Avoid Long-Term Telecom Contracts

Oct 12, 2011

When business slows, companies respond by reducing expenses. What would happen if your business was not allowed to cut costs because of language in one of your service contracts? The answer is obvious, at worst, your business could fail or at the very least, your profits will be reduced.

Term Contracts Benefit One Side – And Its Not Your Side

Telecommunications companies have been using term contracts to lock businesses into paying for a set level of service for years. If your business has slowed, a term contract locks you into paying for services that you don’t need. Service contracts only benefit one of the parties to the contract, and that party is not you.

A telecom service contract that locks you into a minimum amount of services for a fixed period of time only benefits the telecom company.

To show you how completely one sided a service contract is, what do you think would happen if during the contract period, your company needed to increase the service above the terms on the initial contract. Do you think the company would say no, you have to wait until your contract expires? Of course not, they will happily let you pay more, they just don’t want you to pay less.

If You Are Forced To Sign A Term Contract, At least Ask For a Business Downturn Clause

If you have no other options and you are forced to sign a term service contract, at least include a business downturn clause. Some telecom companies have started offering a “business downturn flexibility” clause in the contracts to both new and existing customers.

These new clauses are a ploy to keep companies locked in. Phone companies are not under any pressure to improve the quality of their services because they have had a virtual monopoly. VoIP is a real threat to this industry. Instead of innovating, telecommunications companies have responded by locking you in. Long term, this strategy is doomed.

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