By Dan Baldwin
The stormy seas of the current economy is ripping holes into the bottom of many "telecom ships".
Following are news headlines from just a few phone companies whose customers have found themselves in treacherous waters over the last several years:
- Bankruptcy Survivor Global Crossing is Acquired By Level 3 - October 2011
- TNCI of Boston Declares bankruptcy - October 2011
- Only Bidder Birch Buys Bankrupt Cordia Communications - July 2011
- FairPoint Communications Emerges From Bankruptcy - January 2011
- Florida's AstroTel Files Bankruptcy - January 2011
- Financially Troubled One Communications Acquired by EarthLink - December 2010
- Accounting Scandal Survivor Qwest Acquired by CenturyTel - April 2010
- Sprint and AT&T in Bankruptcy Danger? - January 2010
- Bankruptcy Survivor MCI Worldcom Acquired by Verizon - January 2006
- Bankrupt Norvergence Liquidated, But Customers Still Pay - January 2005
As the headlines above name some of the biggest names in telecom, it seems that market size is not always a guarantee against financial troubles.
What You Should Do (Before & After) Your Phone Company Gets Into Trouble
Following are actions you can take that will minimize upset to your business voice and data communications in the event that your phone company gets into financial trouble.
BEFORE ...
1. Create an "Emergency Carrier Switch" Plan
Every time a business customer goes through the pain of switching voice or data carriers they hope or swear that this will be the last switch - but it rarely is. Before signing a contract, make sure that necessary steps for an "Emergency Carrier Switch" Plan are identified and put into a written plan.
The two most important pieces of this plan are 1) Switching Numbers and, 2) Switching Networks. Whatever advance permissions are needed must be set into place before the plan is needed. An example is the use of an independent resporg like ATL out of Oregon to ensure you can "port over" your toll free or local numbers if your carrier has a problem.
2. Place Some Business With a "Backup Carrier"
Switching voice and data telecom carriers involves overcoming both administrative and physical hurdles. Unlike the old days it's not as easy as "flipping a switch". Simply getting credit approved and all your phone numbers loaded into a carrier's switch can take many days.
This sometimes lengthy process can be significantly shortened by becoming a functional customer of a second "backup carrier". In a perfect world business customers may wish to send some measurable amount of "identical traffic" to a backup provider in order to compare both pricing and taxes/surcharges of the backup carrier to the primary carrier.
3. Build in "Other Carrier Redundancy" on Business Critical Network Connections
The security requirements and network configurations of certain networks may preclude "traffic splitting" as suggested in #2 above. If this is the case with your voice or data network (or maybe even if it's not) customers should build in automatic "other carrier redundancy" to critical voice and data network connections.
While the "other carrier" will usually get no usage for months at a time, if the primary carrier goes down for any reason then the "other carrier" will suddenly get all of the traffic. This design is a bit more difficult to test than "traffic splitting" but testing is crucial to schedule as having a completely redundant network in place is usually fairly expensive - and only worth the price if it actually works when needed.
4. Work With an Independent Telecom Agent Instead of a Carrier Sales Rep
As an independent telecom agent and a former carrier sales rep myself, of course I think customers are better served by getting their carrier options vetted out by a vendor neutral independent telecom agent AKA "carrier partner" instead of a carrier sales rep. As sincere as any carrier sales rep may seem, their job and ability to pay their mortgage is dependent upon their ability say what's necessary to get you to sign their contract. If you sign with a competitor they don't get paid and may not keep their job.
Professional independent agents on the other hand are "vendor neutral" in that they will recommend several different carriers that can present various "pros and cons" to your particular telecom design needs with the understanding that they will get paid as a "carrier partner" from whichever carrier you select.
5. Ask Agent Partners What Extra Incentives Might Be Affecting Their Judgement
The only argument against ever using an independent agent is the idea that the agent will lead you to the carrier that pays them the most. In the event that multiple represented carriers are basically the same with regards to a customer's network design, that may be true.
True or not, customers have every right to ask an agent if one provider or another they are recommending is giving them any "extra incentives". If an agent is earning a large bonus or an "equity stake" in a recommended company then that information should be properly disclosed after a customer asks. If your agent will not share their compensation with you after you ask - find an independent agent that will.
6. Pay Your Partner Directly & Preclude Carrier Commissions
If you want the very best recommendations a professional independent agent has to offer then ask the agent if you as the customer can pay them their commission directly and preclude them from receiving a commission from any carrier.
