Extreme makeover, wireless edition

Corporate reorganizations are becoming almost commonplace in this difficult economic climate. Even the largest, most storied institutions are finding themselves parties to mergers, acquisitions, divestitures and downsizings they probably didn’t envision as recently as three months ago, much less when they negotiated their last round of wireless service and equipment deals.

And while a reorganizing company's contractual commitments for wireless service are little more than a drop in the proverbial bucket when compared with its other challenges, those contracts still must be managed to ensure that the new entity will have the services and devices it needs at the lowest possible cost.

For telecom and IT managers of companies in the throes of a reorganization, unraveling and re-organizing relationships with wireless providers to fit a company's new circumstances can not only be a source of unplanned costs and headaches, it can also prove to be a logistical nightmare.

In this article, we offer pointers to help make the process run more smoothly, eliminate waste and inefficiencies, and turn the exercise into an opportunity to reduce the enterprise's wireless costs relative to those of its predecessor(s)-in-interest.

The spin-off zone

Different forms of corporate reorganizations raise different sets of issues. For example, when a company spins off business units in an effort to streamline its core business, the spun-off entities may be able to buy out the original company's contracts initially, but over time will need to negotiate their own service provider contracts.

The spun-off entities will be concerned about continuity of service and maintenance of discounts, custom pricing, and beneficial terms and conditions. The original customer of record will want to avoid early termination fees (ETF), while trying to hold onto the discounts and reduced rates that its original size warranted, and perhaps ultimately consolidating service arrangements and providers. Similar issues, with a slightly different twist, arise in connection with reductions in force.

Mergers and acquisitions raise additional, more complex issues, including establishing or maintaining the technical compatibility of devices and services across the new enterprise; re-negotiating financial, legal and operational terms to address specific requirements of the new entity and take advantage of post-reorganization economies of scale. Plus, there's reconciling potentially conflicting policies of the legacy organizations on issues such as corporate vs. individual liability, cost control and reimbursement, device management, and centralized vs. distributed, billing, ordering and management.

The termination determination

Unless an enterprise has one of the rare contracts that allows termination of corporate-liable lines for convenience without paying ETFs, chances are that any downsizing will result in liability for ETFs for discontinued corporate-liable lines.

The major wireless carriers have tightened up their early termination policies in the past couple of years, and it is more difficult than ever to negotiate much more in the way of relief from ETFs than a 10% annual waiver pool. Under present economic conditions, however, it is perfectly reasonable for an enterprise customer to insist on augmenting the waiver pool with the right to terminate additional lines as necessary in connection with a corporate downsizing, divestiture, or business downturn. Preferred customers have that right, on top of their waiver pool.