Of credits, surcharges, and the need to focus on unit rates

By Tony Mangino Posted May 23, 2013

The following is a guest post by TC2 Senior Consultant Tony Mangino, who is based in Atlanta.

What’s your net rate? Easy: Gross price minus discount. Right? Well, if it’s that easy, you should be wary of a net rate that doesn’t fit that definition.

Carriers are sometimes happy to proffer a “net effective rate” for a SIP trunk, MPLS port, LD minute or other charge. Such a rate is inevitably arrived at through a credit. If you receive, say, a $500,000 credit six months into the contract term, the credit is almost certainly not just sitting there in the contract with no context. Your account manager will say that it has the effect of lowering your per-minute price from one number to another, or of making your total T1 MPLS port plus CoS cost something meaningfully lower than the calculated list price minus discount.

But that context is in the account manager’s head, not in the price itself – or in the carrier’s billing system. And that difference comes into play as soon as the carrier changes something else affecting your invoice.

Here’s an example. Last week David reported that Verizon has instituted an entirely new surcharge that seems to trod over the old ground of Verizon’s total regulatory costs but is probably Verizon’s specific answer to AT&T’s universal service administrative fee. What this new fee is all about is an interesting question, but the thing about surcharges is: They really have no flexibility in themselves. Account teams can’t waive them and most users can’t explicitly negotiate them. They go into the billing system and you kind of have to take it.

That same billing system doesn’t know and doesn’t care that your above-market 2 cent per minute net rate isn’t 2 cents just because your carrier rep says it isn’t. When the billing system calculates the new, higher surcharge (or tacks on an entirely new percentage surcharge), it just goes by the net rate it sees.

As a result, the value of your “net effective rate” starts to blow up. The dollars added in surcharges that month will be more than the magnitude of increase that the carrier “announced” (well, quietly disclosed in the Service Guide). Or put another way, your credit has no way of expanding to cover the increase in the surcharge percentage. It’s just sitting fixed in the contract while the carrier monkeys around with surcharges to its heart’s content.

Truth be told, this messy relationship between credits and surcharges is just symptomatic of a range of difficulties with contractual credits. All other things being equal, a nice juicy credit appears to be a freebie that “rewards” you for signing with the carrier. Problem is, other things are almost never equal. Suppose you have unexpected growth in a telecom or network service. Unless the credit expands commensurate with the growth, once again your net effective rate rises because the credit is now “spread” over greater volume. You would have been better off negotiating for the promised actual net rate without any credit at all.

And depending on the service, credits can also play havoc with discount tiers, minimum payment periods, and the timing of contract negotiations. In some cases they even act as an implicit pushback from the carrier against best practices in terms and conditions.

Every enterprise customer is different, and no blanket recommendation against credits would make sense. But in situation after situation, we’ve found that a focus on actual unit rates rather than “effective rates” arrived via a complex calculation will pay the most consistent dividends over the long term. Remembering what you can control throughout a contract term, and what the carrier can control no matter what the contract says, will help keep this in focus.

SIP over MPLS? Check. Packaged LD pricing? Check. Concurrent call pooling? Well …

By David Rohde Posted May 22, 2013

Looking out over the term of their next carrier deal, enterprise users face the possibility that by the time of contract expiration, the Public Switched Telephone Network will be gone.

Or at least you get that idea from the noises of the big carriers. In Washington they’re petitioning the government to let them phase out the PSTN. In account meetings they’re advising enterprise network managers to do major transformation projects where they once ceded the lead on convergence and VoIP to second-tier carriers. And on the ground in some places, the copper infrastructure is washing away, as it is in my neighborhood in Northern Virginia.

So you’d think that an AT&T (just for example) would have all its competitive ducks in a row on a replacement network offering. Well, maybe in some other industry a generational changeover happens with the snap of a finger. Not in telecom – not in the past, and not now.

AT&T certainly has a reasonably robust SIP Trunking service to provide the transport underpinning of a transformed, converged enterprise network. AT&T’s BVoIP (Business Voice over IP) suite includes the IP Flexible Reach service offering for outbound and IP Toll Free for inbound SIP Trunking. But in parallel with the way AT&T initially slow-rolled its timing of full-featured offerings in past transformations (such as private line to frame relay in the mid-1990s), the comparison between AT&T’s SIP Trunking service and its main competitors is inexact.