Instead of allowing the agent to collect a 15% commission on your monthly phone or data bill from the carrier they recommend, tell your agent to not take any commission in exchange for you the customer paying them directly a 15% management fee for all telecom invoices they are managing for you. This strategy allows your agent to then consider and work with every carrier on the planet, not just the ones that have a reasonably agent friendly "partner program".
By empowering your independent telecom agent this way you'll quickly see that this plan pays for itself because an informed and experienced agent can generally beat any carrier's retail price down 15% if they know their commission will not be directly affected or eliminated by the carrier.
7. Make Sure Your Carrier Agreement Has a Bankruptcy Escape Clause
Once you sign a customer agreement you become the carrier's property for good or for bad. And unlike a marriage, it's very hard to sue for a divorce when your "carrier spouse" gets fat and ugly (by
getting sold off to a large, uncaring carrier) after a bankruptcy. Since the FCC has in place many rules that prevent bankrupt carriers from terminating customer service without proper
notice, there is usually little flexibility to allow carrier customers to cancel their contracted service with a carrier simply because the carrier files for bankruptcy protection.
If you're contracting with a specific carrier to get an enhanced functionality (like special reporting or direct circuit control) that likely will not follow to another carrier if the bankrupt carrier assigns your customer agreement to another carrier, you should speak with a telecom lawyer to see if you can get a bankruptcy escape clause written into your contract.
AFTER ...
1. Ask Your Partner About The Odds of Emerging From Bankruptcy
If you're working with a professional independent telecom agent/carrier sales partner, your partner will be pretty knowledgeable about the carrier's ability to emerge from bankruptcy relatively unscathed, have all their customers sold off to a creditor or in a worst case scenario - liquidated.
Unless you're with a VERY SMALL carrier with a VERY UGLY (unprofitable) customer portfolio, the odds that the carrier will be liquidated and you'll be forced to switch to a new carrier with short notice are quite small - but it does happen.
2. Ask Your Attorney About Penalties Due to Switching Carriers
If you are a contracted customer to a bankrupt carrier, you are one of the bankrupt carrier's few assets that all the bankrupt carrier's creditors want to turn into money. Thinking that you can sneak your asset out of sight by switching to another carrier during the initial bankruptcy upset is a bit short-sighted.
At some time in the future when all a bankrupt carrier's customers are being accounted for you can be sure that you will be missed and likley expensively dragged back to the very place you were trying to escape. Don't switch until your attorney says you're clear.
3. Calculate the Time Required to Switch Carriers
But just because you're not supposed to break a service contract with a bankrupt carrier does not mean you can't plan to do it to avoid some worst case scenario - like the underlying creditor carrier shutting off all the bankrupt carrier's customers from service without warning.
If you didn't create an "Emergency Carrier Switch Plan" as suggested above, now's the time to do that. If it takes you 45 days to switch to another carrier and you loose the belief that the bankrupt carrier or their creditors will continue providing service for that length of time then you have a hard decision to make.
4. Predict Your Happiness With The Carrier You Might Be "Sold Off To"
By looking at the bankruptcy headlines at the beginning of this story it's easy to draw the conclusion that eventually all customer contracts are eventually sold off to acquiring carriers whether a bankrupt carrier emerges from bankruptcy or not.
If you know which carrier creditor is likely to buy you, and you're OK with them providing your future service then you can stay put. If on the other hand, you kow you're going to hate going to an acquiring carrier then you've got another hard decision to make.
5. Act (or Not)
Even the best independent agent that knows everything about all the telecom carriers can't really tell you what to do. Like a good attorney or doctor they can tell you what they'd do if they were you but ultimately you need to act in your firm's best interest.
As a general rule, if you're phone and data systems are not linked to heart transplants, space rockets or nuclear defense it's probably best to grit your teeth and see whether your bankrupt carrier can weather their storm. More "bad things" generally happen from breaking contracts than from not breaking contracts.
Bottom Line...
Customer controlled carrier redundancy is really the only protection a business customer has when a primary telecom vendor starts to have financial difficulties. Don't fall for a carrier reseller's line about, "we use multiple carriers and that's all the redundancy you need!"
Working with an independent, vendor neutral telecom agent (AKA "carrier partner") is the only way to ensure that you, the customer, are in control of your voice and data connectivity. A professional telecom agent will help you test your redundancy in advance of future telecom storms.
Looking for a Southern California based, vendor neutral business communications technology service expert that can help you out with your multi-location telecom or data network problems?
Click here to learn about how we might be able to fix your problem for free, then contact me directly at 951-251-5155 or [email protected].
BaldwinTel helps multi-location businesses across the United States but specializes Southern California especially San Diego County, Orange County, Los Angeles County, Riverside County and San Bernardino County.
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