Auditing services cut telecom costs

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As strategic manager for MIS at GlaxoWellcome Inc., of Research Triangle Park, N.C., Dion Blanchard is constantly on the lookout for ways to improve the company’s international network, which supports 100,000 employees. So, periodically, he calls upon Tel-Adjust, Inc., a Southfield, Mich., firm that specializes in telecommunications audits. I’ve worked with the company for more than 10 years and found that they consistently identify ways for us to save money, he said. In this article, I’ll present the benefits of regular audits. Let’s begin by identifying areas in which audits can save you money.

"Keeping billing data up-to-date is a complex process because carriers
constantly change pricing plans to attract new customers: AT&T has
more than 3,500 pricing plans.

Unintentional errors on both sides

Tel-Adjust’s service is based on the premise that telecom bills are large, complex, and often inaccurate. By closely examining a firm’s charges, companies like Tel-Adjust identify cases where firms have been overpaying for telecommunications services for months, or even years. One Tel-Adjust customer had been overcharged for six years and eventually recouped $350,000 in excess charges.

Seldom do carriers overcharge on purpose; problems usually arise from human error. Keeping billing data up-to-date is a complex process because carriers constantly change pricing plans to attract new customers: For instance, AT&T Corp., of New York, has more than 3,500 pricing plans.

On the customer side, medium and large companies have ever- changing, large, complex networks. Seldom do they rely on a single carrier; instead, they work with multiple telecommunications service providers. Although it helps to increase network reliability, this approach also generates complex, multipage bills from a variety of suppliers.

In most cases, corporations pay little attention to their invoices. Telecom managers are busy and do not have either the time or the inclination to examine their bills line-by-line each month, said Dean Rowen, president of Communications Audit Service Inc., of Lake Forest, Calif. After selecting a plan or signing a contract, many managers consider their jobs done–but they may actually have just begun.

Billing discrepancies arise haphazardly as medium and large companies order new lines or change their telecommunications services. In certain cases, an alteration may not make its way from the point where the salesperson take the order to a carrier’s back- end billing system. The order may not be properly entered: Telephone companies have numerous charges for similar services, so a wrong code may be entered. With tariffs and pricing plans constantly changing, a customer may be billed under an old rate even though it has moved to a new plan, or a special discount may not be applied to a particular service. Also, software bugs can create problems: An application may not recognize a new billing formula or billing information may not move from the order entry to billing engine properly.

Such problems can arise with any type of service. The most common problems we see involve frame relay and ISDN lines; they are rarely billed properly, said Peter Laws, president of Tele Guard Systems Inc., a Plano, Texas, auditing firm.

Usually, a quick scan of the monthly bills will not illustrate any discrepancies. Because carriers summarize so many charges, customers may not be sure what they are paying for. Sometimes, a company finds telephone lines that it didn’t even know existed, or ones that were supposed to be taken out and off the books by the phone company, but weren’t. Or, a company could be paying for equipment that has been returned to the phone company or removed as part of a network upgrade.

Not all the problems are the carrier’s fault. Some problems can arise from a lack of communication between a business’s home office and remote locations. In many organizations, bills are paid centrally but services are delivered locally. Although the head office thinks remote users are working with one service, a branch manager may have purchased another service after hearing a local promotion. Consequently, the company has duplicate services at the branch office.

Typically, employees in the field are not allowed to pick long distance companies or buy equipment, but sometimes they are responsible for reviewing their groups’ telephone bills to ensure they are accurate. With little knowledge about various billing options, they often lack the expertise to evaluate the bills precisely.

The criminal factor

In addition to human error, criminal activities can create billing problems.

Slamming is the changing of a firm’s long-distance service from one carrier to another without the proper authorization, and cramming is the addition of extra services (voice mail, call waiting) without a company’s consent. This type of activity is increasing because carriers engaging in the practice understand their changes can be hidden in the thick pile of monthly telecommunications bills.

"Slamming and cramming are increasing because carriers engaging in
these practices understand their changes can be hidden in the thick
pile of monthly telecommunications bills.

