Customers who currently have these contracts with AT&T should review them immediately, as the cost of complacency may be high.
For as long as I've been doing telecom agreements, we've been telling large users to pay attention to what's in the carriers' Service Guides, those lengthy documents that are incorporated by reference into enterprise telecom agreements and can really hurt you if you don't read them and negotiate to override the worst parts in your contracts. But the very biggest AT&T customers were insulated from some of the worst Service Guide terms and conditions. Until now.
For decades, AT&T's 200 or so Virtual Telecommunications Network Service (VTNS) customers were special. Comprised largely of Fortune 500 companies that had signed up for customized "Tariff 12" agreements in the late '80s and early '90s, they were both few in number and treated better than other AT&T customers.
VTNS users were the first to obtain customer-specific prices and better terms than were available in AT&T's general tariffs. One of these was a provision that prevented AT&T from changing VTNS in ways that hurt customers. Over the last decade, AT&T showed much the same respect for its managed service customers (including those purchasing AT&T's Ultravailable Network Service (UVN) services). By contrast, AT&T often took advantage of its right to change tariff and other Service Guide provisions unilaterally in ways that were adverse to customers.
Nothing lasts forever. As of November 17, VTNS and UVN service customers are treated essentially the same as the rest of the crowd.
When VTNS (along with most interstate services) was detariffed a decade ago, the FCC insisted that the carriers post their general terms in a "Service Guide" available to the public. Large customers loved detariffing; the carriers hated it. They didn't want to give up their rights to unilaterally change terms, so they insisted that the Service Guides themselves be incorporated wholesale into customer contracts. AT&T's first VTNS Service Guide changed the VTNS tariff in ways that were unfavorable to VTNS customers. When LB3 pointed this out, AT&T fixed the problems. The world was a bit different then--AT&T faced a market with more competition from aggressive new entrants, and by design it was not run by Bell Heads with a "I am the carrier and the tariffs control" mind set.
However, effective November 17, AT&T transitioned VTNS to a new Service Guide--and the new VTNS Service Guide and General Provisions are worse for VTNS customers in numerous ways. AT&T also eliminated the Managed and Miscellaneous Service Guide, making services like UVN subject to all of the General Provisions. If your contract specifically addresses an issue, the changes should not affect you with respect to that issue. If your contract does not address an issue, the question becomes whether AT&T--which since detariffing has been acquired by SBC--will again correct the "mistakes" as it did a decade ago, when the carrier environment was more competitive. Don't hold your breath.
Let's start with VTNS.
* Application of Minimum Annual Revenue Commitment (MARC)-Eligible Charges to other purchase commitments. Under the old VTNS Service Guide, a list of specified charges would count towards satisfying a "minimum purchase commitment such as a MARC," which meant that they would arguably also apply to help satisfy any site-specific purchase commitments or minimum monthly usage commitments. The new VTNS Guide limits application of these charges to the MARC, so they do not help retire site-specific purchase or monthly usage commitments, or even a Minimum Term Revenue Commitment (MTRC).
* Denial or Restriction of VTNS. The old VTNS Guide, like the new, included different problems (e.g., fraud and abuse) for which AT&T is allowed to deny new service requests or otherwise restrict use of VTNS. Although the new VTNS Guide expands the reasons for which AT&T may take these actions, the real difference is the circumstances under which AT&T may do so. The old VTNS Service Guide required AT&T to "determine" that a problem exists and to notify the customer before AT&T suspended or restricted service. The new VTNS Guide does not include this provision, apparently relying instead on the General Provisions (GP-9.1), which allow AT&T to deny or restrict service when AT&T "suspects" a problem, and without notice. The old VTNS Service Guide also arguably allowed the customer to hold AT&T liable for restriction or denial of service IF AT&T engaged in willful misconduct. Outrageous as it sounds, there is no such protection in the new terms.
* AT&T's Payment of Another Carrier's Installation Costs After Termination of the AT&T Service--Discontinuance without Termination Liability. Your contract undoubtedly addresses the circumstances in which you or AT&T may terminate AT&T services with or without liability. If it does not characterize the termination right as your sole and exclusive remedy for a problem caused by AT&T, under the old VTNS Service Guide you would have received the reasonable installation costs associated with another AT&T service or moving to another provider following AT&T's default. That part of the clause remains, but AT&T made a significant change to what constitutes a default. The old Guide included not only breaches of material terms, but also an increase in rates in violation of the terms of the Agreement, or changes to the Guide that materially impair the customer’s use of VTNS. The new Guide simply says "default", making it questionable whether customers will receive these costs if AT&T increases rates in violation of a term of the Agreement or the Guide in a way that materially impairs use.
