Savings from TEM programs starts with bill validation. The savings can be quite significant ranging from 2% to 35% depending on your contracts, Move, Add, Change and Disconnect (MACD) activity, and the measures that were in place to manage telecom expenses. There are also savings from cost avoidance, which can range from 2% to 25%. With this category, instead of recovering refunds for billing errors, there are savings from proactive measures that seek to reduce future spending. These savings can eliminate unused services and optimize wireless services with pooled and individual plans based on the usage of each employee. In addition, many organizations find improved visibility and better accountability drives less wasteful consumption of telecom services. Finally, there are savings from automating manual labor intensive processes including invoice processing, asset management and MACD activity, expense validation, reporting and working with telecom service providers.

TEM helps companies become more proactive. This is important because simply focusing on ways to cut expenses is not enough for most Executives. Executives are now seeking to look more strategically at spending patterns and trends. They want to eliminate budget surprises and they need to see spending trends for telecom before expenses are out of control. They need to know what is going on NOW. They also want answers to questions that only Telecom Expense Management (TEM) programs can provide. “How did it happen?” “Why did this happen?” “How can I rein in telecom service costs and manage telecom assets?”

In a recent interview John Killian, chief financial officer of Verizon Communications said, “We will probably need to change the design of our pricing where it will not be totally unlimited, flat rate.” While Verizon’s wireless network has not experienced network problems that have hurt AT&T, Killian stated that the company anticipates “explosions in data traffic” over wireless networks as new phones on 4G networks incorporate data- heavy applications, such as video downloads. Killian also said that Verizon believes that smartphone users, which currently make up about 17 percent of the carrier’s user base, will make up 70 percent to 80 percent of its base “over time.”

Verizon Wireless appears to be getting ready to introduce its new data price plans to coincide with the upcoming launch of its LTE network. It is also interesting to note that the timing of this development is close to new rumors reported by Business Week and Barclays that Verizon Wireless will be getting the Apple iPhone in January. This is significant because the average iPhone user consumes 10 times more bandwidth compared to other smartphone users.

If Verizon follows the approach of AT&T, the changes will only impact new contracts. Most users currently do not consume enough data to merit the cost of unlimited data plans. Verizon reports that its smartphone users typically use between 600 MB and 800 MB of data per month, which is similar data usage for what AT&T reported when it established tiered data pricing.

The average consumption that carriers report for their users may not match your employees’ consumption. Wireless Expense Management programs can provide important baseline information to look at current spending and consumption for employees. In cases where employees are on unlimited data plans determining the actual consumption for data may be difficult because many carriers do not readily report this information on bills. The next step is to review the types of devices that employees use. Blackberries are much more efficient in terms of the amount of data and bandwidth that they consume. In addition, organizations need to consider plans to deploy mobile applications to their employees in the future.

The most important advice that we can provide is to use data from your employees to make an informed decision. Do not rely on averages reported by the carriers. Wireless carriers are betting that they can make more money by switching subscribers to tiered data plans. The worst case would be one in which you pay extra for unlimited plans now when you don’t need them and you end up with a tiered data plan in the future when you do need an unlimited data plan. The key to avoiding this is to get all the facts. Inaction is likely to cost you now and in the future because tiered data plans appear to be coming.

This second cut reduces the roaming charge by approximately 7.5 percent for roaming charges by subscribers calling within the 27 countries of the European Union. Now, the maximum price for making a mobile call roaming on another telecom carrier’s network will fall from EUR 0.43 to EUR 0.39. (This would be from 0.54 U.S. to 0.50 U.S.) The cost excludes the Value Added Tax (VAT). Receiving a call will cost at most EUR 0.15 per minute down from EUR 0.19 (This is 0.19 from 0.23 in U.S. currency.)

EU Data Roaming Charges Cut by Nearly 20%

In addition, wholesale prices for data roaming have been cut to EUR 0.80 per MB from EUR 1 (A cut of 1.01 U.S. from 1.26 U.S.) Under this arrangement, most mobile phone operators in Europe are still charging close to the highest roaming fees allowed under these price caps. Travelers using roaming services in 2009 paid on average €2.66 (3.35 U.S.) per downloaded megabyte for data while roaming, while operators charge each other just 55 (0.64 U.S.) cents per downloaded megabyte. The discrepancy suggests operators are pocketing the difference, €2.11 ($2.66 U.S.), as profit.

Under these new caps, European mobile operators will now also be required to set data roaming spending limits for their customers. Operators will have to send users a warning when they reach 80 percent of their data-roaming bill limit. The default amount is EUR 50 (0.63 U.S.) per month, although customers can choose to set a different level or opt out of the cap. Once the billing limit for data is reached, the carrier will need to cut off access to the data service. In the U.S. AT&T has a similar program where it uses text messages when subscribers reach 65 percent, 90 percent and 100 percent of the threshold, but they do not plan to cut service after subscribers reach the cut off.

