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How Service Provider Agendas Affect Enterprise Customers

So I'm at my desk minding my own business when erstwhile friend Eric Krapf, No Jitter editor, invites me to join a couple of carrier execs on an EC Summit panel he's planning for Enterprise Connect Orlando about how the service providers' agenda impacts your enterprise.

"Sounds like Daniel in the lions' den," I opine.

"More like a match at a fireworks convention," he counters. "Speaking of which, why don't you preview the discussion in a piece for No Jitter. It'll get the juices flowing." (Or the blood boiling, I think, depending on the reader's point of view.)

Of course I said yes. Like Oscar Wilde, I can resist anything except temptation. So even though the carriers have opted to boycott the session, here's a look at their agendas and they mean for you.

The TDM-IP Migration
The carriers want to get rid of traditional TDM services and provide everything through IP-based platforms. Customers want this, too. But disagreements arise over who will control the migration schedule; how much notice users get before legacy services are discontinued; how mature, ubiquitous, and economic replacement services have to be before the legacy services they are replacing can be shut down; and who will pay for the platform change as customers rack up costs for equipment replacement and the expensive special construction projects that often accompany upgrades to Ethernet access.

The carriers want the migration to happen sooner rather than later. They don't want to be required to provide "excessive" notice of the withdrawal of legacy services -- at one time, carriers commonly committed to providing a service during the term of the customer's contract, but they moved from that practice some years ago to a year's notice, and now 120 days is showing up in the service guides. And they don't want to provide any assurances about how the cost of new services will compare to those of the services they're discontinuing, although they do use increases in legacy service pricing as an "incentive" for migration.

Most importantly, the carriers recoil in horror when customers suggest policies that would soften the blow of migration or stimulate competition, even when the suggestions are eminently sensible ones like a reprise of the "fresh look" that accompanied toll free number portability or a blanket waiver of shortfall and early termination charges triggered by the withdrawal of services or service components.

Net Neutrality
Net neutrality is said to be about many things. The Constitution. The heavy hand of regulation. Protecting startups and consumers from rapacious cable companies and telcos. From an enterprise customer perspective, that's all compost. Here's what matters.

Consumers pay an Internet service provider (almost always a telco or cable company) for the line that connects them to the Internet. They only buy one such connection; and once they've bought it, they rarely move. At that point, the online path to a consumer runs through its ISP, which means the ISP has a monopoly on Internet access to the customer. And in a market economy, monopolists get "rent," which is econo-speak for premium prices.

The odd thing about the Internet access market is that the ISPs can't get too much rent from the buyers of access (consumers), because those buyers are price sensitive, the market to serve them is somewhat competitive in some places, and they vote. But what the ISPs can do, unless they're constrained, is institute a premium-access charge for companies that want to reach those consumers. I can't wring too much out of grandma, but I can shake down Netflix, banks, airlines, and Amazon.

So what Net neutrality is actually about for enterprise customers is how much it will cost them to reach their customers via the Internet. Will the ISPs be able to get fees from them (on top of what they pay for their own Internet access) just to reach their customers? Will Citibank be able to advertise to FiOS subscribers that they can get to its financial portal 30% faster than they can get to JPMorgan Chase's website? Or will Verizon just charge both Citibank and JPM Chase millions so that neither will be able to say you can get to it faster if you are a FiOS subscriber?

Stay tuned.

Same Old Same Old

  1. If you still think the property tax allowance tacked onto your telecom bills is somehow mandated by the government you are probably also a fanatic Spirit Airlines fan. Leaving aside universal service fund fees, mumbo-jumbo surcharges have grown from less than 2% to around 10% of the total bill, and that percentage is still climbing.

  2. Legislatures and regulatory agencies pass rules that make carriers responsible for things like E911 implementation and data security. The carriers' agenda is to use contracts to avoid those responsibilities by shifting them to customers.

    E911 is a good example. The FCC has regulations and many states have laws that require telcos to enhance their systems so that the actual location of an emergency caller is passed to the local public safety answering point (PSAP). The carriers have responded by pushing the responsibility onto their enterprise customers. If you occupy a large building, your service provider wants you to track the location of every phone and report it to the correct PSAP.

    Data security is another example. Various statutes (notably Gramm-Leach-Bliley for financial institutions and HIPAA for health care providers) not only impose privacy and data security requirements on target institutions, but also require those institutions to require their vendors to take steps to safeguard the privacy and security of confidential data to which those vendors have access. Telecom providers go to great lengths to avoid these responsibilities by demanding that their customers agree that the provider is somehow not subject to the laws' requirements, requiring customers to encrypt all data flowing through their networks, and/or disclaiming any liability to the customer or third parties for privacy and security breaches (including those caused by the provider's negligence).

  3. First came the service guides -- hundreds of pages of online terms, written by the carriers and altered whenever they please, that are incorporated by reference into all telecom contracts.

    Next came acceptable use policies (AUPs). Mandated by statute to combat illegal downloads and file sharing, AUPs have morphed into broad statements of a carrier's right to suspend or terminate service (without liability) for any reason it chooses. At one point AT&T's and Verizon's AUPs gave them the right to suspend service to customers who said or did anything that "tends to damage the name or reputation of" the carrier "or its parents, affiliates and subsidiaries."

