10 ways to cut telecom bills

Telecom is among the top 10 costs for most businesses in the United States, according to industry experts, and for many it ranks in the top five. With that in mind, here are 10 tips for cutting your telecom expenses that range from organizing your bills better to rethinking how you support older technologies.

1. Go flat rate.

Businesses, such as Fidelity Investments, are moving away from plans that let all mobile users share a bucket of wireless minutes per month to flat-rate, per-minute plans.

If a company is paying $1,200 per month for a bucket of 20,000 wireless minutes but employees use only10,000 minutes, your cost per minute has essentially doubled, says one consultant who asked not to be named.

With a flat-rate pricing contract you pay for only what you use and you know you will pay a set amount per minute every month. The consultant says she is working with a U.S. military department that has renegotiated two of its four wireless service contracts to flat rate and expects to spend 10% to 30% less annually.

"Flat-rate plans also offer customers soft cost savings," says Phil Redman, research vice president at Gartner. "There's less management that needs to take place, no need to manage pools of minutes and where individual employees fit into those plans."

Redman points out that you will not find flat-rate plans as part of a wireless service provider's standard offering. But carriers will negotiate a flat-rate plan, he says.

2. Reverse auctions.

A reverse auction for telecom services starts by stating what your company needs, whether it's a worldwide data network or wireless voice service for 2,000 sales representatives.

Carriers then bid for your contract, with prices dropping as competition heats up. Carriers also include contract terms when they make their bids. Terms include service-level agreements (SLA), early termination fees and specifics on pricing.

Reverse auctions aren't new, but companies that offer this type of procurement say large businesses are now more comfortable with it than in previous years.

Using online RFPs and reverse auctions to procure circuits is one of Fidelity's best practices to keep telecom costs down, says Reed Saunders McGoldrick, a vice president at the Boston financial services company.

Two companies that offer reverse auctions for telecom services are Avotus and Source Loop, each of which says its service can cut customers' costs in half. In addition, they say using reverse auctions can slash the length of the RFP process from nine-plus months to about two.