These new caps on consumption focus on data services. Employees may still return from overseas travel with shocking bills for wireless voice services. Due to the timing of monthly bills, managers may still see employees racking up high roaming charges that are spread over different billing cycles. It is also important to remember that these charges only affect roaming charges within the 27 EU countries.

On balance, the EU measures will help to reduce some “bill shocks” and cut expenses associated with roaming. However, managers of mobile programs should be prepared to deal with unexpected consequences from other aspects of this EU regulation. In particular, mobility mangers now need to be prepared to deal with employees who have had their service cut off after reaching spending limits. Alternatively, they can arrange to opt out of the cap, but this seems like a risky approach.

These changes in roaming charges highlight the value of Telecom Expense Management and Wireless Expense Management programs. It is critical for managers to have systems that flag billing errors and identify opportunities for cost savings. Companies will benefit from having automated reports that allow managers to flag the largest spending so managers can get employees on the right plans for international travel. The European Union is trying to protect consumers from bill shocks and runaway expenses, but a good TEM/WEM program can go further.

First, define the information that managers want to see on reports. Will the reports provide summary level information or will there be details about calling activity? You should ensure that the data elements, which you want to report on, are captured in your telecom carriers’ billing. For example many carriers may not provide call detail records. Polling of Private Branch Exchange (PBX) systems for fixed voice services can help capture the data and provide granular information about individual users’ consumption of phone services. Also consider privacy issues. In Europe, caller information must not be included in reports. Here in the US, it is important to balance the benefits of providing granular data with privacy concerns.

Managers should consider the services that will be included (consumption, recurring costs, vendor usage, and infrastructure.) It is also necessary to identify the criteria for pricing services. This can include the actual contract rates, invoices, or some other formula from tariffs. Many organizations add a mark-up to the expenses to cover with common network infrastructure and operational costs to manage the telecom department. Also consider compensation for un-priced data (time of day, metered vs. fixed). Finally, determine how to pro-rate summarized vendor charges for taxes, late fees, credits, and miscellaneous charges.

It is critical to develop clear communications to users about how price points are allocations are determined. Many organizations develop FAQs to deal with Frequently Asked Questions. For example, employees may be curious to learn how the system will deal with mid-month transfers of employees and services. Obtaining management buy-in for the program will help to address some resistance to the program. Chargebacks are now common for most Information Technology expenses.

While the costs for voice services are declining, call accounting is gaining in popularity because communication expenses are rising. Costs are growing from increased use and new services like wireless phones, mobile email, and data applications, which rely on laptops, netbooks and a proliferation of smartphones. Chargeback allocation to locations, departments and individuals improve financial accountability. Value-add benefits from chargebacks drive savings through improved sourcing of contracts, better negotiation, bill validation, expense optimization, and productivity studies, which can improve your bottom line.

Recently, there were three news reports that highlight the need for organizations to focus on network security. There were wide spread reports of people that were able to see other people’s information when they were caught in the rush of online ordering of the new iPhone. A few weeks earlier a group hackers got the e-mail addresses of more than 100,000 Apple iPad owners and the ID numbers the iPads use to communicate over the network. In addition, Google’s Street View cars – used to develop Google Maps collected personal information sent over Wi-Fi networks.

The Federal Communications Commission has now states “the FCC’s mission is to ensure that broadband networks are safe and secure, and we’re committed to working with all stakeholders to prevent problems like this in the future.”

With more employees connecting personal wireless devices to corporate networks for e-mail, this is a good to determine what you are doing to manage the security on these devices. Each of these devices presents opportunities for hackers to access your network. As employees access corporate e-mail and other data, it is important to develop plans to secure this data. As you think about these issues, cost considerations are sure to rise. A good way to manage these expenses is through Wireless Expense Management or WEM programs.

Effective TEM programs reconcile assets with invoices and help identify services and items with no usage that can be removed from billing. These programs must start by collecting all telecom service providers’ invoices and Customer Service Records (CSRs). In the US, each service order and change placed with a telecom provider requires an update by the carrier to the Customer Records Information System (CRIS). The CRIS system information must be entered into a separate system that manages billing.

CSRs do not capture wireless devices and mobile services. For mobile devices, phone numbers, billing and the names of the employees using them should be reconciled with personnel records. After implementing a TEM system for one large company we found that nearly 500 monthly cell phone bills were still being paid for employees who were no longer worked for the company. This finding saved the company approximately $600,000 per year.

After the inventory is complete, it should be analyzed for further savings. Effective TEM programs can help identify equipment or services that are not associated with an employee, department, project or corporate location that can be discontinued. In one case the refunds were $400,500 for a client that had clear documentation of a request to disconnect services for a branch location that had been closed. In other cases where clients have no record of submitting a disconnect request to the service provider there will still be future savings after submitting a disconnect request and avoiding the cost in the future.