Changed services

The last set of possible savings stems from network configurations. With corporate networks rapidly evolving and carriers’ calling plans constantly changing, firms may be able to save money by adjusting their services. Tele Guard Systems says it used this technique to cut one company’s mobile communications costs by $1,000 per month, reduced a manufacturer’s bill from $1,500 to $600 per month, and saved a third company $400 by changing its voice mail system.

Savings are also possible with special services, such as calling cards. The rates for these services are often much higher than for other offerings, such as 800 lines, so a firm can lower costs by moving employees from the former to the latter. In certain cases, these services are misused–for example, cards may be used by former employees and family members. Once identified, this practice can be stopped.


Taxes represent another potential area of savings. Few companies check to determine if they qualify for any local business exemptions.

Audits can help!

Carriers don’t have much incentive to fix these problems. They are in business to make money, which means delivering additional services or driving up customer usage. Rather than identify potential savings, they focus on convincing customers to spend more.

Consequently, the onus falls on the telecommunications manager to monitor and clean up any problems. This work can be difficult, because dealing with telcos often isn’t easy. They are large, bureaucratic organizations, and local account representatives lack the time and expertise needed to help companies examine their bills.

Telecommunications auditors are willing to take on the work with virtually no risk for their clients. Typically, these firms operate on a contingency basis: If they don’t identify any billing discrepancies, then they don’t get paid.

From experience, these firms have a gained an understanding of where problems may lurk. We’ve worked with enough companies so we can quickly determine whether or not we can save them enough money to make it worthwhile for them to work with us, said Ken Spint, a consultant with Access Utilities and Telephony Services Inc., a Solana Beach, Calif., auditing firm. If a company has only a couple of offices and a few services, then the savings potential may be low. If they have a lot of remote offices and a variety of services, chances are good that we will find some significant savings.

The audit process

After identifying potential discrepancies, the auditor and its customer sign an agreement that defines what percentage of the savings will go to the auditor (usually ranging from 25% to 50%) and what will go to the client. The fee is usually based on past overcharges but sometime can include a percentage of future savings.

To start an audit, a company has to sign a letter of authorization so the carrier understands that the auditor is working on the company’s behalf. The auditor also requires a list of the company’s account information and recent bills.

When first contacted about an audit, a telco can become defensive. A lot of the carriers look at us with suspicion, said Communications Audit Service’s Rowen. They are afraid that we will come in and convince their customers to switch to another carrier. The telco may also offer a high degree of cooperation. One carrier recommended us to one of its customers that needed to fine-tune its network, said Tele Guard System’s Laws.

Once a company completes an audit, the next question is how long it should wait before conducting its next one. The frequency of telecom audits depends on how much flux there is in the company network, said Tele Guard’s Law. If a firm goes through a rapid expansion or dramatic corporate changes, such as mergers or acquisitions, then it may want to conduct an audit every 12 months. If there are fewer changes, then the process should be done every 24 months.

An underused service

Although telecommunications auditing services can be helpful, they are not widely used. Few IT departments are aware of billing problems and even fewer know that there are firms that specialize in fixing them.

One reason for this low usage is that few companies offer such services–a dozen or so nationwide. This is the case partly because the skills needed to sift through bills and identify mistakes are rare. After working at AT&T for 14 years, I had a good understanding of how its billing systems functioned but it’s certainly not the type of knowledge one easily picks up, said Tele Guard’s Law.

Another issue is that telecom managers often don’t want it known that they really don’t understand the company’s bills. Certain managers are afraid that they will be viewed as incompetent if they call too much attention to their firms’ billing problems, said Communications Audit Service’s Rowen.

Another limitation is that services currently are geared only for domestic services, not international ones. We have a number of international lines and would like audit them but have been unable to find a firm that focuses on this market, said GlaxoWellcome’s Blanchard. //

Paul Korzeniowski is a freelance writer in Sudbury, Mass., and specializes in networking and telecommunications issues. His electronic mail address is

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