    And if these weren't bad enough, now we have click-through licenses. Customer employees "accept" these on behalf of their employers whenever they access a carrier's Web portal -- which they do nowadays to download, review and pay bills, check inventory, place or check the status of an order, or report troubles. Click-through licenses purport to override any inconsistent negotiated terms or conditions covering issues like limits of liability, indemnification obligations, and dispute resolution.

    And all of that is on top of rigid and unfavorable terms in areas like wireless early termination fees.

The carriers like to say their only agenda is to serve their customers. That's true. And it's fine, so long as you don't mind being lunch.

Join Hank Levine at Enterprise Connect Orlando on Wed., March 18, for the session, "EC Summit: How the Service Providers' Agenda Impacts Your Enterprise." Register today and save $300 on your conference pass using the code: NJSPEAKER.

  • Legislatures and regulatory agencies pass rules that make carriers responsible for things like E911 implementation and data security. The carriers' agenda is to use contracts to avoid those responsibilities by shifting them to customers.

    E911 is a good example. The FCC has regulations and many states have laws that require telcos to enhance their systems so that the actual location of an emergency caller is passed to the local public safety answering point (PSAP). The carriers have responded by pushing the responsibility onto their enterprise customers. If you occupy a large building, your service provider wants you to track the location of every phone and report it to the correct PSAP.

    Data security is another example. Various statutes (notably Gramm-Leach-Bliley for financial institutions and HIPAA for health care providers) not only impose privacy and data security requirements on target institutions, but also require those institutions to require their vendors to take steps to safeguard the privacy and security of confidential data to which those vendors have access. Telecom providers go to great lengths to avoid these responsibilities by demanding that their customers agree that the provider is somehow not subject to the laws' requirements, requiring customers to encrypt all data flowing through their networks, and/or disclaiming any liability to the customer or third parties for privacy and security breaches (including those caused by the provider's negligence).

  • First came the service guides -- hundreds of pages of online terms, written by the carriers and altered whenever they please, that are incorporated by reference into all telecom contracts.

    Next came acceptable use policies (AUPs). Mandated by statute to combat illegal downloads and file sharing, AUPs have morphed into broad statements of a carrier's right to suspend or terminate service (without liability) for any reason it chooses. At one point AT&T's and Verizon's AUPs gave them the right to suspend service to customers who said or did anything that "tends to damage the name or reputation of" the carrier "or its parents, affiliates and subsidiaries."

    And if these weren't bad enough, now we have click-through licenses. Customer employees "accept" these on behalf of their employers whenever they access a carrier's Web portal -- which they do nowadays to download, review and pay bills, check inventory, place or check the status of an order, or report troubles. Click-through licenses purport to override any inconsistent negotiated terms or conditions covering issues like limits of liability, indemnification obligations, and dispute resolution.

    And all of that is on top of rigid and unfavorable terms in areas like wireless early termination fees.

  • E911 is a good example. The FCC has regulations and many states have laws that require telcos to enhance their systems so that the actual location of an emergency caller is passed to the local public safety answering point (PSAP). The carriers have responded by pushing the responsibility onto their enterprise customers. If you occupy a large building, your service provider wants you to track the location of every phone and report it to the correct PSAP.

    Data security is another example. Various statutes (notably Gramm-Leach-Bliley for financial institutions and HIPAA for health care providers) not only impose privacy and data security requirements on target institutions, but also require those institutions to require their vendors to take steps to safeguard the privacy and security of confidential data to which those vendors have access. Telecom providers go to great lengths to avoid these responsibilities by demanding that their customers agree that the provider is somehow not subject to the laws' requirements, requiring customers to encrypt all data flowing through their networks, and/or disclaiming any liability to the customer or third parties for privacy and security breaches (including those caused by the provider's negligence).

  • First came the service guides -- hundreds of pages of online terms, written by the carriers and altered whenever they please, that are incorporated by reference into all telecom contracts.

    Next came acceptable use policies (AUPs). Mandated by statute to combat illegal downloads and file sharing, AUPs have morphed into broad statements of a carrier's right to suspend or terminate service (without liability) for any reason it chooses. At one point AT&T's and Verizon's AUPs gave them the right to suspend service to customers who said or did anything that "tends to damage the name or reputation of" the carrier "or its parents, affiliates and subsidiaries."

    And if these weren't bad enough, now we have click-through licenses. Customer employees "accept" these on behalf of their employers whenever they access a carrier's Web portal -- which they do nowadays to download, review and pay bills, check inventory, place or check the status of an order, or report troubles. Click-through licenses purport to override any inconsistent negotiated terms or conditions covering issues like limits of liability, indemnification obligations, and dispute resolution.

    And all of that is on top of rigid and unfavorable terms in areas like wireless early termination fees.

    The carriers like to say their only agenda is to serve their customers. That's true. And it's fine, so long as you don't mind being lunch.

    Join Hank Levine at Enterprise Connect Orlando on Wed., March 18, for the session, "EC Summit: How the Service Providers' Agenda Impacts Your Enterprise." Register today and save $300 on your conference pass using the code: NJSPEAKER.