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Why paying someone else to pay your phone bills may make sense.
Scott Leibs, CFO Magazine
February 1, 2003
Competition within every sector of the telecom industry may have driven per-minute prices down substantially, but that doesn't mean you can ignore the phone bill. Companies spend anywhere from $2,000 to $10,000 per year per employee on local, long-distance, cellular, and data communications, and enterprise telecom expenditures are, by most accounts, still growing.
Much of that growth will come from increased use of cellular, conferencing, and high-speed Internet services. But many companies say that hidden within those ever-rising phone bills are a host of errors or, at the least, missed opportunities for savings. Enter the "telecom administrative outsourcing" firm, a new and logical extension of the telecom auditing services that have existed for years. The auditing firms, often regional in focus, scrutinized phone bills and identified mistakes. The newer breed of administrative outsourcing firms, such as Teldata Control, ProfitLine, Broad:margin, TSL, MSS Group, QuantumShift, and TelAssess, go beyond auditing to handle many other tasks, from negotiating contracts up front to processing payments to assessing future needs.
Most rely on Web-based technologies to automate at least part of the audit process, comparing phone charges with actual usage and contracted rates. Web-based systems also give clients a convenient window into payment status, and for those things that technology can't do — such as wrest refunds from telecom carriers — the human touch is applied.
The current movement from bare-bones auditing to full life-cycle support is driven, says Rick Valencia, CEO of ProfitLine Inc., by the fact that "problems start the minute you place an order, not when the bill arrives." Most corporate telecom contracts are customized, he says, and often customers don't realize how far carriers are willing to deviate from published rates to win business, nor do they always understand what services best meet their needs. This results in a lucrative revenue stream for carriers that is known as "breakage," or money spent on services or minutes not actually used.
But it is the seemingly boundless anecdotal evidence of billing errors that will make most potential clients take notice. Valencia recalls one company that was unknowingly being billed for the phone service provided to a nearby karate school. Once the school realized it was getting "free" service, the volume of long-distance calls suddenly shot up. This went on for five years before ProfitLine was brought in. The company and others in this sector claim that corporate customers overpay by 10 percent on average.
Dana Tardelli, a senior analyst at Aberdeen Group Inc., says carriers don't intentionally misbill, but since many have up to 15 separate billing systems, mistakes do happen. And while many errors work out in the carriers' favor, the reverse is also true. In fact, Connexn Technologies Inc., which sells software to telecom firms that ferrets out billing errors that go against carriers, claims that such mistakes cost phone companies $143 billion a year.
But that's little consolation to companies that are seeing their phone bills rise each year. Even if every bill were correct, the labor involved in processing payments is costly. Valencia points to one client in retail that had been paying separate phone bills at thousands of stores. Now it gets four monthly electronic feeds from ProfitLine.
Today the number of firms offering telecom auditing services far exceeds those offering a more-integrated bundle of outsourced services, but Tardelli and other analysts say the full life-cycle approach often provides the biggest bottom-line boost.