Photo of C. Douglas Jarrett

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 raises concerns of a virtual duopoly in Wireless services, many would argue the market for Wireline services for large businesses and state governments is already a duopoly.

At the expiration of multi-year services agreements, inclusive of any rate-stabilized transition periods, a customer’s rates revert to the carrier’s standard, non-discounted rates that are prohibitively expensive. Relatedly, migrating from one services provider to another is always a resource-intensive and time-consuming process for major enterprises and state governments, particularly for Wireline services.  If the RFP process for securing a new agreement is not initiated in a timely manner, the odds for securing a better deal decline dramatically. The  customer typically finds itself in a defensive position, scrambling to negotiate an extension or new agreement with the incumbent carrier just to avoid these rate increases.

The timely release of an RFP maximizes the likelihood of receiving competitive bids because (prospective bidders will see) the customer likely will have sufficient time to (i) evaluate responses to its RFP and select its services provider(s), (ii) negotiate balanced agreements, and (3) transition from the incumbent’s services to those of one or more successors.  If the RFP is released too close to the existing agreement’s expiration,  potential successor carriers either will not bid aggressively or decline to bid altogether.

For Wireline services, the RFP should be released 12-14 months prior to expiration of the current agreement.  On the other hand, for Wireless services, the timing for the RFP has two elements:  (1) the expiration date of the agreement, including any rate stabilized transition periods, and (2) the line-specific commitment periods keyed to minimum period of use for the discounted handsets.