Only recently did AT&T make SIP Trunking available over its principal MPLS service, “AT&T Virtual Private Network” (universally known as AVPN). Before then, AT&T users were mostly getting SIP Trunking over a kind of souped-up dedicated Internet service from AT&T with a label-switching add-on feature. But everyone knew that AT&T was timing availability of SIP Trunking over AVPN for a more critical mass demand of SIP Trunking.

AT&T is also now current with the general industry practice of dramatically simplifying the nature of how calls from the IP/SIP network to the off-net PSTN are charged. Along with Verizon, Sprint and others, AT&T offers a “packaged” long distance pricing option that wipes out ancient distinctions among interstate, intrastate and intrastate/intraLATA per-minute tolls.

But unlike Verizon and Sprint, AT&T does not yet integrate its outbound/inbound SIP Trunking suite in the sense that Verizon and Sprint offer integrated SIP Trunking ports for both traffic types. With AT&T you still have to buy separate ports for outbound and inbound. Granted, many users prefer that arrangement for security and redundancy, but it’s a question of even having the choice.

Now we at TC2 are closely watching AT&T’s progression through arguably the most central SIP Trunking procurement issue of all: whether, in the centralized model, an enterprise can pool its concurrent call capability across all of its network locations.

You’d think that AT&T would recognize that this is key to SIP’s economical nature – the ability to shift a Concurrent Call Path (the key pricing element in SIP Trunking) to different sites depending on traffic patterns. Verizon innovated this practice years ago with its Burstable Enterprise Shared Trunks (BEST) feature – something that almost all other SIP Trunking providers have imitated. But AT&T doesn’t offer such a feature, at least not yet.

In all likelihood AT&T will offer a concurrent call pooling feature in the near future, just as it caught up on other aspects of SIP procurement. If your SIP business case relies on the availability of concurrent call pooling – for example, to cost effectively provide failover capacity – then right now you may need to seek alternative commercial solutions from AT&T to offset the higher costs associated with a product that does not yet provide a concurrent call pooling feature. But it’s a great idea to tee up these questions in competitive procurements to get the best, current feel for where all the carriers, including AT&T, stand.

Remember, AT&T is still the 800-pound gorilla of the industry with a tension between its growth businesses (IP enterprise networks and, obviously, wireless) and its still somewhat meaningful legacy revenues. AT&T’s moves follow their own timeline as they juggle priorities in telecom public policy and the competitive enterprise market with stockholder expectations. A mix of best practices in corporate procurement to ask questions about your own priorities the right way, while keeping an eye on telecom industry product news in general, is the best approach.

Apparently feeling left out, Verizon adds an Administrative Expense Fee

By David Rohde Posted May 17, 2013

Were you under the impression that Verizon does not have a surcharge for the regulatory costs it incurs? Neither was I. They always charge extra for regulatory costs!

And yet today Verizon added a regulatory-related “Administrative Expense Fee” of 0.45% of applicable interstate and international revenues. Some users have been seeing this new 0.45% AEF pop up in account communications and invoices that cover periods past the June 1 effective date. Today it became official with a notice in Verizon’s Service Guide.

So what’s going on here? Is this a redundant charge or something?

Users who bird-dog surcharges may have already picked up on the subtext. The wording here is everything. Verizon’s new “administrative” expense has clear echoes of a longstanding 0.88% charge from AT&T on the purported administrative cost of collecting the USF surcharge. Not an official mark-up of what is technically a pass-through of the carriers’ USF contribution factor (such a mark-up would be illegal), the AT&T surcharge takes full advantage, to say the least, of the FCC’s permission to assess users for the alleged cost of collecting the fee.  But no other major carrier has dared to implement a similar charge up until now.

Verizon’s own new “administrative” fee seems clearly designed to step into this area, with a number that’s just barely over half of AT&T’s fee (how generous of them). So it’s a USF collection charge, right? Problem is, that’s not what Verizon says it is – they don’t limit it to USF administration. Verizon says the AEF is “imposed to recover a portion of Verizon’s internal costs associated with implementing, administering, and complying with federal regulations and programs.” In other words, USF and a whole bunch of other things!

In a way, that sounds reasonable – until you realize that Verizon has another surcharge that already offsets regulatory costs across a similarly described amorphous range of federal regulatory obligations. That charge, the Carrier Cost Recovery Charge (CCRC), could be said to purportedly cover Verizon’s regulatory expenses themselves, while the new AEF could be said to be the additional administrative overhead on those costs. But in the real world, there’s a clear parallel to AT&T’s 0.88% USF admin fee.

