Blog #Telecommunications


Telecom Service Contract Length, 1-year or 3-year

I recently read an article that Sorell Slaymaker put out a few years ago, and he stated that folks should stop signing up for 3-year contracts ( I respect his opinion, but there are many variables to consider.

From my wholesale background, 1-year terms made sense. I would consistently see at least a 15% and more often 20% rate reduction year over year. There were also times when three years made more sense. Change platform from 10 gigs to 100 gigs, or get 30% or discount over 1-year price versus 3-year price. 

When working with the enterprise side, I see wholesale pricing, and most of the time, the three-year pricing is the best option for customers with the lower MRC. I decided to reach out to my network of professionals and ask their opinion and share best practices. The response was tremendous, critical decision-makers from Cloud Aggregators, Submarine Cable providers, Fiber Network, Larger Enterprise focused providers, wholesale Carriers, OTT providers, Large ISP. Here is a breakdown:

Customer Access: 3 years is prevalent. Providers have no issues with matching the term for the access piece to the client's commitment. If a company was only purchasing a few circuits a month and circuit management is relatively easy, hey would consider 1-year terms, but if there are many orders, the resources to manage the workflow often outweigh the cost savings. 

Network Backbone: Many respondents had their fiber network backbone and mainly purchased last-mile access. But a few buy their backbone networks from wholesale providers, and a 1-year term is preferred. Many have seen cost reduction year over year. Last-mile connectivity has become more fluid, eliminating a significant obstacle of changing out providers. 

Portability. My industry colleagues are incredibly savvy. They purchase a significant volume of services and have many moving parts connecting the metro, long haul, and customers. They insist on a portability clause in their Master Service Agreements (MSA's). Usually, they have services priced at a 3-year rate and sometimes even a 5-year rate. Most providers will require the circuit to stay in place for one year to use portability. You may have a customer that signs up for one year; you price out the access at a three-year rate. This approach is beneficial in winning the business; others may be pricing the higher one year rate. The customer elects to go elsewhere after the year, and you have a circuit that has two years left on the term. With the portability, you cancel the circuit no longer needed and assign a new circuit to that position or renew an existing circuit towards that commitment. Portability requires very efficient and effective Telecom Management.

Dark Fiber. Here is an area that is rarely a 1-year rate. If you are in the market for dark fiber, you are more than likely to operate DWDM, having more than just a single circuit. Terms can run 3-year, 5-year, or possibly a 15 to 25-year IRU. 

Overall, there is no one size fits all.  Many times 3-year agreements work, and other times the 1-year deal works. At 3 Eagles, we analyze what is best for our customers and present all options. Whatever your service needs: VOIP/SIP, UCaaS, Cloud, Transport, SD-WAN, IP, and many others. 

Before I close, I wanted to shout out to key contributors: Frank Florentine, Nigel Bayliff, Debbie Grasso, Walt Wollny, Jim Jerrells, Michael Hallgren, Lauri Abrahamson, Mike Leber, Jake Miller, Gary Funk, Bill Rauch, Jens Leuchters, John Welch, Julie Brown and many others.

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If you have not had a cost review in over a year, you are probably paying too much and not getting the best service available! 3 Eagles IT Solutions can navigate through all available options and present to you the best service at the best price! Companies that set out to reduce their telecom spending are often confronted with a grim reality – it’s difficult and resource-intensive. It takes a startling amount of work to achieve savings that are meaningful to the bottom line.


1) Engage the Telecommunications and IT Service Provider

Your provider may have a lower rate than what currently exists which they are not sharing. We can do cost comparisons with the competition.  Many times, a provider is willing to lower the price immediately, even if you are under a contract term.  They would much rather keep you as a customer than to lose you. Continual contract optimization can save 15 to 30 percent.

3 Eagles IT Solutions provide support to a wide range of carrier products such as data, phone, integrated voice, internet and cloud services. We help you acquire services which are best suited for your business and your budget.

2) Get the right ISP and broadband for your location

There is nothing more costly to a business than being locked into a contract with an ISP for the wrong service. Not only is this a costly mistake to make, but a wrong network can mean a slow network. Slow internet lowers employee productivity and increases time to deliver to customers.

We will confirm your ISP and broadband moves at the speed of your business at the best price with quoting software.

3) Find the right Voice plan for your business

Companies are transitioning from traditional phone lines to Voice over  IP (VoIP) to allow for scalability and cost savings. Apart from the lower rates on phone calls, you can do away with the incremental cost of having a “just in case” long distance package and enjoy a “pay for what you use'' plan structure instead.

We will help navigate the best voice plan for unified communications with employees and customers across the globe.

4) Bundle services

Check on the availability of feature plans if you’re paying individual rates for your phone features. If you’re receiving your phone service from one company, and your long distance or toll free from another, request rates for those services from your phone service provider. Ask one of the companies to bundle the services for you.  Managing subscription and service optimization saves from 10 to 25 percent.

We research your current services and find possible bundles to save your business time and resources. 

5) Mobile Phone Review 

Here is something you don’t hear “ Hello, This is Mobile Phone Company we have just announced a new promotion and we are going to cut your rate by 20%, this should show up on your next invoice” Providers are not proactively looking to save you money. It is important for annual reviews of your mobile services. Clear the clutter, stop paying for add-ons that are not used. 

We save clients thousands of dollars by taking advantage of all the published and unpublished discounts for wireless with cost savings of at least 10 percent.

6) Cloud Optimization

Cloud has grown tremendously over the last 15 years.  The product sets are changing daily as is the pricing models.  Many businesses get the sticker shock with their first few cloud invoices. They may have been set up with a minimum usage plan and in reality only needed a small fraction of the services they signed up for. Up to 35% of business cloud expenses are wasted on unnecessary features.

Schedule an appointment Now to start Saving Money.

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