All-in-one-deals: Wireless, data, traditional voice.
One national service provider – Sprint – wants its business customers to sign a single contract that covers wireless, data and traditional voice services. So what, you might ask. Well, if you’re looking for competitive rates and a service provider that lets your wireless dollars count toward your minimum annual commitment, then you’ve answered the question.
One national service provider – Sprint – wants its business customers to sign a single contract that covers wireless, data and traditional voice services.
So what, you might ask. Well, if you’re looking for competitive rates and a service provider that lets your wireless dollars count toward your minimum annual commitment, then you’ve answered the question. The minimum annual commitment is the minimum amount a user agrees to spend with a carrier annually. The carrier typically offers specific discounts based on levels spent.
Because AT&T and MCI do not offer combination contracts, Sprint offers users all-in-one deals that are proving beneficial for some.
“Users are seeing huge savings,” says Kevin Dilallo, a partner at law firm Levine, Blaszak, Block and Boothby, which negotiates contracts for large businesses. About six months ago Sprint started to regularly reply to RFPs with combination wireless/wireline contracts where the customer’s total dollars spent on all services counts toward a minimum annual commitment, Dilallo says. “Users are not only seeing lower service rates, but simplified terms and conditions,” he says.
By that he means that terms such as payment options, provisioning guidelines and the life of the overall contract are the same for multiple services. Other terms such as service-level agreements (SLA) will differ, and each would be spelled out in the contract. One SLA benefit is that Sprint offers network performance guarantees on its wireless services. It is the only carrier doing so today.
Flexibility a big draw
A combo contract also presents more flexibility. As data and voice prices have dropped, users might have a harder time meeting their minimum annual commitment, says Johna Till Johnson, chief research officer at Nemertes Research and a Network World columnist . By having all services count toward the commitment, users also likely will be pushed into a better discount bracket.
“This is not a trivial amount of money,” Johnson says. “Non-core voice and data services can represent 60% of a users’ total telecom [dollars spent].” With more employees using cell phones and with the proliferation of BlackBerry and Treo devices, wireless voice and data expenses can really add up, she says.
For example, customers with a $5 million minimum annual commitment based only on traditional voice and data services might spend more like $12 million annually when wireless voice and wireless data are counted, Johnson says. By bumping their commitment up to $12 million, they will get better rates and typically double their discounts.
“It’s really important and can make the difference in getting rates you can or can’t live with,”Johnson says. “Traditional voice and data rates have come down over the last few years and that can affect a user’s [minimum annual commitment]. But wireless rates have not come down at the same rate.”
Users still pay a premium for the convenience of wireless. According to the Telecommunications Industry Association , users pay more than 7 cents per minute for wireless voice services. Business users can negotiate traditional voice services down to 2 cents per minute.
Better prices is one of the advantages of combining services onto one contract that all count toward one minimum annual commitment, says Tom Shaughnessy, a marketing director at Sprint. But combining contracts and salesforces is only one part of the company’s plan, he says. Sprint also is combining its wireline and wireless services. “Single contracts will just make more sense for more users,” he says.
For example, the company offers wireless users the ability to access all of Sprint’s audio conference bridge telephone numbers for $5 per month.Minutes spent on the audio bridges do not count toward monthly minutes packages.That could put up to 100 minutes back into play, he says.
Offering combo contracts has become easier for Sprint since it integrated its Sprint PCS business with its parent company last year. No other carrier sells its services in such a fashion, although that might change.
AT&T, which signed a mobile virtual network operator deal with Sprint in May, likely will offer users similar combo contracts early next year when it starts offering Sprint’s wireless services to AT&T customers. Since AT&T spun off AT&T Wireless in 2001, AT&T proper has been left with a gap in its service offerings. Sprint and AT&T’s closest competitor, MCI, still doesn’t have a reselling arrangement.
The largest wireless provider in the industry today, Verizon Wireless, isn’t working with its parent on joint contracts. According to a company spokeswoman, it bid on new business as separate companies.
One analyst says Verizon Wireless’ market leadership is one reason it doesn’t offer combo contracts.
“Verizon Wireless can afford to say [to users]: ‘Like us or leave us,'” Johnson says. “Wireless is so strong, they don’t need to make that extra step.”
BellSouth and SBC customers might have better luck signing a combo contract if they’re also looking at buying Cingular Wireless services. The two RBOCs own that wireless service provider. Dilallo says he’s familiar with SBC offering combo contracts to large enterprise users, but not as aggressively as Sprint.
Although the RBOCs want to offer national data services, none have national wireline data coverage.
One customer’s experience
Finlay Enterprises of New York is reaping the benefits of signing one contract with Sprint.
Finlay, which operates 980 jewelry counters in department stores around the U.S., signed its deal with Sprint 18 months ago. Although well before Sprint integrated its wireless and wireline businesses, the jewelry company was able to get an integrated contract.
“By consolidating wireless under this centralized Sprint plan and being able to have a number of pool minutes to work from, we’re seeing a savings of about $100,000 per year, and that’s just in voice cell service,” says Jim Giantomenico, CIO at Finlay.
Although he did not want to give details about the deal he received from Sprint, he says Finlay gets “much better discounts.”
“MCI was our incumbent. I wouldn’t say we were dissatisfied, but our term was coming up and given [MCI’s] financial situation we thought it was in our best interest to re-bid the contract,” he says.
Finlay chose Sprint because it was aggressive on price, assigned a technical account manager and network specialists to ensure the transition would go smoothly, and agreed that wireless be included in his contract and count toward the commitment.
The jewelry company has 20 dedicated frame relay sites, 180 wireless voice users, and about a dozen of the 180 also use Sprint’s wireless data service called Sprint Vision.
Finlay says when it signed its contract in March 2003 it was dealing with multiple salespeople, but now there is one point person responsible for all services.
Not everyone is sold on the idea of combo contracts. Using a simplified contract to get a better price isn’t the best way for corporations to go about signing new deals, says Pete Wilson, CEO at Telwares, a company that negotiates contracts for enterprise business customers. Users should issue RFPs for individual services and see who has the best prices.
“That’s how savvy enterprises are getting the best rates,” Wilson says.
Although Sprint says its integrated contracts are available to all business users, Johnson says some might need to be prepared to fight to have their total wireless dollars spent count toward their minimum commitment. She says while negotiating a contract for one of her clients, Sprint initially said only 10% of the user’s wireless dollars would count toward its minimum commitment. In the end, Sprint changed its tune and let the customer apply 100%.
Johnson says the fact that the sales folks first only offered 10% – while corporate says these offers are available to all business users – shows a level of confusion. Bottom line is that customers that are negotiating contracts with Sprint now or in the near future need to be aware these offers are out there, she says.
“I don’t think sales people at Sprint are trying to be duplicitous. They may just not be getting the clearest message from corporate,” Johnson says.
Sprint says it is making significant efforts to be sure salespeople in the field are capable of selling, negotiating, delivering and implementing wireless and wireline services equally as well. The carrier maintains that all business users can combine both wireless and wireline services on one contract and have total dollars spent count toward their minimum annual commitment.
One of the biggest downfalls of signing such a contract with Sprint or any other provider is that users might be leaving themselves vulnerable. What happens if Sprint’s network goes down? Users still should consider secondary carriers so they are not left in the lurch if a large network outage occurs with their primary carrier.
