Telecom Expense Management Blog

While you may have a responsive telecom carrier account team who treat you well, they still are in business to maximize the profits they earn from you. Hopefully, your experience with your carrier has been good. Unfortunately, it is possible that your experience has not been a positive one. You may be suspicious of extra charges on an invoice or you do not feel your account team is supporting you. Whatever the case, it is important to understand what motivates carriers in order to understand how to effectively perform internal wireless expense management.

Carriers are under extreme competitive pressure. Couple that with antiquated systems that are too expensive to update easily, and you have a perfect conditions for overbilling. Often carrier account teams are compensated by plans that entice them to push your organization into features and other expenses you do not need. Sales rep compensation plans are focused on recurring charges, not on overages. While it is in the carriers best interest to recommend optimization suggestions, often the teams are ill-equipped to provide good ideas for true wireless cost management.

The Life of a Telecom Carrier

When it comes to providing useful information, it is not unusual for carriers’ internal systems to be ineffective at providing regular, automated reporting. That leaves it to the carriers’ account team to manually create effective reports, which often makes them simplistic. Furthermore, client satisfaction often takes a back seat to revenue generation. After all, there is more money to be made by increasing your device count. While carriers will not stand in the way of you managing your wireless expenses to reduce expenses, they will not typically bring to your attention that you are overpaying unless they fear losing your business.

The bottom line is wireless carriers are not your friend. That being said, they are also not your enemy. Most organizations simply want to pay a fair price. The thought of spending hours determining if you are being overcharged is unpalatable. Plus, carrier invoices are difficult to understand. If you spend some time analyzing your bills, then you are probably catching some of the issues. If you do not spend any time analyzing and rely solely on your carrier’s representative to take care of this for you, your organization is definitely overpaying.

Carriers are in business to make money, and that is fair. However, you must spend time protecting your organization against overbilling, and that takes time and effort on your part. Spending time and effort to engage in some wireless expense management to review invoices and ensure that they are in alignment with your organization’s needs is worthwhile

There are several ways a wireless expense manager can allocate the cost of the pool plan to different cost centers.

Average per line.  With this method, you simply add the total monthly recurring and peak charges and average per each line in the pool plan. 

1. 100% Cost per Minute.  With this method you take the total monthly recurring and peak charges and divide by the peak (non-mobile-to-mobile) minutes to derive a cost per minute.  Then you allocate the pool costs by charging each user the cost per minute times their peak usage.  Users with zero peak usage in that month should be charged nothing for the voice component.  Of course, if they only made text or data charges, those costs would be directly allocated to the individual and not averaged in the pool.
2. Base Plus Cost per Minute.  This method is a hybrid of methods 1. and 2. Here you would allocate a base charge (say $39) to all users in the pool.  This is the cost to have the potential benefits of a cell phone, regardless of how much you use it.  Any excess costs (pool monthly and peak charges) above the base charge times the number of users is converted to a cost per minute.  Thus, each user is allocated a base plus the cost per minute times their peak minute usage.
3. Everyone Gets Unlimited.  While this may not be the most cost effective option, it does simplify order, administration, and monitoring. If your company is large enough, you might be able to negotiate the unlimited plans down to $89/line.

If you need help with your wireless expense management, contact us today or call us at 877-219-8012

You would think that it would be easy to get approval from senior management to migrate to a pool plan to reduce wireless expenses.  This is not always the case. Migration can become a complex and contentious issue when there are multiple cost centers.  Cost center managers that have low usage individual lines do not want to subsidize the high usage cost centers that share the pool.  For example, cost center 1 has 10 users on the lowest individual plan of 450 minutes (at $39/line) and cost center 2 and 10 users on the highest individual plans of 2,000 minutes (at $89/line).  So the total pool size needed is 24,500 minutes for an average of 1,225 per user.  The closest plan that the carrier has is 1,500 minutes so you put all 20 users on the 1500 minute plan (at $59 per line).  Cost center 1’s cost has gone up $190 in the pool even though the company reduces wireless expenses and saves $100 ($1,280-$1,180).

In my next post on wireless expense management, I will explore different ways you can allocate a pool plan.