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Top 10 ways to kill your phone costs


Look after the cents and the dollars will look after themselves. You might have first heard this axiom on your mother’s knee, but it still holds as enduring business wisdom. Telco expense analyst Tony Simmons reveals 10 simple ways to reduce your company’s not-so-humble phone bill.

It always makes sound business sense to manage costs. Cost management is especially important when you enter into long-term contracts, as you do for most business telecommunication services. If you address all of the following issues in your planning, you are bound to keep the costs in check:

  1. Lines – How many lines do you have? How many lines do you need? It would come as no surprise that many businesses have too many lines, and at $35 a pop per month, they are expensive. Lines can be easily consolidated – e.g., 10 PSTN lines could become an ISDN 10 or ADSL lines can combine with Fax.
  2. Local – Make a lot of local calls? There is a trade off between line rental and cost of local calls. The cheaper your line rental, the more expensive your local calls. At some point, there is a cross over and expensive line rental is a better option.
  3. Contracts (Plasmas) – Ever hear the saying, “There is no such thing as a free lunch”? We are yet to see a free hardware plan (Plasma’s, photocopies, PABX, etc.) that provides a client value for money. In general, these contracts lock in for five years and the client ends up paying a huge amount extra after about two years – which is the break-even point.
  4. Tender – Depending on your business size, this may or may not be an option. However, actively seeking out prices, in conjunction with understanding your telecommunications costs, will generally lead to a better cost outcome and help you to understand your services in more detail.
  5. Analysis – The key to managing costs is analysis. In telecommunications this is a very difficult and complex business. Comparing apples with apples is very hard to achieve, but well worth it as it enables you to focus on those types of calls or services that generate the most costs.
  6. Negotiate – Like any service, you can achieve a better deal if you are prepared to negotiate a little bit harder. Obviously, using analysis will give you the best chance for a successful negotiation and understanding what you need, and what you can give, will also add value to the process. For example, lock in for a contract if you can receive a better line rental price.
  7. Caps – Call caps are an incredibly simple way to reduce call expenditure. Most caps also give you the “bolt-on” ability to have voice mail or calls to other business phones on the same account at a reduced fee or for free. Again, using analysis will help determine which caps provide your business the best return and cheapest overall call rates.
  8. Credits – Strange activity on your phone bill? Calls dropping out all the time and having to reconnect? Any service or billing issue that you may experience with your phone may be subject to an account credit. All you have to do is call and ask. Many of these credits are given to customers in the name of loyalty and goodwill. But be careful, asking for too much too often may get your account highlighted on your carrier’s system.
  9. Calls – Where you make your calls from, who they are made to and for how long can have a significant impact on your costs. For example, if many of your calls are made to another office, calling from a desk phone may incur a charge while calling mobile to mobile, on the correct plan, could be free.
  10. Technology–The final piece in the puzzle. Can technology reduce costs? Yes and No. VoIP (Voice over Internet Protocol) has long been touted as the great saviour from Telco costs and fees. However, the reality is not always that simple. Apart from VoIP often being more costly, when CAPEX of new hardware is included, you need to ask what value to you place on excellent quality connections that have less change of failure or degradation?
Tony Simmons is the Managing Director of The Full Circle Group, an independent company devoted to Telco expense analysis and management.