Don Hobbs, product director of telecom services at Advantage IQ (, says:

Telecom can be a whopper of a corporate cost area, with the largest US corporations now spending hundreds of millions of dollars annually, and about $400 billion being spent on domestic corporate telecom overall. A rule of thumb for estimating telecom expenses for most companies is just under 1% of revenue, with the percentage being somewhat higher or lower based upon the technology and communication requirements of the specific business.

What’s remarkable is the meteoric rise in spending on wireless telecom. What was once a handful of cell phones given out as executive perks is now a full-fledged network component with large numbers of employees using smart devices connected to company applications. Wireless spending is poised to exceed wireline within 2-3 years, with most of that growth driven by data requirements, not just voice.

Wireless is the largest area of concern for many telecom cost managers. There are a few key actions all companies can take that will lower costs significantly, sometimes up to 50% :

  • Enlist your AP department to create a list of everyone who gets their phone reimbursed through an expense report, and convert those to corporate liable wherever possible. For corporate liable phones, conduct an “enrollment” program to capture key information such as employee name, phone number, carrier and device type. Run that enrollment list against HR lists to identify people who are no longer with the company, it could surprise you how many former employees are getting free service at your expense.
  • Set policies to control these excess cost areas, and while you are at it, set strict policies for appropriate use of company phones in such areas as texting or talking while driving. Avoiding potential litigation down the road is a legitimate form of cost containment.
  • By getting your actual usage aligned with the most advantageous pooling and targeted individual plans, carriers can no longer take advantage of significant over or under buying, both of which are highly profitable for them.
  • Negotiate. With a clear handle on your wireless environment you are in a great position to leverage the most favorable contractual terms with the carrier.

Wireline spend has similar opportunities to reduce costs.  Some areas are:

  • Eliminate late fees.  With 1.5% per month fees added by carriers it is not unusual for 1-2% of a company’s telecom spend simply being tied to payment inefficiencies.
  • Build an inventory of services.  Most companies with a national or regional footprint have multiple vendors, so it is important to combine information into a single inventory database.  For companies with similar multiple sites such as commercial or retail chains, profiles can be designed to allow cancelling unnecessary levels of service at individual locations.
  • Manage contracts.  Know your expiration dates and plan plenty of time to negotiate your next deal.  Issue an RFP to learn what the market baselines are, and at least keep your incumbent vendor honest.
  • Pay vendors what you owe them, not what they bill you.  Carrier billing is riddled with errors and crammed charges that you can control with effective validation processes.
How can enterprises control spending?
The biggest problems that small to mid-sized enterprises have in controlling telecom are lack of internal expertise and lack of resources. The people they do have might be doing a great job of running the network, but are they specialists in contracts and negotiations?  Do they have a database to build accurate inventories?  How can they evaluate optimized rate plans for hundreds of wireless users each month?

To get a handle on costs, the first step is always create an inventory, both wireless and wireline.  Enlist AP to provide you with copies of every bill being paid or expensed that falls into the telecom category.  Now you know how much you are spending, and with which vendors. Next, build an inventory of these services. Capture as much as you can from the invoices, but often you will need to work with the carrier to acquire Customer Service Records or other data to complete this inventory.  At this point you know the details behind those expenses. Finally, assemble contracts for all of your telecom services. These contracts serve as the “rulebook” for your relationship with your carrier, and if you want to improve the situation, you need to know where you stand today. Armed with this information you can plan a strategy to run a better network, at less cost.