How to Avoid Hidden Telecom Overcharges

Are you losing thousands of dollars a month in communications-related expenses? Many companies are and don't even realize it. The divestiture of the Bell System has brought upon the business community, and the communications manager in particular, responsibilities that in the recent past were part of the service package provided by Ma Bell. Those services included one vendor to contact, one integrated organization acting on subscribers' orders, one billing system for all local services, and one coordinator of the total telecom effort.

The last item mentioned above, coordination, has become a most-serious shortfall in the post-divestiture environment. The backlog of orders for installation of services has had wide coverage in the media. This backlog of orders has been expensive to the industry in general. But these are one-time costs. The lack of coordination in the ongoing billing for services, though not as visible as the order/installation problems, is more-costly.

The daily routine in the telecommunications world of adds, moves and changes to telephone systems has been dramatically altered--and is no longer routine. Responding to the communications needs of organizations has become a complex task in the post-divestiture telecommunications arena.

The task of ordering changes to telecommunications systems, which was once mundane, is now often an exercise in futility for the communications manager. The problem of dealing with multiple vendors for communications services was in the past only a concern of the large user. But the large organization could afford the staff necessary to control and coordinate a multiple-vendor environment. Today, no matter what kind of telecommunications systems you have, you must, either personally or through an intermediary, deal with multiple vendors. You must coordinate the total communications function. Avoidance of this effort will incur significant, unproductive telecom expense.

Neglecting the coordination of communications systems and facilities in an organization will raise costs; added expenses will be experienced in a loosely controlled telecommunications organization. That which was in the past managed by the vendor, Ma Bell, must now be managed by the consumer, you.

Control must be gained over the base level of service. This is a major task in any telecommunications function today, no matter what size its communications bill is. Before divestiture, a single telephone bill was presented that incorporated service and equipment, other charges and credits, additional message units, direct distance dialing charges and Wide-Area Telephone Service (WATS)--in some areas, this last item was always presented on a separate bill.

The current invoicing systems provide multiple bills from multiple sources. Naturally, the billings will be at different times of the month. The invoice rundown:

* The local operating company bills for its supplied service and equipment, other charges and credits, additional message units, intraLATA long-distance charges and AT&T Communications' interLATA long-distance charges.

* AT&T Information Systems (AT&T-IS) invoices for leased telephone systems (PBXs, key systems and hybrids), station equipment, key service equipment, data equipment associated with various types of private lines, and miscellaneous ancillary equipment associated with PBX systems and data services.

* AT&T Communications (AT&T-C) bills for WATS (in and out) and private lines (voice and data).

The changes from the pre- to post-divestiture billing for services has been a confusing and elongated procedure fraught with problems not foreseen in the rarefied air of the courtrooms. The transition from the highly structured, vertically integrated AT&T organization to the divested world of competition has not been without casualties, especially among the Bell System's employees and within its infrastructure. The former has had the effect of ending some careers and disrupting most others. The latter has cost the consumer in the form of delays in service and installations, and in inconsistent charges for services.

A prime example of the problem of the divested billing world is Centrex Service (or Essex, and in some areas, Centron). Centrex is, except for customer-premises systems, a PBX-like service provided from the local operating company's central office. In the good old days, when most people ordered this type of service for their companies, they expected and received from one source, the local operating company, all services: station equipment, lines, switching system, key service, cables and console. All of this equipment was billed on one invoice and supported by one service/equipment record-keeping system.

Centrex Service Is Unchanged, except for Billing

Centrex is now billed in separate segments by separate organizations. It's the same system that existed prior to divestiture; there's just a new way to bill for it. Centrex lines, common equipment and cable are invoiced by the local operating company; key service, station equipment and ancillary equipment are billed for by AT&T-IS; and WATS and private lines by AT&T-C.

In the Centrex system, billings are keyed to the instruments and the lines associated with those instruments. In the past, the local operating company maintained the records of all the components of the system. This isn't so today.

The records of the relationships between equipment, cables and lines are disassociated from one another. Changes in line, station, line treatment and cabling are not coordinated. As a consequence, the invoicing is not coordinated, and therefore may be inaccurate. The subscriber to the service pays for any such inconsistency in hard dollars every month.

A major user of Centrex Service recently performed a full audit of several of its Centrex systems. The audit showed that individual locations were being overcharged from 15 percent to 30 percent. In one case, a location was being billed $1200 per month for nonexistent service and equipment. The major cause for the erroneous charges was the lack of coordination between inventory, billing and order processing.

The problems with the invoices rendered for Centrex Service are given here as an example of the present billing problems generated by the AT&T divestiture. These are not isolated to the invoicing of Centrex. The same problems exist with Dimensions, Horizons and key systems.

Additionally, inventory problems were created during the transfer of records from the local operating companies to AT&T-IS. Control was lost over the activity that occurred between the time that local operating companies cut off their inventories and AT&T-IS was able to activate its. This resulted in differences between the actual inventory in use and the new AT&T-IS base of information. AT&T-IS inventory errors continue to affect subscriber billings.

Users Pay for Errors in Records Conversion

Further complications were introduced in the records conversion at AT&T-IS. The old system of Universal Service Order Codes (a classic misnomer, they were never universal) had to be converted into the new entity's product codes. This allowed for additional differences between the installed customer-equipment base and AT&T-IS's records. Often, the buyer pays extra for the inaccuracy.

It's easy to be critical of the Bell System metamorphosis. However, credit must be given to the managers who undertook the breakup of the largest vertically integrated communications company in the free world. This effort was loaded with opportunities for disaster. Amazingly, a remarkably good job was done. However, it's an imprudent business person who ignores the shortcomings of the new divested system and does not arm himself with the systematic tools that assure proper billing.

If your company does not regularly compare communications invoices to equipment and services actually on hand, do it now! In the past, this may have been regarded as a nicety. It's become mandatory in today's communications world.

The costs of not managing one's communications inventory and billing can be measured in real dollars spent each month for nonexistent equipment and services. How much can this cost a company with a 200-line system? As much as $1200 per month.

How can these overbillings be avoided? Develop or purchase for your organization the systems, either manual or automated, that will maintain inventories (PBX hardware, data communications hardware, station lines, instruments, ancillary voice equipment, private lines, cable assignments and runs, telephone credit cards and spare parts), control work orders (generation, tracking, costing and confirmation) and provide accountability (for the user, the vendor and the internal cost-allocation process). In an automated system, add on-line functionality on-request reporting and telephone directory features.

You must manage your communications environment. There's no one vendor with the information or the motivation to do this job for you. The solution to eliminating the waste of resources is up to you, the communications manager. The solution is coordination and total information management.

COPYRIGHT 1985 Nelson Publishing
COPYRIGHT 2004 Gale Group