by c. douglas jarrett, partner, keller and heckman llp [email protected] and rick sigel, ceo and...
TRANSCRIPT
By C. Douglas Jarrett, Partner, Keller and Heckman LLP
and Rick Sigel, CEO and Founder Silver Lining Telecom
BEST PRACTICES FOR ACQUIRING TELECOMMUNICATIONS SERVICES
PROCUREMENT CYCLE
DATA COLLECTIO
N
CURRENT / FUTURE REQUIREMENTS
CARRIER DUE DILLIGENCE
SOURCING EVENTNEGOTIATIONS
FINAL CONTRACTS
IMPLEMENTATION
MONITOR MILESTONES & COMMITMENTS
DRIVING TO AN OPTIMAL TELECOM PROCUREMENT
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important
TOPICS
Wireless Services Generally Available Voice and Data & Data-
Only Services Plans Wireless voice and data services offered to businesses
and consumers on carriers’ authorized frequencies operating on carrier-determined transmission technologies (GSM, CDMA, LTE)
Subsidized handsets, smartphones, tablets, and air cards
In-building repeaters for customer’s high-traffi c locations (negotiable)
Principally domestic with international roaming options
SCOPE OF SERVICES
Wireless Services (cont’d)Business-Only Wireless Services
Push-to-Talk-Services Includes subsidized handsets
M2M Services Wireless data service for which application restrictions
apply Offered over 3G or 4G networks Interconnects to customer’s MPLS service, not the public
Internet Carrier-approved devices/modems, not subsidized by
carrier
SCOPE OF SERVICES
Wireline Services
Local Exchange Services Special Construction Arrangements Enterprise Services
1. Basic Transport Services 2. Dedicated High Speed Internet Access
Service3. Layered Services4. Rest-of-World Services
SCOPE OF SERVICES
Wireline Services (cont’d) Local Exchange Services
Regulated intrastate voice services–PRIs, PBX Trunks, FB1s
Straight volume discounts and term commitments Typically acquired under state-specific
tariffs/contracts
Special Construction Arrangements Examples
Dark fiber ring Physical extension of carrier’s network to a customer facility
Offered by local telcos or IXCs pursuant to contracts sometimes tariffed
SCOPE OF SERVICES
Wireline Services (cont’d)
Enterprise Services Agreements Almost always interstate and international services Commercial agreements, not tariffed in USA
1. Basic Transport Services Circuit switched interexchange voice and VoIP inbound
and outbound Dedicated access services—DS-1, DS-3 and Ethernet
Private Line Service-- DS-1, DS-3 and Ethernet Multiprotocol Label Switching (“MPLS”) Service* Virtual Private LAN Service (“VPLS”) Satellite service
2. Dedicated Internet Access Services*
SCOPE OF SERVICES
Wireline Services (Cont’d)
Enterprise Services Agreements 3. Layered Services
Hosting CPE/Network Management Firewall Data Center (Collocation) Many network-based conferencing services Content delivery services Cloud computing
4. Rest-of-World Services Typically MPLS and Private Line Some Layered Services—CPE/Network Management
SCOPE OF SERVICES
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important
TOPICS
WHEN TO START? Timing and leverage is always key—Don’t wait to renegotiate !
Uncommitted spend New business or technology upgrades – know what the account teams
want to sell Term Extensions
Know current detailed demand set/inventory and contract milestones Maintain credible threat of loss or migration – minimum 6 - 9 month lead time
for data collection, sourcing strategy, negotiations and possible migrations WHY DO IT?
Drive savings /cost reductions, obtain market leading rates, terms and conditions Typically 20% - 25% gap to market on contracts over 12 months old
No linear relationship between spend, commitment and price among customers Knowledge, preparation, benchmarks and leverage are the keys to any
negotiation Remain open to options and alternatives Carriers usually “hold the cards” on benchmarking and T’s & C’s Drive to more level playing field Timing+Flexibility+Knowledge >>>> Uncertainty for carriers = Better
overall result
PROCUREMENT CYCLE
WHAT’S INVOLVED? First understand different carrier perspectives and current environment
Wireless gets attention; wireline accounts for 50% - 75% of typical enterprise spend
Local services = low profits. Traditional Voice services less attractive to carriers
Carriers highly value data services – “stickier” with higher margins and more viable choices
Power of incumbency Less staff on customer side creates major bias in favor of incumbent - Carriers know this!
