Wireless Deals – Advanced Concepts

and International Considerations

Wireless Deals – Advanced Concepts

and International Considerations

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Joseph Schmidt

Wireless in the Enterprise

Mobile services usage continues to grow rapidly, and now gets a lot of executive attention

Wireless is also one of the most bloated and wasteful spend areas in telecom

This means there is constant opportunity to improve pricing and terms and optimize use of wireless services in order to reduce costs

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BASIC CONCEPTS

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Some Best Practices for Wireless Deals

Early Termination Fees Rate plan changes Fixed pricing Free equipment Ordering authorization Optimization Rate review

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Discount Structures

Vendors provide discounts to base plan charges based on total spend / lines

Employee discount program spend / lines will count, but the company should have zero liability for employee lines

Implications of falling below the agreed discount tier, right to move to higher tiers, and right to reduce tier thresholds

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Equipment Funding Approaches

Equipment funding and individual line terms are linked

Different vendors have different approaches

You can negotiate rights to use ETF waivers to upgrade early

Beware of short equipment return times (~15 days vs. 30)

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Meaningful wireless SLAs are still hard to get, but progress is being made

Network performance SLAs are weak because they are averages across all of a vendor’s customers

Focus on service levels for delivery of new equipment and service activations

Strive to have service credits paid automatically

Wireless SLAs

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Wireless RFPs are extremely effective Customers are often surprised by the

price and term improvements they obtain through an RFP

Wireless services move and evolve quickly and this makes competitive RFPs especially important

Wireless RFP documents should focus on what you are looking to improve

Wireless RFPs

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NEGOTIATING WIRELESS PRICING

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Discount tiers are negotiable and get customized for different customers

Vendors offer custom net pricing plans, meaning that the impact of an improved discount can be very limited

Look at the discount, but don’t make it the lynchpin of your negotiations

Optimization yields bigger savings than improved discounts

Focusing on Discount Tiers Can Be Unproductive

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Pooling and flat rate plans continue to be the best approach for enterprise users

Pooling will sometimes yield lower effective rates than flat rate plans

Unlimited calling plans are good for high-volume users and are becoming more prevalent

Voice Plans

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Smartphone Plans

Smartphone data plans are a key area to

focus on in negotiations

Unlimited domestic plans are becoming hard

to keep

There is significant variability in global plan

pricing

Tethering options can be cheaper than data

cards

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Data Plan Pricing is Moving Lower

Some vendors price data card plans aggressively

Some vendors still offer unlimited data plans in bundled offers

Negotiate lower cost sub-5GB plans and use them

Data pooling plans are becoming much more common

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Data Plan Pricing is Moving Lower

Zero usage is a big issue MiFi and data card equipment should be

subsidized to zero International roaming plans are getting

cheaper but remain expensive, and need to be tightly managed

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Tablet Plans are Evolving Rapidly

Tablet plans are on the rise in enterprises

Expected usage levels tend to be unknown, leading users to hedge on the high side

Pooling tablet plans are becoming more common

iPads do not not get subsidized

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Messaging Plans

Expect at least a moderate bundle of messaging usage for $0

Some wireless carriers tend to make life very difficult with messaging

The sweet spot:• Low users fall within the “free” allowance

• High users put on heavily negotiated unlimited usage add-on

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International Charges

Negotiate a waiver of MRCs for discounted international calling plans, then give one to everyone

It is not uncommon for wireless vendors to negotiate custom rates for international roaming

Global plans / add-ons are expensive, but negotiable

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Renewal & Acquisition Credits

Acquisition credits have been common

for some time Renewal credits and other bonuses are

also available But the vendors are increasingly linking

credits to new business commitments /

thresholds

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TRENDS IN WIRELESS SERVICE CONTRACTING

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Trends in Wireless Contracting

Rates have flattened out Custom plans have “expiration

dates” Emergence of semi-custom plans Carriers get tougher on ETFs Carriers increasingly demand line

term extensions

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Trends in Wireless Contracting

Overall service discount is increasingly irrelevant; 24-month minimum line terms are required even without equipment subsidy

Increasing willingness to pool data across devices

Still no text pooling Rollover data has not yet hit the

enterprise market

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Trends in Wireless Contracting

Carriers demand exclusivity or high commitments of new lines

Carriers turn their backs on confidentiality, data security, privacy

Providers cut back on indemnification Continued USF abuses Carriers turn a blind eye to cramming

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MISCELLANEOUS WIRELESS CHARGES

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The Worst Offenders Include …

Navigation services Insurance Mobile purchases (apps, music) Enhanced voicemail Roadside assistance Non-subsidized equipment purchases Extended warranties Ring tones

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You Can Save A Lot By …

Banning these services Cancelling miscellaneous packages Conducting recurring audits of your

bills Tightening up the corporate policy

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RATE PLAN OPTIMIZATION

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Rate Plan Optimization – Not Just Voice Plans

Align with your rate plan strategy Upgrade high voice users to unlimited

plans and downgrade low usage unlimited plans

Add flat rate plans to standalone smartphones with voice usage

Ensure international voice users have an appropriate feature

Shut down zero usage phones

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Rate Plan Optimization – Not Just Voice Plans

Upgrade smartphones with international data usage to international plans

Downgrade smartphones with no global usage to domestic plans

Move lines with low data usage to plans with smaller allowances

Take advantage of data pooling plans for tablet and aircard users

Optimize messaging plans

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BYOD ISSUES

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Challenges with BYOD

Implementation is more complicated and time-consuming than predicted

User take-up isn’t as great as we planned or hoped

The management and administration effort is far greater then we anticipated

There seem to be lots of issues we didn’t consider and new problems keep turning up

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Challenges with BYOD

We don’t really have a mobile policy, let alone one that addresses BYOD

There is a lot of nervousness about the security of our data

We’re not seeing the cost savings we had expected

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GLOBAL WIRELESS DEALS

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Non-US Wireless Services

In much of the world, wireless services are highly competitive

Just as in the U.S., unit prices are going down but consumption is rising and changing

There are always cost reduction opportunities

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Pricing Structures Vary Widely Across Regions

Inclusive usage allowances vs. pay as you go

Caller-pays vs. called-party-pays pricing models

Other usage models – e.g., communication allowance packages and packet-based allowances in Japan

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Pricing Structures Vary Widely Across Regions

Investment Funding – Technology funds, airtime credits, equipment subsidies, rebates, cash credits

Voice and data pooling and flat rate data plans with periodic reconciliations

You can’t easily impose a pricing model on the vendors – work on getting savings using their models

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Global Deals – the Holy Grail

The industry is extremely fragmented Only Vodafone claims a global footprint European players like the FreeMove Alliance

and Telefónica-O2 have good footprints in specific regions

APAC is still very fragmented Negotiations invariably involve in-country

operating units You need to know the market rates in each country

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Is There Value in Buying on a Regional / Global Basis?

Possible benefits from regional / global approach

Increased focus from vendors Lower sourcing costs vs. multiple in-

country projects Momentum for data gathering Additional discounts and value add

services

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Is There Value in Buying on a Regional / Global Basis?

But the global wireless market is not yet mature enough to warrant a single global RFP

We recommend structuring wireless procurements as follows• Separate regional RFPs for each of Europe and

LATAM

• Separate in-country RFPs for the U.S., Canada and APAC

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SUMMARY

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Summary

Wireless services continue to grow in strategic importance for the enterprise

Understanding the changing service offerings and regional differences can help you better negotiate a market leading deal

Ongoing optimization will keep your wireless spend in check

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Questions?

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