* Discontinuance of VTNS Service Components by AT&T. You are committed to buying AT&T VTNS services for several years, but AT&T is no longer committed to providing VTNS services for the same period. The old VTNS Guide did not allow AT&T to discontinue VTNS service or service components; the new VTNS Service Guide allows AT&T to terminate any grandfathered service component on 120 days notice if AT&T "generally discontinues providing [it] to similarly-situated customers."
* AT&T's Obligation to pay 6% interest on Security Deposits. AT&T's form Master Services Agreements include provisions requiring customers to provide security deposits in certain circumstances. Hopefully, you can avoid paying a deposit. If you can't, the old VTNS Service Guide required AT&T to pay 6% interest on security deposits it held. Neither the new VTNS Service Guide nor the General Provisions provide interest on these deposits. But don't worry--AT&T still retains the right to charge you 1½% per month on late payments. It's good to be AT&T.
* RespOrg. In the years following the introduction of toll free number portability, few customers spent much time thinking about AT&T's Responsible Organization (RespOrg) functions related to 800 and similar numbers, other than to be certain AT&T would provide the required functions at no cost. The old VTNS Service Guide required a customer to ask AT&T to act as its RespOrg for Toll Free numbers; the new Guide makes AT&T your RespOrg for AT&T Toll Free Numbers UNLESS you request otherwise. Whether this is better or worse depends upon your needs. We have some clients that use RespOrgs independent of the toll free services providers and others that use their primary provider as the RespOrg. If you do not want AT&T to act as your RespOrg for AT&T Toll Free numbers, send your request immediately.
* Resale of AT&T Services. AT&T's current form Master Services Agreement broadly prohibits resale (and arguably sharing of AT&T services if there is a charge back). Many customers negotiate this provision to allow others to use and share the services, but few negotiate a specific provision for VTNS that allows VTNS to be resold or shared. The old VTNS Service Guide specifically stated that "VTNS may be resold or shared by the Customer," but no such right appears in the new VTNS Service Guide or the General Provisions and, absent a term in your contract, your rights to share services will now be severely restricted.
* SLA for 1.544 Mbps DTCs with Network Protection Capability. Many customers rely on the VTNS Service Guide for "old" commodity services rather than negotiating specific SLAs into their contracts. If you fall into this category, you may now lack a quarterly fitness measurement for 1.544 Mbps DTCs with Network Protection Capability of 99.89%. It was in the old VTNS Service Guide, but is not in the new VTNS Service Guide.
* AT&T-Initiated Retermination of Access Components. The old VTNS Service Guide provided customers a credit allowance if AT&T reterminated an access component to a different access provider. It also required AT&T to provide notice of such reterminations and to coordinate the changes with customers. Neither the new VTNS Service Guide nor the General Provisions provide any such rights. While the credit allowance may not be significant, many customers expect AT&T to coordinate these types of changes with them. If your contract doesn't address this, you are now out of luck.
Ultravailable Network Services--AT&T's DWDM
Unlike the VTNS Service Guide, where AT&T hesitated to make changes before the big one on November 17, AT&T has updated the UVN service guide several times in the past several years to incorporate definitions and "add-on" charges found in the General Provisions of its new(er) Service Guides. The charges added to UVN were substantial, and included the federal and state universal service charges, the property tax allotment charge, the administrative expense fee, and the federal regulatory fee. If your contract didn't prevent it, you likely found your UVN costs increasing by 15%-20% as a result. AT&T did not, however, apply all of the General Provisions to UVN--until November 17. If your contract, for example, didn't allow AT&T to suspend your services when AT&T suspected fraud or abuse, or if it permitted AT&T to terminate services only for your material breach, you did not have to worry. Now you do, because the General Provisions of the new(er) Service Guide grants AT&T these rights. If your contract protects you against material and adverse changes to the Service Guide, act now--your rights are time-limited and likely triggered by publication of the changes in the Service Guide, so the clock started ticking on November 17.
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AT&T's transition from its old VTNS Service Guide to its new VTNS Service Guide, along with its decision to make managed and miscellaneous services subject to all of the General Provisions on November 17, has left customers vulnerable to potentially expensive changes. Customers who currently have contracts with AT&T should review them immediately, as the cost of complacency may be high.
Deb Boehling, a partner in the law firm of Levine, Blaszak, Block & Boothby, LLP ("LB3"), has substantial experience representing clients in evaluating and negotiating AT&T Master Agreements and Service Order Attachments. LB3 represents enterprise customers in their planning and procurement of telecom and IT services. Information about the firm is available at www.lb3law.com and Ms. Boehling may be reached at [email protected].