If that’s not enough to make your head spin, consider this: 

• Many surcharges themselves generate a USF calculation on top of it – something like compound interest. In Verizon’s case, that includes the new AEF! So you could see 15.5% (the current USF contribution factor) of the monthly dollar value of the new AEF charged in addition to the AEF itself. How fun.
• Nice job by Verizon instituting this at a time when the USF contribution factor itself is down – it was 16.1% in the first quarter of 2013. If that makes the overall burden look like it’s decreased, it’s a mirage. As soon as the USF at least goes back to its past level, that’s 0.45% extra vs. before (plus “interest” as described).

Whatever the level of surcharges, there are always additional considerations in this arena as you’ll discover by clicking the Surcharges link in our Topics Cloud:

• Whether a particular interstate service is assessed surcharges or not. That’s no longer an obvious answer in the age of transformation from the PSTN to all-IP networks.
• How VoIP does or does not fit in to the surcharge regime (but notice that Verizon makes a point of including “interconnected VoIP charges” – the regulatory term of art – in its new administrative fee).
• What role access plays (typical scenario: the interstate access line to an MPLS port incurs all the percentage surcharges while the MPLS service itself may not).

Any way you slice it, Verizon has stepped into a gap it had kept between itself and AT&T with a fresh new surcharge. It raises the stakes yet more on how you tee up surcharges in RFPs, manage them in TEM, and truly understand how they can be discussed in negotiations as part of your total cost of ownership of complex enterprise network services.

Data pooling plans gain momentum as data usage accelerates

By David Rohde Posted May 8, 2013

Is wireless data usage threatening to bust your budget? Keeping up with the accelerating changes in how carriers are pricing data usage can help with the accelerating costs.

Data pooling plans, which made a tentative appearance last year, are becoming mainstream. For enterprises, the problem with wireless data pricing was not so much the replacement of unlimited data plans by capped usage. It was the price of the basic per-user unit of capped or unlimited plans, which were usually designed for a 5GB level of usage that few end-users reach. Data pooling plans can be a real game-changer, particularly when combined with lower-priced 2-3 GB plans.

Even better, some custom plans now offer very low charges for zero-usage aircards. No matter how data usage is pooled, some aircard users (and for some enterprises, numerous aircard users) will generate zero usage in given months. Until data pooling plans match a good deal of the flexibility and “give” of traditional voice pooling plans, they don’t really do all they can for enterprises. That point is now coming.

After that, will the challenge of wireless data pricing recede? Not likely. Mobility is moving so fast that keeping up with the state of the market – literally meaning what’s happening in the most recent few months – is critical.

For example, tablet plans are now on the rise in enterprises, but expected usage levels tend to be unknown, leading enterprises to hedge on the high side. And with tablets we’re also talking about a market where the equipment is generally not subsidized by the carrier (and even worse, they still default to incurring line terms and ETFs anyway).

And there’s always the headache of messaging plans. You’re probably in a place where your end-users don’t even conceive of messaging as generating an incremental cost. Unfortunately for many enterprises, that’s not what their bill shows!

If your carriers are not giving you at least a moderate bundle of messaging usage for $0, you simply don’t have a market-current deal. Especially when it comes to a mix of text and multimedia messaging, you can expect Verizon Wireless to be the most difficult to negotiate with in this area absent an aggressive, competitive procurement.

The very best wireless data deals also have some little-known pricing options that can be financially much more significant than an extra percentage point in the nominal corporate “discount” or a tweak in attainment tiers. Until further notice, expect to have to check market intelligence on wireless data pricing regularly as the mobile broadband revolution marches on.

Softbank’s fight with Dish for Sprint runs far afield from the enterprise

By David Rohde Posted May 3, 2013

So it turns out that Sprint has at least two suitors. Softbank and Dish Network are now competing to take over majority to full control of Sprint. The Dish bid of about $25 billion outdoes Softbank’s bid of about $20 billion, but clearly saddles the surviving company with additional burdens.

Once past the complexities of financial engineering, the two offers are basically polar opposites. Softbank’s bid is akin to a Warren Buffett investment that largely cleans up Sprint’s messy finances and leaves $8 billion free for new investment. Dish’s bid is akin to a late 1980s-style leveraged buyout that risks more debt troubles down the road.

Softbank is furiously arguing against the riskier Dish offer to Sprint’s shareholders. But still, there it is from Dish: $25 billion on the table for long-suffering (or recently opportunistic) Sprint investors.

