ISP consolidation: Tips on renegotiating your services contract
Push for lower prices before the ISP merger deals are finalized
By
Carolyn Duffy Marsan
,
Network World
, 02/23/2005
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A change would do you good, according to Sheryl Crow. But network managers facing massive changes in the ISP industry may
not feel quite so good about it.
In recent months, so many merger deals have been announced that all of the top-tier ISPs are in flux. Verizon is acquiring
MCI. SBC is buying AT&T. BT is snapping up Infonet. France Telecom is taking control of Equant. Sprint is merging with Nextel.
What's a corporate network manager to do?
In recent issues of the ISP News Report, we're offering advice from industry experts to network managers about how to respond
to the instability in the ISP market, how to get the best deal when renegotiating contracts, and warning signs that a carrier
may be in trouble.
Here are some specific tips for renegotiating your IP services contracts in these uncertain times:
1. If your contract is up for renewal this year, get what you want in writing. Don't be afraid to ask who will be on your
account team and what the parent company's transition plan is. "Get assurances that the company will honor all the terms of
your contracts," says Brian Van Dussen, director of telecommunications strategies at the Yankee Group.
2. Add a clause to your contract that gives you input into changes in your account team. Ask for 90 days notice of any changes
to your account team, advises David Rohde, senior analyst at Tech Caliber. "You need to make the carrier realize that your
account is not to be taken for granted," he says.
3. Ask for a technology refresh clause. The telecommunications industry is familiar with refresh agreements, and customers
shouldn't be afraid to ask for them. "Larger companies spending $100,000 or more in communications a year may want to have
the right to refresh their contracts or reconsider the terms," Van Dussen says.
4. Push for lower prices this year, before the merger deals are finalized. Some analysts say pricing for IP services may stabilize
after these merger deals go through. While prices aren't expected to rise, they may stop dropping at double-digit rates each
year. If that happens, network managers would be smart to lock in to a low price now. "[Network managers] may find that some
of the control or pricing power may shift to the suppliers after all of these deals are closed," Van Dussen says.
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