There’s a perception in the telecom expense reduction industry that contract renegotiation is mainly for the benefit of enterprise customers. Carriers and service providers rarely need this service because 1) they are buying wholesale and 2) they have carrier management teams that ensure they get the best possible contract. That is the assumption, in any case.
But for smaller or fast-growing service providers, that assumption is often wrong and can lead to missed opportunities to significantly reduce their telecom expenses.
Case in point. A large rural ILEC had recently entered bankruptcy due to a large acquisition and flawed integration. They needed to reduce costs so it could emerge from bankruptcy. They hired Cloud Age Solutions to do a comprehensive analysis of their cost data, network inventory and current wholesale contracts.
The assessment identified several high profile cost reduction opportunities that could be implemented quickly — all related to the renegotiation of expiring contracts. Cloud Age Solutions’ team engaged with the ILEC’s telecom vendors and leveraged their extensive industry background, cost benchmarks from other recent engagements and overall experience to drive significant reductions. Over the course of 6 months, the team secured new agreements producing $11M in annual savings:
- Renegotiated wholesale LD agreement — approximately $6M annualized cost reduction
- New multi-megabit internet deal — annual savings of approximately $4M
- New MPLS contract (replacing existing Frame Relay network) – $1M in annual savings