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Are Your Contracts Healthy?

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QUICK CARRIER CONTRACT HEALTH CHECKLIST

Here’s three quick questions that will give you a good indication of whether or not your current carrier agreements are “healthy” or need help (HINT- if it takes you more than 5 minutes to answer these then you probably need help):

1.  Do your contracts have an Annual Spending/Volume Commitment such as a     MARC or AVC?

2.  Is there specific language protecting you against discontinued services?

        3.  Does any part of the agreement have Auto Renewal language?

If you answered “YES” to any of these questions then your contract is not leading edge and should, at minimum, be revisited and reevaluated. Here’s why:

• Annual Spending Commitments are carrier traps  to lock you into longer Terms and more spending then is necessary and they reduce your negotiation leverage. We routinely negotiate market leading edge rates, terms and conditions in contracts without having Annual Spending commitments

• Carriers want to move customers to IP, Fiber and Wireless technologies to improve profits and are pressuring customers by discontinuing services. Deregulation by the FCC, in most cases, allows this to happen with as little as 25 day notice. This can wreak havoc on networks and applications that have relied on TDM, wireline and related technologies. Unless you have specific and detailed language in your contract BEFORE this happens you are at the mercy of the carriers’ timeline to migrate services.

• When’s the last time you looked at all your carrier agreements to check on the expiration dates and notice provisions? If there’s Auto Renewal language and you’ve missed the requirement for notice you could be locked into another 1,2 or 3 years with no chance to bring rates, Terms and conditions in line with current market or current internal requirements. There should never be Auto Renewal language in your agreements, but if there is, don’t wait- check it now!

One of the most common fallacies out there is that you must wait until you’re nearing expiration in order to revisit or renegotiate these carrier agreements. Not true. In the same way that you don’t wait 15 or 30 years to refinance your mortgage agreement if current interest rates are more advantageous, you shouldn’t wait to take advantage of current/better telecom carrier rates. We regularly are successful in addressing contract deficiencies in contracts that are as recent as 6 months old.

There are many other factors that can also determine whether or not a contract is “healthy”. Certainly, Rates and Pricing are also an importatn component.  Part of our approach at Silver Lining Telecom is to provide a free detailed contract and spend analysis to let you know exactly where you stand relative to the current market. Feel free to reach out to us for this free analysis if you’d like to find out if your contracts are “healthy”.

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