Here’s where this falls out for the enterprise market. For all of Sprint’s troubles on the customer front, Sprint does have a scarce asset – a national wireless network in the world’s wealthiest country. As that asset attracts interest from diverse parties, it becomes increasingly shorn of the connection with telecommunications markets as they currently exist. It makes sense that multiple bidders are lining up for that Sprint asset, but each new bidder comes to the game with concerns that are increasingly divorced from current customer markets – the enterprise market most of all.

Dish’s problem is that what we call television programming today, most of it now delivered over dedicated broadband-to-the-home landline or satellite connections, in a few years will likely be sent over broadband mobile networks to whatever hybrid multifunctional personal device wins out over the rest of the decade. For Dish to be a winner going forward, it figures it needs to have a national mobile broadband network under its wing.

It’s a fascinating problem, but it’s a world away from the concerns of enterprise network managers. True, even in the business world we live in an era of consumerization of IT. But for corporate managers, consumerization issues still depend on how they affect your next 2- to 3-year contract term. Unified communications, softphones, tablets, every gradation of BYOD, even the selection of approved corporate mobile apps from home-grown to public apps – all those are in play for your next wireline, wireless or unified contract. Accommodating employee desires to watch everything from I Love Lucy to Glee? Not so much.

Right now there’s still an expectation that Sprint will likely end up falling into the hands of a company like Softbank that will continue Sprint’s historic role in U.S. telecommunications, although increasingly shorn of what remains of Sprint’s wireline business. (The industry website Telecom Ramblings, in a recent reader poll, rates Sprint’s wireline network as one of the “carriers” that’s most likely to be sold to some yet different player in the future.) But there’s a reason why there’s so much new energy in the enterprise sales market from several carriers, most notably Level 3, which recently reported an increase in enterprise revenues in the first quarter of 2013 even as its wholesale markets dragged. It’s because the No. 3 position in the U.S. enterprise market is considered fully up for grabs.

For enterprise customers, the sale of Sprint, more than any telecom merger in memory, raises the question of whether the buyer of this key carrier will have any interest (or even awareness) of the key services that businesses have historically bought from the acquired carrier in question. The disconnect could be rather large.

Getting a grasp on your telecom inventory – is it possible?

By Theresa Knutson Posted April 15, 2013

The following is a guest post by TC2 Project Director Theresa Knutson, who is based in Sioux City, Iowa.

One of the most challenging aspects of telecommunications management is developing an accurate inventory. The complexity of carrier services and siloed billing make this theoretically simple exercise akin to solving a quadratic equation.

Developing a unit level inventory by service address will be painful, but worthwhile. You will find services that are billing at closed locations, services you didn’t know you had, and services that are billing at rates that you haven’t negotiated. Bottom line, you will save money.

Here’s why inventories are a mess. Take a single site at 123 North Maple Street in Omaha, Nebraska. It uses the following: local phone lines, long-distance voice services, a T1 MPLS data port with T1 access, and a dedicated 3M internet circuit with related access—all with the same vendor. Every month you get 6 separate invoices under 6 separate account numbers:

1. Local services
2. Interexchange voice and access (yes, they can get these 2 services on one invoice)
3. MPLS access
4. MPLS port/CoS (yes, this often bills separately from the related access)
5. Internet port
6. Internet access (which can bill separately, though some vendors get the Internet port and access to bill together)

Generating each invoice creates the possibility of errors or inconsistencies that could complicate the inventory. To cite just one example, consider that the number of ways to enter an actual single address: 123 North Maple Street, 123 No Maple St, 1 2 3 Maple St North, added to the number of variations on city/state abbreviations. Developing an accurate inventory, however, requires the complete service address to be keyed in correctly and consistently. 

Say that this site closes. Who will submit disconnect orders for all of the services under each of the accounts? How about cancelling everything but the alarm line? Consider the possibilities for error if you have 50, 100, 500, 1,000, or more global sites.

So where do you start? Define what you need to gather:

1. Service address (street, city, state, country, zip, NPA/NXX)
2. Vendor name/account #
3. Service description at unit level/USOC code, including speed if applicable
4. Quantity of each service
5. Service identifier such as circuit ID
6. Unit rate billed (this may or may not be what you are contracted to pay, but that’s another article)

There are several potential sources for this information. The three main candidates are your vendors, your TEM, and your internal team. Since no single one will have all of the right information, evaluate each option and how complete or reliable it is.  Start with the most complete source and use other sources to fill gaps.

Your Vendors. Start by running reports from the vendor portal (e.g. monthly charges report by service address). Remember: vendor portal reports only contain the accounts that are populated in it for your ID, as I wrote in January.

