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The telecom money pit: How to use audits to find significant discrepancies and big savings

By Will Saybe, Audit Director, Alsbridge | Aug. 15, 2016
A third-party audit offers a low-risk opportunity to drive savings and maintain a clean billing environment free of errors

This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter’s approach.

Analysts estimate that 10% to 20% of telecom charges are billed in error, and the financial impact can range from a few dollars to tens of thousands of dollars a month.

On any given monthly statement the items being over-billed run the gamut of services delivered by the provider, and can include charges for invalid circuits, billing disputes, contractual issues, fraudulent charges, set-up fees and improper rates.  These charges can appear on the invoice or can be buried within the bundled services comprising monthly recurring charges. 

Over-charges, to a large extent, reflect the byzantine complexity of telecom agreements. While carriers don’t intentionally doctor their invoices, they’ve done little to improve their billing and invoicing processes or to facilitate customers’ ability to identify and recover costs.  Indeed, customers who attempt to recover credits from overbillings and resolve billing anomalies face huge challenges. 

One is documentation. In past years, carriers provided written documentation detailing charges for utilization, physical inventory and circuits installed and decommissioned.  As services became increasingly complex, the documentation has moved to offline formats and has become increasingly difficult to access.

At the same time, carriers have experienced significant turnover, and today lack account reps who have the expertise to navigate the vagaries of invoices and billing platforms.  This has led to a buyer beware mentality, where customers increasingly bear the onus for ensuring that statements are accurate and that negotiated discounts are actually applied.  

Specifically, many carriers are putting contractual terms in place to limit the amounts that customers can recover from overcharges. For example, contracts may stipulate a window of six to 12 months to as little as 30 days during which a customer can document a billing discrepancy and receive credit for the overage.  If the claim is made beyond the window, the carrier isn’t liable for any reimbursement. Basically, the carriers are saying, “By paying the bill, you agree that it’s accurate.”

To further complicate matters, several factors significantly increase the risk of billing discrepancies. One is organizational change.  Any merger, acquisition or divestiture within an enterprise drives disruption and can result in circuits, lines and services that a customer no longer uses, but that continue to appear on invoices and continue to be paid for.

Another factor is the migration to new technologies, such as SIP, which frequently results in legacy assets and services falling through the cracks.  Following a network transition, existing PSTN services often remain in place and continue to be billed. In addition to driving unnecessary cost, this undermines the business case and anticipated savings of the migration initiative by reducing the amount of cost savings realized.


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