Stop Customers From Signing
"One Way" End-User Agreements


Not All Providers Trap Customers Into Changeable Contracts

May 29, 2009 Join TA / Subscribe  TA Home  TA Index

TA Endorses PAETEC's Agreement for setting a fair "Two Way" Standard
by Dan Baldwin, TA Founder & Executive Director

     Most all telecom agents and channel partners both know about and love the "evergreen clause" - the language in an agent agreement that requires the provider to pay the agent commissions for as long as the customer stays on service with the provider. Few agents would consider signing an agent agreement that is missing the evergreen clause.

     As much as agents love the evergreen clause though they are starting to hate the "one way clause" - the language in the agreement that their end-user customers sign with the provider that states that the provider can change the agreement during the term of the contract that the customer must accept without the option of getting out of the agreement - one way indeed!

     Several months ago my outbound call center customers were informed by two different carriers that they would soon see new surcharges added to their monthly invoices - surcharges that were clearly not part of the original contract they signed.  When I spoke with the carrier's executives and suggested that these surcharges were not in the customer's contract and that the carrier could not change the rules in the middle of the agreement the executives said, "Actually, we can!"

     The executives then proceeded to show me the clause in the signed contract that incorporated additional service terms on the carrier's web site which said, in effect, "We can change these terms at any time". When I suggested that this was unfair the carrier executive suggested that "All carrier contracts are like this".

    To determine if all carriers do have such "one way" clauses I contacted two different telecom attorneys TA has worked with over the years. Click here to read Mark Del Bianco's thoughts on the matter.

     "Major carrier rate increases are typically protected under either the carrier’s agreement or its service guide, and are generally permissible absent customer consent pursuant to the terms of those documents," advises telecom attorney Tom Crowe. “Unilateral rate increases by major carriers are fundamentally unfair. These provisions generally enable the carrier to unilaterally change the pricing elements of a deal without the consent of the customer.”

     Well when my customer's new surcharges started kicking in he no longer cared about "fair or unfair" - his phone bill more than doubled and he want out - with my help as his agent or without it.

     As I helped my customer look for a new provider I quickly learned that the executive who said "All contracts are like this" was almost correct. About 90% of all the provider agreements I read did indeed seem to say "We can change this but you can't" - but not all. I was quite pleased to learn that PAETEC has written into it's standard agreement a clause that clearly gives the customer 30-days to decide if new regulatory surcharges are more trouble than they're worth.

“Customer will have thirty (30) days from the date of the notice to terminate” 
PAETEC Terms & Conditions regarding "Regulatory Changes (paragraph 18)"

The complete PAETEC language on the matter reads as follows:

18. REGULATORY CHANGE. PAETEC may amend any contract term or pricing in response to a regulatory change that materially changes the technical feasibility or economics of providing service. PAETEC will notify Customer in writing when exercising this right, after which Customer will have thirty (30) days from the date of the notice to terminate the adversely affected Services for cause by notifying PAETEC in writing. If Customer does not respond in writing to PAETEC within thirty (30) days, Customer waives its right to terminate. For avoidance of doubt, Customer’s remedy pursuant to this section shall not apply for rates otherwise subject to change as designated on Customer’s Rate Schedule(s).

This PAETEC "two way" language is quite a bit more customer friendly than the more hostile "one way" clause used by other carriers:

      "Carrier 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.[carrier].com/terms, or by email."

 

Why TA Endorses the PAETEC "Two Way" Agreement

1. Basic Fairness

    Sure, both people and businesses are getting clobbered in today's wretched recession but that does not mean customers no longer expect a sense of basic fair play from the other companies and people they do business with. This recession will end and when it does business owners will remember those other business people who continued to play fair through the worst of it.

2. Didn't Have to Ask

    When looking around for protection from the "one way" clause I was pleading with every carrier I could find to waive it for my customer. Every carrier I spoke to except PAETEC said, "We need more time. Our lawyers don't like to grant these requests!"  PAETEC said, "What are you talking about? Our agreement is 'two way' now." Getting something good you didn't ask for in a business deal is pretty cool.

3. "Win Win" Philosophy Speaks to a Long Term Vision of Success

    Not every prospect can become a PAETEC customer. To become a PAETEC customer an agent almost has to prove to PAETEC that the customer will be profitable for PAETEC. While this can be quite frustrating for agents in short fused deals, it's also a bit comforting in that it suggests that PAETEC is looking to stay in business for a very long time and will have the profit margins necessary to endure even tough recessions. This long term picture may give PAETEC the confidence to allow customer's out of their agreements in the event they need to pass on regulatory surcharges.

 

Agents Need to Fully Inform Customers About "One and Two Way" Deals

     As agents and carriers both know, few customers allow themselves all the time in the world to consider which service provider they will choose. Most customers don't even start the provider picking party until they are in the process of packing boxes for a business move. Because of this most carriers with the "best rate" expect that customers will sign a "one way" agreement out of a need to get their dial tone & Internet circuits installed on time.

     Now is the time for telecom agents and channel partners to understand more than just the "starting price" a customer is getting with a provider's signed contract. To be a proper advocate an agent must fully inform the customer about the existence of "one way" clauses in one agreement and the option of selecting a different provider that offers a "two way" agreement.

     Two way agreements will only come in the negotiating process to those who ask for them. Agents that want to keep their customers for the long term (10 years or more) need to make sure they are fighting hard not just for a fair price but for a fair two way agreement.

 

Other Providers Offering Two Way Agreements

     TA is not in the business of endorsing one provider over another. In fact, since TA's founding in 1995, this is the first time TA has actually endorsed any provider for any reason.

     TA believes that other providers also offer two way agreements. As these other providers make their agreements known to us we will share that information with you TA's members as appropriate.

 

TA Disclosure

     As most TA members know, TA Founder & Executive Director Dan Baldwin is also an active telecom agent in southern California who first started selling telecom services to businesses in 1990. As a telecom agent, Dan is familiar with many customer challenges and vendor solutions. Dan writes about his agent experiences for the benefit of TA members. Dan's recommendations to customers and other agents are based on what's best for the customer first, agent second and vendor third. Dan is not compensated by vendors for his recommendations.

 


Got input? Forward it to Dan@TelecomAssociation.com or call Dan Baldwin at 951-251-5155


 

Telecom Attorneys that work with TA members
Thomas K. Crowe  Law Office
Mr. Crowe has been affiliated with TA for almost 10 years. Click here to view the "Legal Alerts" he distributes to TA members. Click here to subscribe to Mr. Crowe's "Legal Alerts"

Mark Del Bianco  Law Office
Mr. Del Bianco has worked with TA since March 2008. Click here to read a TA article he wrote on "bad contracts"

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