8 Tips and Tricks for Saving on Telecommunication-related Costs

By Christian Ericson, BITS

As the banking industry begins to recover from the Covid-19 pandemic and interest rates remain low, many community financial institutions will look for ways to reduce their operational expenses.

Your telecommunications-related expenses for voice, Internet, and data circuits are likely to be a large part of your overall budget, and banks may be paying 20-30% more than they should be in telecom costs. As a service provider working almost exclusively with community banks for telecommunications services for the past 16 years, BITS has acquired some tricks and tips to help your financial institution reduce unnecessary expenses regarding telecom contracts.

1 Your bank won’t realize the maximum savings available unless you are putting your services out to bid.

When you only work with one telecom carrier, you don’t get competing offers or realize the extent of options available to your locations. While you may find a decent price on Internet service from your current carrier, a number of other transport options, such as private fiber may be a better fit for your branch locations. Getting quotes from multiple carriers on a variety of options will ensure that your bank is getting the right service at the best price.

2 Align contracts for your telecom-related services:

You won’t have leverage when negotiating for better pricing unless you line up contract dates for as many current telecom contracts as you can. Try and make sure that all of your contracts for POTS lines, PRI, WAN (Wide Area Network), and Internet circuits have aligned expiration dates.

3 Use the same carrier or aggregator for all telecom services.

Managing multiple carriers and service providers can be confusing and difficult. Some carriers may fall short on being able to provide telecom services to certain areas where you may have branch locations, but aggregators can typically provide service just about anywhere. By sticking with one carrier or aggregator for all telecom services, you will find the best pricing and an ideal alignment of contract expiration dates.

4 Stay away from auto-renewal.

Auto-renewal clauses allow service providers to automatically continue your contract unless you specifically request cancellation in writing. This locks your financial intuition in for additional years at the end of a contract’s initial term. And often service providers require a 90-to-120day notice period for termination before the actual term end date.

If you find yourself close to the end of a contract’s term, request to continue on a month-to-month basis without increasing your cost to “tariff” pricing, until you can renegotiate new contract terms that better fit any changes that occurred since the start of the contract.

5 Make sure Service Level Agreements best benefit your bank.

SLAs ensure that carriers do what they say they are going to do – securely and reliably get your traffic from one place to another in a timely fashion without disrupting normal business operations. When negotiating a new contract, make sure SLAs are fully detailed and both sides understand what the Chronic Outage Clause entails.

When experiencing an outage or issue, it’s important to document everything, including what the problem is, when it occurred, and how long it lasted. Open a ticket or complaint via the carrier’s service department every time you experience an issue that is violating your SLA. In the event that you need to terminate your contract due to service issues, you’ll have proper documentation filed with the carrier.

6 Sign full copies of the contract – not references to weblink agreements.

You’ll find that some telecom contacts will ask you to sign a contract that includes a URL with terms and conditions, additional clauses, etc. If everything you sign is not on one actual document, you risk the carrier changing the content on the web address section of the contract without your consent or knowledge. Ensure that your contract terms are listed in an actual document (physical or a digital PDF) – and not living somewhere on a website that can be easily changed.

7 Know your main contact at the carrier – and their boss.

It’s important that your service provider or carrier supply specific names and contact information for those to contact in case of service issues. You’ll also want to know how to escalate your problem, especially if you experience communication issues. Insist on receiving all contact information during the negotiation process to ensure any problems are resolved as quickly as possible.

8 Make sure your contact doesn’t allow the carrier to increase pricing.

Some carrier contracts offer heavily reduced “special pricing” for a short period of time (like the initial 12-24 months), then they will increase it to “standard pricing” after 24 months. The delta can be as much as 50% increase without notifying the customer.

About the author: Christian Ericson is Head of Sales/CMO for BITS. Contact: christian. ericson@bits.us or 973-474-1828. Learn more at bits.us/telecomadvisory or contact us at telecomadvisory@bits.us or 888-687-5406. IBA Associate Member