“Michael, my phone system sucks!” or “Michael, my internet connection is down again!” are common refrains I’ve heard from clients over the last several years. In fact, I’ve had numerous clients ask me how they can get out of their telecom contracts because of reliability issues with respect to the service. Unfortunately, there is no easy way out. These contracts are intended to be virtually bullet-proof from the provider’s standpoint (i.e., you aren’t getting out of it easily!). Typically, these agreements can only be terminated if there’s a material uncured breach.
Let’s examine just a few aspects of a telecom contract: Performance & Termination. The way “breach” is typically defined, a service outage or even repeated outages may not ever meet the standard for an outage that would lead the customer to be able to terminate. Most telecom contracts require that the customer report the outage within a defined period of time and in a prescribed manner, so if the customer doesn’t report the outage or fails to do so in the manner required, then from the provider’s perspective, there’s no breach. That said, even if the outage is reportedly properly, there is almost always an opportunity for the provider to cure (or resolve) the outage.
Even if there is an outage, you have to look to the contract terms to see whether it’s within the realm of what’s permitted. The contract will likely have an “uptime” guaranty and that means that you have to be down longer than what’s permitted (and it has to be unscheduled). If the provider fixes the problem, then there’s no breach. This untenable situation where the service goes down, the customer reports the outage, and the provider fixes it, can go on perpetually, despite the fact that it is unreasonably disruptive to the customer. If you don’t have a technical person who understands latency, packet delivery and related concepts, you may want to engage the services of a consultant to help you negotiate those terms.
When you do have an issue, including that first one when you think to yourself: “this is temporary, the system will come right back online,” document what the issue was, who you spoke to including the representative’s name or ID number, the date and time you called and the ticket/issue number they generate in their system. Then document each follow-up call you make with the same information. This will increase your chances of getting a service credit or at least give you written documentation of issues that could collectively constitute a breach of contract. You will get farther when following up with the provider when you call back to follow up if you have this information. The provider isn’t likely to turn over the documentation in their system on the trouble ticket history to give you ammunition for a potential breach of contract so you need to be prepared.
Fees. There are a multitude of issues to be concerned about regarding fees. 1) you need to understand where they are connecting to (i.e., the “point of demarcation”). Is it in your space, in a utility room in the basement of the building, in a parking garage or elsewhere? Wherever it is, you’ll likely have to pay to run wires, fiber or conduit to your office. That can be quite expensive and logistically challenging if you have to work with others (like your landlord) to obtain access to a space that you don’t have a legal right to access. Additionally, you’ll want to understand what they charge for equipment and upgrades and customization. I recommend that you ask for a complete, “out the door” cost for installation and monthly service. When you ask for those fees, you’ll also want to know what items are your responsibility and/or that will be billed by a third party. Also, you’ll want to understand when you are entitled to a service credit due to a partial or complete outage and it should be easy to calculate and obtain. Also, many providers use the LEC (Local Exchange Carrier) to run the last mile of the cable/fiber. In the Washington, DC metropolitan area, typically, these are Verizon’s lines. Many Service Level Agreements provide that their “uptime” guaranty exclude outages due to issues caused by the LEC and you will NOT be entitled to a service credit.
Conclusion. If you have a lot of lead time, try to play providers off of each other to get the best overall deal and terms you can. Ideally, push for a termination for convenience. If they won’t agree to let you out whenever you want, ask for it within the first year. Also, watch out for “evergreen” provisions, which are provisions where the contract automatically renews for an additional period of time if you don’t give them notice of your intention to terminate within a prescribed window of time prior to the expiration of the then current term. I’ve only touched on a handful of the issues that come into play in telecom contracts. The primary point I want to make is to tread carefully with these providers as these agreements are typically as one-sided as they come!
I’d like to thank David Moyer, the Director of IT at Digital Infuzion for his input on this blog post!