Telecom assets require vigilant monitoring. All moves, adds, changes and disconnects (MACDs) of service or equipment should immediately be recorded to keep the inventory up-to-date and reduce expenses.

Under the new plans, DataPlus allows 200MB of data use per month for $15 (an extra 200MB can be added for another $15).  DataPro reduces subscribers from a 5GB “unlimited” plan to 2GB and it will cost $25.  An additional 1GB can be purchased for $10 more.  For people that share their data connection or tether their wireless phone with other devices, they will need to buy a $20 Tethering plan in addition to the DataPro plan for a cost of $45. In addition, the $30-per-month (truly) unlimited data-plan for the iPad, will now be replaced with a $25, 2GB DataPro option.

Existing iPad customers who have the $29.99 per month unlimited plan can keep that plan or switch to the new $25 per month plan with 2 GB of data. AT&T said 98 percent of its smartphone customers use less than 2 gigabytes of data each month.

Most bloggers and industry pundits are complaining about these changes, but there could be some positive outcomes from these changes. First, the caps may actually improve the accessibility, reliability, and speed of AT&T’s network. For business users these are likely to be good changes.  Second, most business users will find the new plans are actually less costly.  We find that the average iPhone user consumes 400 MB per month. Blackberry devices, which currently have the largest market share for organizations in North America, consume data more efficiently. This allows Blackberry users to average between 40 and 80 MB of data each month.  There will also be cheaper entry-level prices for people that want e-mail and internet access on mobile devices.  This will enable organizations to provide more people with access to these services and improve employee productivity.

Enterprises that have data intensive applications and employees that send large data files need to be wary of these changes and stay with their current plans.  Verizon has not announced any changes to its plans and Sprint has promised there will be no changes so large consumers of data may need to change providers if AT&T stops allowing existing users to stay with their current plans.  While these changes can be troubling to large consumers of data, it seems like the real losers are likely to be providers of movies and other data rich content.

AT&T has applications for Blackberry, iPhone and Android devices to track consumption.  To help manage your usage, AT&T will send text messages when subscribers reach 65%, 90% and 100% of the threshold. In addition, Telesoft can provide reporting to help manage mobile expenses with reporting and optimization programs.

It is possible that the FCC will impose on Verizon Wireless, AT&T, Sprint, and other service providers rules that are similar to those in Europe, where carriers must send text messages to subscribers who approaching plan limits. Managers of telecom and wireless expenses should not wait for the FCC to act. One way to avoid these penalties is to ensure that employees are on the right plans. Grouping employees together and buying a large pool of minutes is usually more cost effective than a plan, which charges a fee per minute for each employee. It will enable organizations to avoid shock from situations where one employee exceeds their individual allotment of minutes. In addition, pools enable organizations to reduce the number of minutes forfeited each month with individual buckets. In rare cases large volume users should be in an unlimited plan rather than being included in a pool with other employees. This “pool busters” will have a lower cost-per-minute for calls using an unlimited plan.

In many corporations and organizations, employees never see their bills because their employer pays them. It is important to provide employees with visibility into these expenses. At Telesoft, we have even found that managers of wireless expenses have been surprised when they are able to view these charges. Learn more about how our programs can help you to avoid sticker shock and improve accountability for expenses.

Utilization analysis reports can helps organizations to identify services that should be disconnected and stop paying for unused services. Analysis of utilization reports, trends, and traffic will often uncover opportunities to reduce expenses by right sizing your services and equipment to match call volume. A careful review of peak usage will avoid outages at critical times.

In one case, a client was able to terminate an equipment lease that was no longer needed. We have also had clients that have used these reports to eliminate unnecessary point-to-point circuits that were not in use. Many of our clients are also having us use data feeds from wireless services to combine fixed and mobile services in one report. By integrating telecom invoices, wireless billing, long distance charges and calling cards into a single platform, Telesoft is now providing granular data and management reports on usage that drives savings.

The problem of coordinating TEM activities arises from the fact that different functional groups have their own preferred legacy software and ways of doing things. Failure to include these groups in the process of selecting TEM solutions leads to breakdowns after implementing the new program. There is no “single version of the truth” because people are entering data into different systems and using reports from these legacy applications to manage telecom expenses.

The best approach is one in which an executive champions the program. The goal from the outset should be to select one application, which will replace the legacy software and disjointed old ways of managing telecom expenses. The software should manage the entire procure-to-pay lifecycle of expenses for fixed and mobile telecom services. It must also include tools for assets and inventory management, MACD and service orders, invoice processing, expense validation, usage allocations, reporting and business intelligence. Managing telecom expenses requires a customized tool to address the complexity of managing different carrier billing systems and network assets.