Telecom negotiation points to ponder

Carrier stability: Whom do you trust to be here tomorrow? Will the pace of change and competitive dynamics continue, or will the industry stabilize more toward an oligopoly? Even AT&T, which is widely touting its advantage over its peers financially, may find itself acquired by a regional Bell operating company or foreign buyer. If you can live with this uncertainty, any of the biggest four carriers - AT&T, WorldCom, Sprint and Qwest - are still logical choices. Given their size and legacies, it's hard to visualize any of them in a network shutdown mode.

Commitment flexibility: What is a reasonable commitment to make? The key to retaining leverage was and remains undercommitting on your telecom spending. In the past, this leverage was used primarily to drive down prices year over year. Spread your risk and employ multiple carriers whenever you like. As you increase your volume commitments, the need for stronger contract protections such as service-level agreements (SLA) and bankruptcy clauses increases, too.

Price vs. service tradeoffs: Can you discern a difference in service and support levels, and what premium, if any, is your company willing to pay? Most enterprises don't see any of the major interexchange carriers adding a lot of unique value. Sure, one company's balance sheet may be stronger now, but how does that directly impact your level of support and service? Most carriers have implemented or announced layoffs, so it is prudent to protect oneself from future service degradation by guaranteeing service levels in an SLA. However, one area in which service differentiation is widely seen is in managed services, but these offerings usually carry a pricing premium.

Back to main feature: "Challenging times for telecom deals"

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