Sometimes vendors don’t populate the service addresses correctly (or at all). In those cases, take what data you can from these reports. If you’ve verified that all your accounts appear in the portal, these reports should include everything you’re paying for and are likely the most complete information you’ll have, though some gaps will remain.

Vendors can also provide certain information an ad hoc basis, but getting it can be difficult. Request an inventory report by service address across all services from your vendors. Emphasize that you want your entire inventory, including local services!

TEMs. While TEMs often claim that they can provide inventory data, it probably is not complete unless you are paying separately for provisioning service. We use many TEM tools for our clients but have never managed to build a complete service address inventory with the TEM portal/tool alone. But the TEM portal can fill in some blanks, particularly if you want chargeback information in your inventory along with the billing information.

Internal Sources.  Don’t forget your IT department.  Because the IT team is responsible for site connectivity, it will often maintain tracking spreadsheets and/or databases of what has been provision on a site basis.  This information, which tracks independently of billing data, can be invaluable.

Finally, when all else fails, invoices (or images from the billing portal) are a great source. That’s where we go as a last resort. 

As you compile your inventory, document your sources. That will save valuable time when you go to update the inventory. The most amazing thing of all is that you can gather all of this data without having to do an onsite physical inventory. 

Compiling this data will give you a snapshot of your inventory. While your inventory obviously is not static, it will be revealing. You will find services that need to be disconnected immediately (or thought you already had!) and gaps to address during negotiations. You will save money. Even the most sophisticated companies are challenged by telecom inventory management because of the gap between what they think is in the IT department’s inventory and what’s actually billed each month.

Our final suggestion: “follow the money.” Start building your inventory using your largest vendor and work your way down.  Do this regardless of your company’s size or complexity.

Locations with recent site changes/closures or service upgrades are a fertile source of errors. For example, one company told a vendor to upgrade a 45M MPLS port to a 60M (assuming that the 45M port would be disconnected upon acceptance of the 60M port), only to find when the inventory review was completed 6 months later that there had never been a disconnect notice for the original 45M circuit. If you keep records of your disconnect orders, you can seek credits in such cases.

In another case, a circuit was rejected by the customer, which resulted in the provisioning of a replacement circuit.  You guessed it:  the carrier billed both circuits.

A common problem involves a closed site (sometimes many years ago) where the telecom services continue to bill. 

You will find services that are billing at undiscounted rates, presenting key negotiating/procurement opportunities.  You can’t negotiate rates for services that you don’t know you are using. 

The telecom industry has grown largely through acquisitions. While that has made many players much bigger, there has been minimal consolidation of billing platforms. And the carriers are not necessarily rushing to consolidate and fix billing systems to make matters easier for customers. Complex billing is confusing and therefore lucrative for the carriers. It’s almost impossible for a customer to know what it is paying for and where. This isn’t going to change soon, which is why we encourage users to invest the time and resources to assemble their service inventories. It is an investment that will pay you back many times.

Declining account support and the rise of the vendor “Program Management Office”

By Ben Fox Posted March 12, 2013

The following is a guest post by TC2 managing director Ben Fox.

It’s widely acknowledged that today’s vendor account teams are spread very thin, typically supporting more customers with less personnel than ever before. Pricing and margin pressures have led to rounds of layoffs and downsizings and account support has been one of many targets.

Vendors have also invested in ever more sophisticated on-line portals that now do far more than just provide some billing and usage reporting facilities (once you get them configured correctly). The portals are designed to enable customers to support themselves on an almost completely self-service basis (whether or not the customer wants that) and to reduce the reliance on account team support.

This trend is even culminating in some vendors making sheepish attempts to introduce new “standard” charges to contracts, for services that in the past would have been considered account support, such as basic reports and ordering and billing support. But even without such sneaky attempts to turn the lack of account support into new charges, the fact is that vendors are increasingly representing what was once considered account support as a “value-added” or “managed” service.

Discussions around a contract renewal, or bidder proposals in response to a competitive procurement, can often be the catalyst for discussions of such “value-added” services. For instance, a contract renewal is often used as a broader opportunity for the customer and vendor to review the overall health of their relationship, and account support issues are a common theme of such reviews, with customers highlighting areas where increased levels of account support are desired. An increasingly common vendor response is to offer to “re-invest” (the vendors’ words not mine!) some of the savings it is (hopefully) offering in return for a contract renewal, into some resources to “take some of the load off the customer” and generally support the services.

