WAN Services /

Don't rush to farm out the review of bills

By Lisa Pierce
Network World, 10/15/01

Have you ever been approached by a company to review the accuracy of your telecommunications services bills?

Typically, these companies promise to uncover billing inaccuracies in exchange for a percentage of the monies due. That cut can be as high as 50% of "discovered" savings. And, in addition to high fees, customer satisfaction with such firms has been mixed.

These companies are not needed if an organization's telecommunications staff regularly reconciles bills. Everyone should, of course. For instance, one Giga client recently discovered its competitive local exchange carrier was charging federal, state and county excise rates based on tariffed prices, instead of on the discounted prices it had negotiated.

Unfortunately, a thorough, internal review is not always possible. In its absence, third-party review of telecom services bills may be appropriate on a limited basis, especially for organizations facing one or more of the following problems:

Frequent changes in access: These changes include additions and terminations. It is not uncommon for customers to continue to be billed for access lines and trunks that have been disconnected, even though the disconnects occurred many months - or even more than a year - earlier.

Frequent changes in service(s): These changes include adding or dropping a particular service or feature for each site; adding new phone numbers; and adding or dropping users of particular services and features (pagers; wireless phones; VPN accounting or authorization codes; changes in billing and call detail reports; changes in users who access carrier service and network management systems and others). The responsibility to authorize, track and reconcile such modifications should fall on the shoulders of a select group of people who essentially become life-cycle managers. A monthly review of such events with the carrier's account team is highly recommended.

The discount rate for a service is tied to the current tariffed rate or list price, and is constantly adjusted over time as the reference rate adjusts: This becomes more complicated if the effective price of the service is also pegged to short-term price promotions.

Unless the above problems are particularly severe, it is better to redirect internal resources to uncover billing discrepancies and recover monies due from telecom carriers. Given those 50% fees, if your staff finds just half of the potential savings a third party would find, the financial return is the same as if an outside firm had been used.

However, customers considering using an outside firm's services should also consider following these practices:

Obtain references of recent satisfied customers whose network resembles your own.

Speak with recent users whose network and needs resemble your own. What did they find useful and not useful about this approach?

Don't use the services of a company that expects you to recover the money from the carrier; make the vendor responsible for obtaining that refund. If a contingency fee is negotiated, only agree to pay it after obtaining the refund. Payment of contingency fees should be the exception; instead, pay for services on a time- and material basis.

Explicitly limit the outside firm's activity to perform a particular task, or only at a particular interval, such as two-thirds of the way through your current telecom contract.

Don't use its services on a continual, open-ended basis.

Review monthly bills and calculate the effective rate and compare it with pricing and tariff information supplied by the account team. Compare all this with the contract's terms, and ask your account team for written explanations/resolution dates. Hold them to it.