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Find the Red Flags in Your Telecom Contract

Posted by: Today's Tip Contributor on November 24, 2010

For many business owners today, sifting through the intricacies of a complex carrier contract is a task that gets pushed to the bottom of a forever-growing to-do list. In your ongoing effort to protect the interests of your organization and minimize any risk or exposure that could result in financial liability, there are specific items you should beware in a telecommunications agreement.

Recently, many carriers (or providers) have been tweaking the language to their advantage in contractual business-change provisions—areas that are supposed to protect you in the event of a business downturn, restructuring, or other major event. The carriers are introducing language that significantly waters down those protections, deploying phrases stipulating that changes must be "beyond your control" and/or make the provisions inapplicable if reductions in usage are due to "changes in architecture or expenditures."

Furthermore, standard clauses state that no current business or "future growth" be given to another provider or the protection is voided. The language may also require you to stipulate that all available business has been transferred to the provider in an attempt to reduce or eliminate the shortfall.

So take a close look at the business-change-provisions section of your contracts and make sure that this—and any other one-sided language—is stripped from the agreements. Once it has been removed, best practice is to track commitment compliance on a monthly basis. If there is a trend toward a shortfall, begin talks with your carrier right away to renegotiate your contract. Available options become much more limited once the penalty has been incurred.

Al Subbloie
President, CEO, and Founder
Orange, Conn.

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