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By Gerry Carson,
Managing Consultant - Service Provider Practice,
Advocate Networks, LLC
Telecommunications service providers are constantly struggling with getting the best prices they can, as this typically represents a significant portion of cost of goods sold. Providers purchase wholesale—where they don’t have their own networks in place—from AT&T, Verizon, XO, Global Crossing and other vendors. This presents a complex challenge for service providers, with variance by product, provider, geography and applicability of regulatory rules.
Wholesale pricing is typically spelled out in a tariff, which is a publicly available, legally filed FCC document that shows product pricing. This document should be viewed as a list or rack rate. Next, improved pricing can be achieved through promotional offerings from the carriers. Specific pricing plans and negotiated volume and term agreements represent a path to further optimize wholesale pricing. The largest driver of wholesale telecom price is the presence or lack of a volume and term discount agreement with each provider. Purchasing absent these discounts is analogous to entering a car dealership and paying the Manufacturer’s Suggested Retail Price (MSRP).
Finally, nothing is more effective than competition, particularly when it’s applied through a well-managed, third-party Request for Proposal (RFP). This purchasing logic applies to both the enterprise and wholesale markets. What is the story at your company: Deal or No Deal?
Advocate Networks specializes in assessing telecom spend, benchmarking against best-in-class pricing, identifying savings and managing a strategic savings roadmap to achieve the saving. If you would like to discuss this topic further, please contact Gerry Carson at (678) 987-5905 or gerry.carson@advocatenetworks.com.