The vendor spin can be compelling and the services are labelled with monikers such as Program Management Office (PMO), Lifecycle Management (LCM) and Enterprise team. But as you dig into what these services and charges actually deliver, the value-added services you were expecting rapidly turn out to be all the things that you expect your account team to be doing anyway, and certainly not charging you for!

One area that often leaves a particularly bad taste in the mouth is when it becomes clear that a key function that the PMO/LCM team will perform is coordinating between different parts of vendor’s organization in order to deliver the services you need. This has always been a somewhat unseen function that account teams have fulfilled, but it never seems right to be asked to pay extra because vendors struggle to internally manage all of their sometimes disparate functions and product houses.

The concept of PMO/LCM (pick your favorite three-letter acronym here) comes up just as regularly in competitive procurements. Particularly where the procurement includes managed services, bidders regularly include PMO charges in their initial proposals. Where the services scope includes genuinely custom functions such as managing third parties, or dedicated network engineering resources, a PMO team is appropriate. But for basic managed services such as managed MPLS networks, PMO charges are generally not appropriate and can usually be rapidly eliminated in subsequent bid rounds.

The increasing prevalence of PMO charges in all their different guises emphasizes more than ever the importance of making sure your contract commits the vendor to providing the account support you need and expect, and that the contract includes important related concepts such as key personnel and vendor governance. It is best practice to address these concepts at the start of any procurement process by including them as requirements in your Request for Proposal (RFP) document, not waiting to bring them up nearer the end of the process when you start exchanging contract drafts. And where it does make sense to pay for certain incremental PMO services, then the scope of services of the PMO function should be described in the contract in detail, and issues such as the difference between dedicated and designated support clearly addressed.

The issue of decreasing account support, and vendors pushing customers to instead pay for services that may be little more than account support in disguise, is not going away, and indeed will become ever more pervasive as time goes on. As always, competitive procurements provide the best leverage to retain and maximize the account support that you receive at no extra charge, but the longer-term trend is towards either an increasingly self-service model, or paying for certain levels of additional support. As a result, TC2 and LB3 are now helping out not only in those competitive procurements but also, for users who find it too much to bear to pay the vendors extra because their account teams are no longer delivering what they need, through our Lifecycle Services. In a world where account team support is now inevitably trending toward self-service, a variety of tools are needed for the procurement, implementation and operation of the world-class enterprise telecom services that users need and expect.

Machine-to-machine: A whole new wireless pricing ballgame

By David Rohde Posted March 7, 2013

If you’d pay $50 a month for 5GB of monthly data, would you pay $8.99 a month for a mere 1MB – one-five-thousandth of the same amount of usage? Of course not. But that’s how the machine-to-machine (M2M) market is shaping up.

Both Verizon Wireless and AT&T have made splashy acquisitions in the M2M market, and you can bet they’ll be putting M2M plans in front of you if they haven’t already. When they do, you’d better know why their M2M usage pricing is all out of proportion to ordinary wireless usage – or at least recognize that it is – and what you can and should do about it.

This week my TC2 colleague Dorothy Hildebrandt, along with LB3’s Kevin DiLallo, explain the opening rounds of the M2M enterprise market in a NoJitter article called “Thinking About Buying a M2M Solution or Developing Your Own?” The main issue here seems to be the short payload of each M2M transaction. The carriers don’t want you to buy M2M bits on your current data plans, whether for individual devices or shared, because they feel they won’t be compensated for the value provided. To run the M2M apps that they’ll be selling via Verizon’s 2012 purchase of Hughes Telematics and AT&T’s recently announced takeover of GM’s OnStar business, you’ll need distinct new pooled data pricing plans.

Ah, but you say the gross price isn’t really the point – the difference will be made up in discounts. Here’s where the real fun starts. Dorothy and Kevin explain that the big carriers want everything to be different about the M2M pricing, including in some cases the very idea that there’s a discount off the official price. Negotiating for discounts, counting M2M devices toward attainment tiers, the ability to mandate rate optimization exercises – all these matters begin from a very churlish point in the M2M market compared to how they’ve evolved in the rest of the wireless market.

The one thing the carriers do want to keep is minimum service or line terms for these devices. Yet there are generally no significant equipment subsidies for M2M devices, which are the traditional justification for line terms.

So what can you achieve and how is the market likely to change over time? Check out the full piece and let us know your own experiences as well. M2M, or what used to be known as “telemetry,” is going to be a very big deal over the next 2-3 years. So it’s best to know the specific best practices available in pricing and Ts&Cs for this particular market, rather than rely on your past experience in wireless generally and run into a brick wall.