PAETEC's Agreement for setting a fair "Two Way" Standard
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.
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
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
“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
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).
PAETEC "two way" language is quite a bit more customer friendly than the
more hostile "one way" clause used by other carriers:
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."
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
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.
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.
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.