By
C. Douglas Jarrett, Partner, Keller and Heckman LLP
Jarrett@khlaw.com
www.khlaw.com and
Rick Sigel, CEO and Founder Silver Lining Telecom
RickSigel@silverliningtelecom.com
www.silverliningtelecom.com

PROCUREMENT CYCLE
MONITOR
MILESTONES &
COMMITMENTS
DATA
COLLECTION
IMPLEMENTATION
CURRENT / FUTURE
REQUIREMENTS
FINAL
CONTRACTS
NEGOTIATIONS
SOURCING
EVENT
CARRIER DUE
DILLIGENCE

TOPICS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important

SCOPE OF SERVICES
Wireless Services

 Wireless voice and data services offered to businesses and consumers on carriers’ authorized frequencies operating on carrier-determined transmission technologies (GSM, CDMA,
LTE)
 Subsidized handsets, smartphones, tablets, and air cards
 In-building repeaters for customer’s high-traffic locations
(negotiable)
 Principally domestic with international roaming options

SCOPE OF SERVICES
Wireless Services (cont’d)

 Push-to-Talk-Services
 Includes subsidized handsets
 M2M Services
 Wireless data service for which application restrictions apply
 Offered over 3G or 4G networks
 Interconnects to customer’s MPLS service, not the public
Internet
 Carrier-approved devices/modems, not subsidized by carrier

SCOPE OF SERVICES
Wireline Services



1.
2.
3.
4.
Basic Transport Services
Dedicated High Speed Internet Access Service
Layered Services
Rest-of-World Services

SCOPE OF SERVICES
Wireline Services (cont’d)

 Regulated intrastate voice services–PRIs, PBX Trunks, FB
1s
 Straight volume discounts and term commitments
 Typically acquired under state-specific tariffs/contracts

 Examples
 Dark fiber ring
 Physical extension of carrier’s network to a customer facility
 Offered by local telcos or IXCs pursuant to contracts sometimes tariffed

SCOPE OF SERVICES
Wireline Services (cont’d)
 Almost always interstate and international services
 Commercial agreements, not tariffed in USA
1. Basic Transport Services
 Circuit switched interexchange voice and VoIP inbound and outbound
 Dedicated access services—DS-1, DS-3 and Ethernet
 Private Line Service-- DS-1, DS-3 and Ethernet
 Multiprotocol Label Switching (“MPLS”) Service*
 Virtual Private LAN Service (“VPLS”)
 Satellite service
2. Dedicated Internet Access Services*

SCOPE OF SERVICES
Wireline Services (Cont’d)
3. Layered Services
 Hosting
 CPE/Network Management
 Firewall
 Data Center (Collocation)
 Many network-based conferencing services
 Content delivery services
 Cloud computing
4. Rest-of-World Services
 Typically MPLS and Private Line
 Some Layered Services—CPE/Network Management

TOPICS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important

PROCUREMENT CYCLE
 WHEN TO START?
 Timing and leverage is always key— Don’t wait to renegotiate !
 Uncommitted spend
 New business or technology upgrades – know what the account teams want to sell
 Term Extensions
 Know current detailed demand set/inventory and contract milestones
 Maintain credible threat of loss or migration – minimum 6 - 9 month lead time for data collection, sourcing strategy, negotiations and possible migrations
 WHY D O IT?
 Drive savings /cost reductions, obtain market leading rates, terms and conditions
 Typically 20% - 25% gap to market on contracts over 12 months old
 No linear relationship between spend, commitment and price among customers
 Knowledge, preparation, benchmarks and leverage are the keys to any negotiation
 Remain open to options and alternatives
 Carriers usually “hold the cards” on benchmarking and T’s & C’s
 Drive to more level playing field
 Timing+Flexibility+Knowledge >>>> Uncertainty for carriers = Better overall result

PROCUREMENT CYCLE
 WHAT’S INVOLVED?
 First understand different carrier perspectives and current environment

Wireless gets attention; wireline accounts for 50% - 75% of typical enterprise spend
 Local services = low profits. Traditional Voice services less attractive to carriers

Carriers highly value data services
– “stickier” with higher margins and more viable choices
 Power of incumbency
 Less staff on customer side creates major bias in favor of incumbent - Carriers know this!

