This is the first in a series of entries on wireline and wireless procurements, from the perspective and for the benefit of today’s enterprise customers. This entry highlights the distinctions between wireless and wireline procurements. In subsequent entries, we identify the sources of customer leverage and explain the merits of negotiating the best possible agreements; review priority business and legal terms and conditions, including positioning the customer for its next procurement; and, conclude with an entry on customer-oriented remedies.
Introduction. The customer base and demand sets for enterprise wireline services are undergoing a major transition. E-commerce site operators, social networks and cloud computing entities (“Technology Companies”) have joined the Fortune 1000, state governments and the Federal government as major enterprise services customers. Technology Companies tend to have noticeably fewer sites, but far higher bandwidth requirements. High speed Internet access service, not circuit-switched voice, is the ubiquitous wireline service. MPLS has displaced frame relay. Customers are demanding increased bandwidth for all data services.
Commercial wireless service providers offer “one-size fits all” voice and data services for residential and business customers. The latest smart phones and tablets are offered to residential and business customers without distinction. On the other hand, non-standard pricing plans and device refresh cycles are offered to business customers. The continued growth of wireless services, particularly the continuing demand for ever higher data rates, suggests undifferentiated services currently meet customer requirements. The exception is M2M services. These offerings are geared to business customers. M2M traffic can be routed to customer’s data services, as opposed to the public Internet—a selling point for many businesses.
Wireline and wireless services providers are similar in one major respect: carriers’ facilities-based services footprints can and do vary widely. Many companies obtain service from at least one other wireless and wireline carrier, respectively, in addition to their primary carriers.
The major carriers—AT&T and Verizon—market, provision and support wireline and wireless services through distinct organizations. These providers do not bundle wireline and wireless offerings and have different contract templates for these respective offerings. Sprint largely follows this practice. The standard term for wireless agreements is two years, three years for wireline agreements.
Wireline Service Procurements. Wireline carriers offer an expansive menu of data rates for high speed Internet access services, MPLS and VPLS offerings, high capacity private line Ethernet and TDM services, and multiple voice options (IP and circuit switched). Wireline carriers consider and often respond to requests for special construction. Wireline service account teams aggressively market managed services, such as network management, data center/colocation, firewall, and conferencing services, as well as voice and data transport services. An experienced consultant recently noted “[c]arriers are aggressively pursuing managed services business because margins are higher than traditional transport services and because the carriers are eager to move up the value chain and provide services that penetrate further into their customers’ premises.”
Wireline carriers offer domestic, international and rest-of-world services. Many multinational enterprises often look to a primary MPLS carrier to connect the entities’ principal locations throughout the developed and developing regions of the world. Despite the substantial bundling of services, very little, if any, wireline CPE intended for enterprise customers is subsidized by wireline carriers and [mandatory] bundling of CPE with wireline services—enterprise or not—is rare.
Enterprise agreements typically include SLAs with multiple metrics for MPLS, VPLS, and private line offerings and a more limited set of SLAs for high speed Internet access services. These metrics include site-specific availability and mean-time-to-repair, and latency. Wireline SLAs vary by services provider and region (US and Canada, Mexico, EMEA, South America, and Asia PAC).
Continue Reading Wireline and Wireless Services Procurements: An Introduction