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Bargaining for economical LD services.

Obtaining long-distance telecomm services has traditionally been a oneway street. And the carriers usually controlled the direction of traffic. Over the years, the Big Three of long distance--AT&T, MCI and Sprint--have steadily lowered their rates. MCI and Sprint continue to this day to maintain a 10% to 15% advantage over most of AT&T's rates, a policy they have pursued since their inception. So why haven't most users switched away from AT&T?

In many cases in the past, the transition was rather cumbersome. It was complicated by tactics to discourage carrier changeouts, such as transition fees, extensive paperwork, coordination delays, and outright harassment, e.g., threatening to go to the company's top brass.

Today, those problems have been minimized, but not totally eliminated. Corporate users who decide to change IXCs still face coordination problems, missed due dates, finger-pointing, and billing errors.

Personal long-distance users have a somewhat different set of dilemmas. MCI television ads suggest the value of providing them with a list of one's friends and family members. Sprint talks a similar game, but with one's business associates. AT&T tries to blast the whole deal by asking why you would want to pass around the phone numbers (which are supposedly a private matter).

Suppose you decide to find, and implement, the best deal on long-distance service.

As a corporate telecomm professional, you can simply issue an RFP for LD service and wait for the carriers to assemble outside your door. (If you are starved for attention, this is one effective way to feel important.) AT&T will pitch Tariff 12 or some other special arrangement; MCI and Sprint will probably propose something similar. If your company is large enough and has dozens of locations, you can virtually name your price. Further, if you are really smart, you'll also set up a multiple-carrier arrangement, dividing traffic over two or more carriers.

This way you can keep each carrier trying to outdo the other, which helps you negotiate the best rates. This approach also means that a network failure with one carrier will not disable your entire network. You will still have service available with your other carrier.

But what if you are a small business owner or office manager? Here are some suggestions. Start by getting someone else to do the research for you. Consultants will certainly take on the job, but you will probably pay top dollar for their time, if the job is done on an hourly basis. Try to get their services on a fixed fee basis, with a ceiling on the fee. Some consultants work on a contingency basis, taking a percentage of the savings they obtain.

Other options are available. A growing number of entrepreneurial firms have materialized in recent years that specialize in reselling long distance. IXC tariffs (or no tariffs at all) make these alternative carriers possible. The IXCs frequently have special tariff schedules available for companies who resell IXC services.

A classic example is what happened when AT&T made it possible for companies to resell its Software Defined Network (SDN) services by aggregating multiple small users into a single SDN. We discussed that kind of arrangement in the September 1990 issue of Communications News. Unfortunately, that option was loaded with problems, especially those companies who opted for AT&T's SDN and not MCI's or Sprints's.

AT&T's billing was a disaster for a while; due dates were regularly missed; service orders were lost, etc. AT&T found itself in a losing situation, and has ever since been looking for the right opportunity to get out of the aggregation business.

As an aside, my business and personal LD service is still aggregated on an AT&T SDN, and things have been fine over the last year or so. But the first few months.... In the meantime, my rates still appear to be quite low, considering other IXC discount programs and my particular level of usage.

Maybe a long-distance reseller is an option. A true LD reseller provides LD service directly from an IXC at discounted rates, often better than the carrier's listed discount tariffs. Resellers regularly offer discounted long distance, 800 service, LD calling cards, and even specialized arrangements for hotels, motels, hospitals and universities.

The reseller probably has access to six-second billing arrangements, which often can save an additional 7% to 10% on top of an existing discount service. Make sure you can get six-second billing, because you only pay for what you use.

Check to see if your reseller offers services from more than one IXC. You might be able to get a better per-minute rate if the reseller can negotiate a deal among the carriers (although that is usually reserved only for the larger resellers). But each reseller should be able to secure six-second billing for you, as a minimum. With that kind of market clout (the reseller's), you may not have to change carriers to get a better deal.

That will probably save you a non-recurring charge to change carriers, plus eliminate the uncertainty that often goes with a carrier swap.

Here's another possibility. Strike an agency deal with a resale LD carrier to sell its LD services, in return for a commission or other fee. That way, your LD costs could be reduced further. It also assumes you have the time, staff, and interest to get involved as an agent for the reseller.

Agency resellers look for people with sales experience in real estate, insurance, and even automobiles as prospective agents. What's important isn't their telecomm knowledge. Rather, it is their network of contacts within the community. Discounted LD service to small businesses is really a personal type of selling, not usually handled by experienced telecomm reps accustomed to the long lead times associated with corporate users.

Make sure the ultimate result is still "genuine" service from carriers like AT&T, MCI, Sprint, or whoever you prefer. Insist on six-second billing. Find a local LD reseller in your yellow pages. Ask your friends at the golf course or gym where they get their long distance.

Big savings on long distance are no longer the province of Fortune 500 companies. With a bit of research and some persistence, you can save 15% to 30% off your monthly LD bill, and still get brand-name service.

Start bargaining!
COPYRIGHT 1992 Nelson Publishing
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Communications Management; long-distance telephone services
Author:Kirvan, Paul
Publication:Communications News
Article Type:Column
Date:Aug 1, 1992
Words:1051
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