New "Phone Bill Bombs" to
Your Customers About This Month
Baldwin , TA Executive
In the 25 years since the phone company monopoly was broken up, the cost
of a long distance phone call has fallen from 30 cents a minute to just
a penny a minute. The deflationary price trend even picked up a name, "the
race to zero". But it must have dawned on the people in charge of
telecom prices that you can't lose money on every call and "make it up
The telecom companies have now hit the brakes on falling prices and are
looking to make up for years of lost revenue in an almost frantic way.
Business customers that are not buckled in tight are about to hit the
windshield. Telecom agents and channel partners need to call their
customers for a contract and phone bill review today because the telecom
race to zero is over and the unwary business customer may get "blown up"
by their next phone bill.
Most Current Customer Contracts
Offer Little Rate Hike Protection
In an era of constantly falling prices, scant attention has been placed
on preventing carriers from raising rates on customers during the term
of an agreement. For 20 years, the one constant in telecom seemed to be
the fact that market prices for any service would fall during the term
of any agreement. It seemed logical that fierce competition would
prevent even the biggest provider from raising rates - ever!
Unfortunately, this conventional wisdom caused many telecom agents and
their customers to overlook a critical clause contained in the
customer's telecom contract which basically states, "this agreement is
bound by the terms on our website". The agreement on the "website
clause" seems innocuous enough until you go to the website to discover
additional terms clearly stipulating that the carrier can basically
"change any term at any time" with no more notice than a bill insert or
a phone call.
Business telecom customers who do not scrutinize every line of every
phone bill AND the web-based telecom service agreement EVERY month may
very well end up with a phone bill bomb that can not be defused.
Three Phone Bill "Bomb Checks"
Anyone Can Do in Under Five Minutes
So how do you know if there's already a bomb in your customer's phone
bill? Any of the following three checks can quickly alert you in under
5-minutes to a problem. Please be advised that your customer might still
have a phone bill problem even if these three quick "bomb checks" don't
alert you to a something obvious. If one of these three check do alert you
to an anomaly there may be a good explanation that the phone company can
A. Divide "Taxes + Surcharges" by "Total New Charges"
If the total of taxes plus surcharges is more than 15% of all the new
charges for the month then the bill has likely been hit with some new
surcharges. Over the past several years, tax/surcharge percentage of an
average phone bill is usually between 7% and 15%. The percentage is
towards the lower end if intrastate calling is high and local phone
taxes are modest. Also figure the same percentage for the first full
month of service that does not show any installation charges. Is the
recent and initial percentage the same?
B. Divide "Total Category Dollars" by "Total Category Minutes" for Intra
and Interstate Call Categories
If the resulting "cost per minute" is different than what you contracted
for then you've suffered a rate increase or a call surcharge.
C. Figure "Cost Per Minute" for the Most Expensive Calls You can Find
Either find the "most expensive calls" summary report or flip through
some of the call detail of the invoice until you find calls that cost
more than a dollar or two. dived the minutes into the cost. Is the rate
or cost per minute higher than what you originally contracted for?
Recently Discovered "Phone Bill
Telecom Association ("TA") members have recently reported the following
surcharges, rate hikes or other phone bill bombs for the benefit of
fellow TA members. If you discover a phone bill bomb not on this list,
please report it to TA by contacting Dan Baldwin at 951-251-5155 or Dan@TelecomAssociation.com.
Registered TA members can get get "customer friendly" versions of this
information that they can use to fully inform their business customers
and prospects by visiting www.PhoneBillBombs.com.
A. The "We Can
Change the Rules (But You Can't)" Notice
The following language is showing up on carrier "Service Terms" web
pages and is pretty unmistakable. (Highlights inserted by TA.)
contained herein will prohibit Company from implementing rate increases
or surcharges for its service which are unrelated to Governmental
or Quasi-Governmental actions or the actions of the Company's underlying
carriers at any time provided Company provides written notice to
Customer of the increase."
may change this Agreement at any time. Carrier will notify Customer of
any material change in this Agreement, in Customer’s services or of an
increase in rates or fees prior to the billing period in which the
changes would go into effect, except for international rates, which
may be changed on one (1) day notice. Notification of any such change
may be in the form of a bill insert or by a message within your
invoice, by postcard or letter, by Carrier’s
calling and speaking to Customer or leaving
a message for Customer, by
postings on our website at www.website.com/terms, or by email."
So what's the point then of even negotiating rates? Good question. TA
strongly suggests the TA members advise their end-user prospects and
customers to seek the counsel of qualified legal professional if they
have specific questions about interpreting any carrier agreement.
Personally, I tell clients to request the carrier amend their standard
agreement to give the customer a "90-day out" in the event the carrier
makes individual or collective changes over the course of the agreement
that increase the customer's monthly gross costs more than 5% from the
total gross monthly costs in effect on the day agreement was first
Plan Changes Including Price Increases Up to 77%
The following rate increase or change notices have appeared in business
customer phone bills over the last several months. Quoted information
has been drawn from the original documentation but has been paraphrased
and/or highlighted by TA for the sake of brevity.
