’ and get out of their obligations? A ‘force majeure’ is often defined to include anything beyond the telco’s reasonable control.

    Is your supplier a reseller or resupplier of a service on somebody else’s network? This could mean the telco must rely on its upstream supplier for service activation and restoration when there is a fault. Does the fine print let them off the hook if their upstream provider does not do what they are meant to?

  2. Term

    Check whether you are committing to a minimum term and what happens at the end of that term. Can you cancel during the minimum term, and what are the consequences if you do? If equipment is part of the service, such as a mobile handset, does the warranty for the equipment match the minimum term, or could you be left committed to paying for a service without equipment if it fails outside its warranty period?

  3. Service description and optional extras

    The description and details of your service will often be filled out on a form as part of the contract.

    Check it has been done properly so what you are agreeing to pay for is what you are expecting to get. Are you getting optional extras you do not need? Are all the inclusions and benefits you have been promised listed?

  4. Changing the terms

    Almost all contracts will allow the telco to change the terms of supply. Some promise not to do this during the minimum term.

    If your telco does change the price or other terms, can you get out of the contract and return all equipment for a full refund? Are there any limits on how much the telco can increase its charges?

  5. Flexibility

    How flexible is the service offering? If you need both Blackberry and Exchange push email, does your service offering cope with that? Can you choose from a variety of handsets, and can you aggregate your usage allowance across your fleet?

  6. Liability

    You can expect the liability and indemnity provisions to be heavily in the telco’s favour. You are not likely to have any fallback for your lost profits or lost data if your business is crippled during a network outage or fault. Check that the telco is indemnifying you against any third party intellectual property claims made against you because the telco’s service is alleged to be infringing. Expect to have to indemnify the telco for claims made against it because of the content you put over its network.

  7. Redundancy

    Do you need protection and redundancy for your data links? If you are paying for redundancy, check whether they are promising you a completely diverse route or simply diverse fibres or cables on the same route.

  8. Speeds

    Check whether the speeds being promised for data throughput are guaranteed speeds or theoretical maximums. If you are using a shared network, ask what the contention ratios are. Will your network speeds suffer when there is high congestion?

  9. Usage

    Are there high excess usage charges if you exceed your quotas? Does the telco offer any way to monitor your usage? Any warning when you are approaching your quota? Can you monitor this centrally for your whole organisation?

  10. What’s your backup plan?

    You might receive service credits for a catastrophic network failure, but what is your ‘Plan B’ if the network is down for a couple of days or longer, or if your supplier loses all your data in its Cloud? Do you have a backup supplier?

It is tempting to assume there is nothing you can do to change your contract and cross your fingers and hope it will all work out. But there are several things you can check and query to make sure you are getting what you are paying for. I have worked on the telco side of the fence, so I know how these contracts operate. If you ask the right questions, you can get what you pay for.