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Why It Pays to Pay Attention to Contracts

One of my biggest pet peeves in this industry is the formatting of contracts. Technology services such as Internet, SIP trunks, and SD-WAN are some of the most complicated agreements an IT manager will see.  Here’s how to navigate these complex deals with clarity.

Have you ever purchased services from AT&T?  Consider the AT&T wireline services agreement. This contract consists of two documents: a Master Agreement and a Pricing Schedule.  The Master Agreement is exactly what it sounds like, a blanket agreement for any ATT wireline services.  The pricing schedule is a multiple-page document that lists any AT&T wireline service that you could buy under the Master Agreement.  And, beware there are hidden documents incorporated into the agreement by reference.  That means there are many hyperlinks to terms and conditions within the document that are noted.  These hyperlinks documents are easy to change and can be changed at any time. 

Most of the time, customers will receive a single-page eSign document to execute the agreement.  However, if you look deeper at this one-page eSign document, there is a link to the Master Agreement on the ATT website.  There, you’ll find the actual multi-service agreement -- two pages long, single-spaced.  Contained in that two-page agreement are hyperlinks to the (1) ATT Business Services Agreement, (2)ATT Service Guide (3) Service Level Agreement, and (4)Acceptable Use Policy.  In addition to all of these very important documents, contract terms related to Arbitration, Licenses, Pricing terms, Minimum Annual Revenue Commitments (MARC), termination of the agreement, and billing disputes are outlined there.  It is very important to understand all of these contract elements before signing anything.  So now you’re looking at eight supporting documents before you even sign the master agreement – and this is just the first agreement to review! You still have to review the pricing schedule. And bad news -- The AT&T pricing schedule is the more frustrating of the two documents that make up the AT&T wireline services agreement.

 The AT&T pricing schedule is a long list of menu items for any service you could purchase from AT&T under the wireline services agreement. These items don’t come with a lot of definition or detail. For example, if you are purchasing an internet circuit, there are two pricing elements: the access circuit and the port(bandwidth).  There is nothing in this document that explains why an internet circuit is comprised of two pricing elements.  What is worse is that there is nothing in the document that indicates what you are buying.  There isn't a line item that indicates that there are two billing elements, discounts applied, or the net monthly rate.  So it looks like you are signing an agreement for unknown services.  And, don't get me started on taxes, fees, and surcharges!  They are not in any of these documents so those remain a mystery until you get your first bill.

I am sharing this with you so you become an educated consumer.  I can’t mitigate the frustration of being surprised by taxes, fees and surcharges, but I do want to remind you that some of what you’re reviewing can be gleaned ahead of time.  So any time you’re facing a contract, I recommend the following practices:

  1. Read everything related to the document -- both contract language and linked documents. Highlight everything you want to ask about.
  2. Download and save these documents before you sign the agreement -- for future reference.
  3. Require that the final proposal be incorporated into the agreement. Your proposal should indicate the billing elements and final monthly recurring cost taxes, fees, and surcharges.
  4. Ask your account manager for a list of the taxes, fees, and surcharges for the service you are purchasing.
  5. Finally – I highly recommend you have an attorney with telecom contract experience review the agreement. These contracts are complex and unlike most other contracts that purchasing sees.

Another contact I came across recently was for a CPaas. First, the contract included all the services and pricing outlined in the proposal.  That was a great start.  The client knew what they were signing up for.  However, things got more complicated from there.

There were numerous documents referenced in the proposal.  These documents we incorporated into the agreement by reference. They contained a lot of great information, such as how to create a support ticket, escalation paths, and ticket prioritization.  I have not seen this kind of info supplied on the front end of the project.  Thinking ahead is a good thing.  I hope that this vendor will step the client through this process once the work is completed as a reminder.   There was a great checklist of other documents that needed to be completed at the start of the project: scope of work, timelines, and process, etc. 

One interesting thing was where and when a project manager was expected to join the process. The vendor clearly stated that a project manager would not be assigned until these documents were completed.  Clients do not change carriers often; it would be nice to have a project manager available as a guide throughout this process.  It appears that the intent is to make this as much of a self-serve activity as possible until the contract is signed.  There were no gotchas in these documents, just a lot to absorb and understand.  For a new client, understanding the practices and processes of a new vendor can be a steep learning curve. 

The key item that was missing in this agreement was the service level agreement (SLA)!  It was not linked to the contract or the proposal.  I had to go back to the account manager for the SLA, which was not as detailed or robust as it should have been for a client who was buying services for multiple locations scattered across four continents:  There were no credits specified for outages, no mention of uptimes by country or dependencies for service-level commitments, and no guaranteed uptime. 

My message to you:  When you buy new services you must read and understand all the terms, conditions, and attachments to your contract.  The services you are buying are mission-critical.  By paying close attention to the details and understanding the terms, you can feel confident that you are making the best decision for your organization.

Denise Munro is writing on behalf of the SCTC, a premier professional organization for independent consultants. Our consultant members are leaders in the industry, able to provide best of breed professional services in a wide array of technologies. Every consultant member commits annually to a strict Code of Ethics, ensuring they work for the client benefit only and do not receive financial compensation from vendors and service providers.