Negotiating Strategies

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Growth in enterprise Wireless services tracks society’s accelerating shift toward all things Wireless—smart phones, apps, tablets, and Wireless broadband. The following is our assessment of major trends and influences currently impacting enterprise Wireless deals.      

  • If given the choice, telecom consultants would prefer—by a wide margin—to work on a Wireless procurement as compared to a Wireline

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The combination of Google and Motorola has elicited a flood of comments and analyses.  Those relating to Motorola’s patent portfolio are of most immediate importance for enterprise Wireless customers. As noted by Verizon’s deputy general counsel John Thorne, “the extent that this deal might bring some stability to the ongoing smart phone patent disputes,

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The broad acceptance of Multi-Protocol Label Switching (“MPLS”) service by enterprise customers warrants a “fresh look” in negotiating three important aspects of Wireline services agreements.  The discussion on service provider transitions applies to Wireless services agreements, as well.

1.  Addressing Chronic Service Issues.  The principal benefits of MPLS service are “any-to-any” connectivity, scalability and ease in adding or deleting sites.  Readily available CPE supports voice-over-MPLS.  These benefits are maximized when MPLS is offered by a single carrier, although multi-national firms may maintain region-specific MPLS networks and some large enterprises maintain several MPLS networks (each provided by a different carrier) for redundancy purposes.

A glaring weakness in carriers’ standard services agreements is the failure to address reasonably the risk of chronic service problems in an MPLS environment.  The carriers’ standard (and antiquated) “partial discontinuance” clauses are limited to problems associated with services to a single customer location; potentially relevant for high volume call centers utilizing inbound toll free services, but not an MPLS network.  Even though Service Level Agreements (“SLAs”), such as mean time to repair and site availability are customer-oriented, the metrics remain largely site-specific.

If  MPLS service to priority customer locations (data centers or corporate offices) are subject to chronic outages, the enterprise’s businesses and processes will be impacted severely and adversely.  The standard carrier insurance policy (to be purchased by the customer) of redundant ports, access and routers is not the answer.  The burden should not be shifted to the customer to insure that the carrier delivers the agreed-upon level of service.  In light of the limitations on potential damages demanded by carriers and the risks associated with chronic service issues, a tailored remedy or escalating remedial responses are warranted to more equitably address the risks borne by MPLS customers.Continue Reading Three Critical Considerations for Enterprises When Procuring MPLS Services

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Whether hitting a baseball, landing a triple axel on the ice, or striking a header in soccer, timing is essential.  In telecommunications services procurements, timing is a critical consideration even for the largest corporate and government customers looking to realize a measure of bargaining leverage in today’s environment.   While the proposed AT&T and T-Mobile combination

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Achieving cost savings and efficiencies are a constant concern for IT/Telecom staffs.  While cloud computing (“one to many”)  is a relatively new option, more established IT outsourcing arrangements (“one to one”) continue to be offered by entities such as HP.  In evaluating the outsourcing option, one question that sometimes arises is whether Wireline services

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A fundamental expectation of clients in any commercial transaction is that counsel understand the business deal.  When procuring Wireline voice and data communications services,  major businesses, institutions and state governments make five fundamental business decisions.  The first four apply to Wireless services procurements.
              1. Service
              2. Choice of Carriers
              3. Pricing
              4. Minimum Purchase Commitments
              5. Wireline Service for Enterprise Data Communications

1.       Services

The major domestic Wireline carriers are AT&T, Verizon, Sprint and Qwest/CenturyTel .  The core services these carriers offer to enterprise customers include long distance, VoIP, audio conferencing and various data services—high-speed Internet access, frame relay, private line (TDM and Ethernet), and Multi-Protocol Label Switching (“MPLS”) services.   As a rule, local exchange service remains regulated and is not included in these deals.  These carriers offer related services, such as network (router) management , data center (collocation) and network security services, but are not yet substantial providers of cloud computing or content delivery services.   Customer premises equipment  (routers and switches) typically are not bundled with these services.

All of these carriers offer international services ( i.e., services between the US and other countries).   Multinational enterprises also are interested in Rest-of- World (“ROW”) services (i.e., services between and sometimes within foreign countries).  Several domestic carriers and foreign carriers such as Telefonica and BT offer ROW services.

The Wireless voice and data services available to enterprise customers are largely the same as those offered to consumers, although pricing options are different.  Handsets are bundled with Wireless services.  The principal domestic providers are AT&T, Verizon Wireless, Sprint and T-Mobile.  Available handset options, in-country coverage, Wireless data options  and the extent to which domestic carriers coordinate or manage wireless services in other countries are among the critical decision points.  Wireless service offerings tend to be country-centric.

2.         Choice of Carriers

Wireline and Wireless services are highly commoditized offerings with high  market entry barriers.  Enterprise customers typically utilize RFPs and consultants specializing in procuring these services.   Properly crafted RFPs include substantial information regarding enterprise traffic and bandwidth requirements and service preferences.  As discussed below,  the real-world prices paid by enterprise customers are not publicly available.

Enterprise customers have a strong interest in limiting the number of Wireline and Wireless carriers, respectively, from which they obtain service, principally to clarify responsibility for service quality, provisioning and trouble resolution, maximize bargaining leverage, and develop a mutually beneficial business relationship.  Typically, Wireline and Wireless carrier selection decisions are made independent of each other.Continue Reading Understanding the Business Deal in Wireless and Wireline Services Agreements

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Amazon’s analysis of its extended cloud computing outage, as summarized in Richi Jennings IT Blogwatch, raises an important question for counsel advising clients negotiating agreements to procure cloud computing, content delivery and data communications services:  Should the agreement include a provision defining a service problem threshold and/or a series of problems threshold that triggers