Carriers trying to increase contractual commitments both in Term and
Spend (in addition to individual circuit/SOA Terms)
 Pricing continues to go down – not as fast, but still declining

Competition continues in the form of technology choices (Ethernet,
VoIP/SIP, Wireless)
 Account Team Realities

TOPICS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important

DEVELOPING RFP S
 Determine which vendors to invite
 Due diligence based on current/future requirements
 Develop clear outline of process steps and timetable
 Schedule (in-person) Bidders’ Conference
 Recognize that carriers always want more time
 Provide detailed demand set—“Book of Business”
 Usage profiles / details for voice and wireless
 Geographic info i.e. sites, addresses, CPE, # of users etc.
 Required Terms and Conditions
 Term – 3 Years Wireline / 2 Years Wireless
 Commitment level and structure for each
 Periodic Rate Review with remedies
 Implementation and other SLA’s with remedies
 Customized rate plans for wireless
 Business Change/Downturn/Divestiture with specific remedies
 Billing Issues – resolution timing, remedies
 Account Team performance obligations

DEVELOPING RFP S
 Develop and require standardized format for responses
 Carrier worksheets for side-by-side comparison analysis
 Scorecards helpful for T’s & C’s i.e. relative importance
 Require Senior Exec direct contact information for escalations
 Include non-recurring pricing aspects such as implementation/migration costs and assistance, equipment, demo’s and tests
 Encourage creative/alternative solutions or technologies
Determine finalists
 Negotiate to “Best and Final” offers
 Ensure implementation, migration, and billing are correct
 Execute new agreements

TOPICS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important

DECISION MAKING AND VALIDATION


 Savings, Increased Bandwidth, Equipment Upgrades etc.
 Geographic Coverage
 Wireless and Wireline
 Technology Roadmap

 Hard and Soft Implementation/Migration costs
 Number of Vendor Relationships or Applications to Manage

 1 st Bill Review with Account Team(s)
 Quarterly Reviews with Vendor – Billing, SLAs, Optimizations,
Implementations, Outages etc.

TOPICS
Part I -- Scope of Services
Part II -- Procurement Cycle
Part III -- Developing RFPs
Part IV – Decision Making and Validation
Part V -- Terms and Conditions -- What’s Really Important

TERMS AND CONDITIONS
WHAT’S REALLY IMPORTANT
 Services agreements are drafted by and for the carriers
 Separate Wireline and Wireless agreements
 Major components
 Master Agreement

Schedules and Attachments
 On-line pricing, terms and conditions—Authorized User Policies

TERMS AND CONDITIONS
WHAT’S REALLY IMPORTANT
 Make sure the good stuff you negotiated is in the agreemen t
 Pricing expressed as fixed rates
 All agreed upon credits
 Pricing Review, Business Downturn and Technology Migration
Clauses
 Account team support
 Low minimum revenue commitment; no service-specific minimums
 Line minimums-only in Wireless deals
 Accelerated handset refresh periods
 In-Building repeaters for major locations

TERMS AND CONDITIONS
WHAT’S REALLY IMPORTANT
 Key Issues to Overcome in Carriers’ Agreements (directly or indirectly)
 Limited damages for carrier
 Limited termination rights for customer
 Service Level Agreements
 Wireline SLAs don’t address chronic issues
 Not an issue with Wireless Service—No SLAs
 Address M2M differences
 2-year term impractical
 M2M services requires service levels/right to terminate
 Understand application/operational limitations
 Customer indemnity obligations minimized
 Carrier-preferred dispute resolution provisions for billing & other issues

TERMS AND CONDITIONS
WHAT’S REALLY IMPORTANT
 Key Subjects to Consider, Include or Address
 Value of a “low” minimum revenue commitment
 Reasonable (extended) transition period upon expiration or any early termination
 Customer’s standard vendor insurance obligations, and workplace safety and access rules—particularly if carrier accesses customer premises or equipment
 Account Team support commitments
 Cybersecurity Considerations
 Carriers disclaim responsibility for unauthorized access to customer data
 Obligation to assist in troubleshooting a cyber attack
 Different principles must apply if layered services are part of deal

PROCUREMENT CYCLE
MONITOR
MILESTONES &
COMMITMENTS
DATA
COLLECTION
IMPLEMENTATION
CURRENT / FUTURE
REQUIREMENTS
FINAL
CONTRACTS
NEGOTIATIONS
SOURCING
EVENT
CARRIER DUE
DILLIGENCE