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Savings that telecom expense management providers miss

Theresa Knutson, Julie Gardner and Janis Stephens, TechCaliber | Aug. 28, 2015
TEM services perform basic checks, but it’s not practical for them to pursue the forensic analysis necessary to catch the billing errors outlined here.

Other errors occur where a contract calls for a custom rate or discount for specific speeds and the client provisions a speed that falls just outside of the speeds listed instead. The client did not receive the discount, even though the list prices were the same and the intent of the discount was clear.

* Unusual cost trends and unit rates: Expertise in network and telecom services is critical to an organization’s ability to identify unusual cost trends.   We have compared the costs of all MPLS services by address across all carriers to identify unusual cost patterns, resulting in negotiations with a supplier who had costs that were three to four times that of the other carriers at the same locations for the same services. The result was $600,000/year in savings.

In another situation, we found a client’s MPLS list pricing document differentiated between burstable ports and burstable Ethernet ports. The client’s contract only discounted the burstable ports, not the burstable Ethernet ports, so when they ordered Ethernet they did not receive the intended discount.  

We have also found excessive class of service charges for a location in Mexico due to an error in the supplier’s list pricing document – the speed the customer was using had a price that was ten times the price of the surrounding speeds. Although the client spotted the high price, they didn’t realize it was just that one speed and could not get the supplier to pay attention until we showed them the source of the problem. It’s not often you get a supplier to admit an error in their list pricing document, but we did in this case, resulting in $175K per year in savings.  

In a managed services environment, we found numerous instances where a supplier invoiced its clients at list rates for some of its managed routers and switches even though there were negotiated rates, resulting in a $1,000,000+ credit for our client.  

* Complexity leads to confusion: When a supplier’s contract structure is very complex and multiple contract documents are in effect, the possibility of billing errors multiplies. One client had a waiver of access connection charges for services provisioned on a high speed ring written into the ring pricing schedule, but the access connection charge was billed because the supplier’s billing system billed them under a different pricing schedule.

When access pricing is ICB for specific NPA-NXXs (which we try to avoid) you have to be careful how these are written into the contract, because sometimes multiple NPA-NXXs are in use at the same location. If orders are placed under the wrong NPA/NXX, the ICB pricing will not be applied. One client’s engineers routinely ordered using the NPA-NXX of dial access lines to their routers which were not part of the client’s PBX DID range. But the contract only listed the NPA-NXX of the DID range and thus did not cover the NPA-NXX on the orders.

 

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