Carriers trying to increase contractual commitments both in Term and Spend (in addition to individual circuit/SOA Terms)
Pricing continues to go down – not as fast, but still declining Competition continues in the form of technology choices (Ethernet,
VoIP/SIP, Wireless) Account Team Realities
PROCUREMENT CYCLE
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important
TOPICS
Determine which vendors to invite Due diligence based on current/future requirements
Develop clear outline of process steps and timetable Schedule (in-person) Bidders’ Conference Recognize that carriers always want more time
Provide detailed demand set—“Book of Business” Usage profiles / details for voice and wireless Geographic info i.e. sites, addresses, CPE, # of users etc.
Required Terms and Conditions Term – 3 Years Wireline / 2 Years Wireless Commitment level and structure for each Periodic Rate Review with remedies Implementation and other SLA’s with remedies Customized rate plans for wireless Business Change/Downturn/Divestiture with specific remedies Billing Issues – resolution timing, remedies Account Team performance obligations
DEVELOPING RFPS
Develop and require standardized format for responses Carrier worksheets for side-by-side comparison
analysis Scorecards helpful for T’s & C’s i.e. relative
importanceRequire Senior Exec direct contact information for
escalations Include non-recurring pricing aspects such as
implementation/migration costs and assistance, equipment, demo’s and tests
Encourage creative/alternative solutions or technologies Determine fi nalists
Negotiate to “Best and Final” off ers Ensure implementation, migration, and billing are correct Execute new agreements
DEVELOPING RFPS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important
TOPICS
Analytics—Model Potential Award Scenarios Financial Impact and Trade-Offs
Savings, Increased Bandwidth, Equipment Upgrades etc. Geographic Coverage
Wireless and Wireline Technology Roadmap
Internal Resource Requirements Hard and Soft Implementation/Migration costs Number of Vendor Relationships or Applications to Manage
Require Formal Tracking and Review Process 1st Bill Review with Account Team(s) Quarterly Reviews with Vendor – Billing, SLAs,
Optimizations, Implementations, Outages etc.
DECISION MAKING AND VALIDATION
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important
TOPICS
Services agreements are drafted by and for the carriers
Separate Wireline and Wireless agreements
Major components
Master Agreement
Schedules and Attachments
On-line pricing, terms and conditions—Authorized User Policies
TERMS AND CONDITIONSWHAT’S REALLY IMPORTANT
Make sure the good stuff you negotiated is in the agreement Pricing expressed as fixed rates All agreed upon credits Pricing Review, Business Downturn and Technology
Migration Clauses Account team support Low minimum revenue commitment; no service-
specific minimums Line minimums-only in Wireless deals Accelerated handset refresh periods In-Building repeaters for major locations
TERMS AND CONDITIONSWHAT’S REALLY IMPORTANT
Key Issues to Overcome in Carriers’ Agreements (directly or indirectly) Limited damages for carrier Limited termination rights for customer Service Level Agreements
Wireline SLAs don’t address chronic issues Not an issue with Wireless Service—No SLAs
Address M2M differences 2-year term impractical M2M services requires service levels/right to terminate Understand application/operational limitations
Customer indemnity obligations minimized Carrier-preferred dispute resolution provisions for billing &
other issues
TERMS AND CONDITIONSWHAT’S REALLY IMPORTANT
Key Subjects to Consider, Include or Address Value of a “low” minimum revenue commitment
Reasonable (extended) transition period upon expiration or any early termination
Customer’s standard vendor insurance obligations, and workplace safety and access rules—particularly if carrier accesses customer premises or equipment
Account Team support commitments
Cybersecurity Considerations Carriers disclaim responsibility for unauthorized access to customer data Obligation to assist in troubleshooting a cyber attack Different principles must apply if layered services are part of deal
TERMS AND CONDITIONS WHAT’S REALLY IMPORTANT
PROCUREMENT CYCLE
DATA COLLECTION
CURRENT / FUTURE REQUIREMENTS
CARRIER DUE DILLIGENCE
SOURCING EVENTNEGOTIATIONS
FINAL CONTRACT
S
IMPLEMENTATION
MONITOR MILESTONES & COMMITMENTS
DRIVING TO AN OPTIMAL TELECOM PROCUREMENT
C. Douglas Jarrett, Partner, Keller and Heckman LLP [email protected]
and Rick Sigel, CEO and Founder Silver Lining Telecom
THANK YOU!