1. "Dedicated intrastate
rates shall change based
on the jurisdiction of the intrastate calling. The new intrastate
rates will be accessible to you via (our) customer portal (at)
here to view a TA
created table of these intrastate rate changes for all 50 states. The
new rates were lower for 14 states with Texas getting a 33% price
reduction. Washington was one of the 27 states that got a price
increase of up
2. "Dedicated interstate
inbound and outbound rates
shall increase by
9.23%." This rate change was effective April 1, 2009 for
customers on a specific underlying network on a flat or blended rate
3. "Switched interstate
inbound and outbound rates
shall increase by 16.96%." This rate change was effective
April 1, 2009 for all this carrier's switched customers.
4. "Local PRI
or Integrated T1 interstate outbound rates
shall increase by 19.78%." LOCAL T1/PRI OR INTEGRATED
SERVICE UTILIZING THE xxxxx UNDERLYING NETWORK
Pursuant to your carrier. SERVICE AGREEMENT, we are notifying
you that your rates for long distance switched
voice traffic will be changing effective May 1, 2009
Interstate Outbound Rates shall increase by 19.78%
rate plan customers will be transitioned
to LATA/OCN rate plans." Instead of just two flat or
blended US calling rates (interstate and intrastate), tiered rate plan
customers got upwards of ten different US calling rates for different
types of US traffic. Tiered rates allow customers with narrow,
identified and consistent traffic patterns to possibly save money.
LATA/OCN rate plans are extremely tiered plans that may have over
10,000 different calling rates for a customer to keep track of. A
carrier may wish to bill their customers on a LATA/OCN rate plan
because their own wholesale costs come to them in a similar fashion
and it shields them from being "cherry picked" by their customers.
C. Short Duration Call
Surcharge Equal to 20˘ Per Minute
Over the past six months, at least four of the biggest wholesale phone
providers have decided that "short calls" (phone calls that last six
seconds or less) are creating expensive havoc on their telecom
networks and that the providers are going to do what's necessary with
punitive surcharges to price these nuisance calls off their networks
"For customers whose total short duration calls are more than 10% of
total calls during a monthly billing period, a short duration call
surcharge of $.02
per call will be assessed for
ALL short duration calls.
Phone customers making a great many short calls (the $2,279
surcharge graphic at the top of this article was taken from an
actual customer's phone bill) quickly see how convert this surcharge
to a 20˘ per minute. The underlying cost of their phone campaign
just doubled overnight.
D. The 34˘ Per Minute
"Free Conference Calling" Surcharge
conference calling "
and you'll find dozens of conference companies that appear to want
to give any business totally
free conference calls. The
logical question is, "How can it be totally free?" Well it's never
been free to the phone companies charged with connecting the calls
and with the new XHCA surcharge it's going to stop being free for
some unsuspecting business that think they are getting "totally free
"Our wholesale providers have provided us with a separate, limited
set of LATA/OCN’s that are billed
to us at an extremely high cost. In order to ensure we
can continue to maintain competitive pricing, we are separating out
the rates for these extreme high cost areas (XHCA) and billing for
calls to these locations utilizing separate rates. Please go to
www.website.com/terms for a list of these locations and the
Click here to see those places in the US where
this carrier might now charge you up to 34˘ per minute to call. (If
you need look up the LATA/OCN on the list to see which area codes
and prefixes may cause you to incur this surcharge then click
here or visit TelcoData.us and
type in the OCN from the list.
E. The Non-RBOC or
"High Cost Area" Surcharge of 4˘ Per Minute
While the XHCA surcharge noted above is pretty new, the high cost
area surcharge (otherwise known as the "HCA", non-RBOC or access
arbitrage surcharge) has been around for some time but many carriers
are only now starting to charge it.
monitor Customer's monthly call to identify excessive traffic
originating from or terminating to high cost areas defined as
high-cost LATAs and non-Regional Bell Operating Company ("RBOC")
served telephone numbers. Carrier reserves the right to apply a
surcharge of up to 4 cents per minute of use to the number of
minutes by which Customer’s HCA and Non-RBOC outbound terminations
and inbound originations exceed usual and customary call patterns
for business users."
Most carriers want to see
non-RBOC traffic stay under 25% of a customer's normal minutes. Some
carriers will only apply this surcharge after a warning but many are
now applying it as a standard course of billing.
F. Excessive Call Attempts Surcharge
This was the original surcharge conceived of to drive telemarketing
calls away from a carrier's network. It is not currently an active
surcharge (that we are aware of) because the carriers choose to move
forward with the short duration call surcharge instead.
utilizing any of our underlying networks for call termination and
origination, a minimum inbound and outbound call completion ratio
(defined as percentage of completed calls versus attempted calls) of
50% is required, and is calculated on total inbound and outbound call
attempts on a monthly billing basis per T1 circuit. An excessive call
attempt surcharge of $10 per DS0 (there are 23 or 24 DS0's in a T1)
may be assessed on each trunk group where call completion is less than
purpose of this surcharge, an incomplete call is any call that does
not get positively answered by a human, a fax tone or a voice mail
machine. It is not unusual for a telemarketing company that is simply
"dialing randomly" to have 70% or more of their calls not get
Got something to add? Call Dan at
email your printable thoughts to
call our audio recorder at 951-200-4144 and we'll post your audio message
here next week.