(Part 1 of 3)
Given the state of today’s economy, companies are (or should be) looking for ways to reduce costs, while maintaining the services that they need in order to continue doing business as usual. Now, this statement is almost as cliché as “it was a dark and stormy night”. The economy stinks, and so, yes, companies are cutting costs.
One expense that companies tend to ignore on a daily basis, much less during hard economic times, is their cell phone bill (or in fancy accounting terms, their ‘wireless expenses’). And there is a good reason for this; reading and deciphering a cell phone invoice is harder than translating Homer’s ‘The Iliad’ from Greek to English. And the carriers want to make sure that understanding your cell phone invoice is difficult. A cell phone bill for a mid-sized company with 1,000 devices might contain over 5,000 pages of details. It is a nearly impossible task to be able to read and understand the information and charges on all 5,000 pages.
Luckily, most carriers offer the billing information on a CD. Now, access to this wealth of information should make deciphering your wireless expenses easier – correct? Not hardly. Let’s take a look at a CD that we received from a prospective client. The CD contained the billing information for 180 separate corporate-liable accounts. The user interface is written in Microsoft Access (sorry Mac users), and the interface, well to be blunt, stinks. You are limited to canned reports, and there isn’t anything intuitive or helpful about it.
If you dig deeper on the CD and find the actual Access database files, you might be able to bypass their user interface, especially if you have an Access guru available. Inside the database, you will see 20 or so separate tables, with each table containing 25-30 columns. Wait – there is a handy User’s Guide, explaining all of the columns in each table! But, the explanations in the guide are generic and cryptic at best. One example is a column named “call_type_feature”, which in the user’s guide has the meaningful description of “Call Type Feature”. It doesn’t explain that this column represents cellular calls, push-to-talk calls, packet data usage or the various types of messaging. You have to figure that one and the remaining thousands of columns out for yourself. And, a few of these tables are huge – with one table containing 1.2 million rows of data for a total of 1200 wireless devices (our company spent six months deciphering the database schema for one wireless CD product – and this is after working in the wireless industry for six years).
So, let’s assume that you have figured out all of the tables and columns, and you want to reduce your wireless costs. You don’t want to switch carriers or ask your cousin who took a MS Access course at the county extension office for help. Here is what to look for…
The Basics – Understanding your invoice
The first page of most cellular invoices contains a breakdown of all of the charges for that invoice, including amounts due from the last invoice, total amount paid, etc. The wording varies from carrier to carrier, but each carrier usually lists these items, and most are pretty obvious, like messaging, directory assistance, etc. One exception is the line item which usually has the name of ‘Access Charges’ – this is another word for ‘overages’. Take a quick look at these figures, and you can easily see the bulk of your ‘unnecessary’ spending. If you don’t know what each line item means, ask your carrier representative (you might find that most of the salespeople won’t have any idea either, so call customer care).
Understanding your cell phone plans
When choosing a cell phone rate plan, it helps to know exactly what you are getting. Terms like mobile-to-mobile, peak and off-peak are sometimes confusing. Sure, the sales representative will explain them to you at the time of purchase, but once you leave the store, you will probably forget them by the next day.
The most important term is ‘peak minutes’. ‘Peak’ describes the calling period where your cellular usage consumes the minutes from your cell phone rate plan. If a plan offers 1,000 peak minutes, you will only be able to use 1,000 minutes during the peak time – so, you should understand exactly what time period falls into the ‘peak’ category. Some providers have peak times from 7 a.m. to 9 p.m., others stop at 7 p.m. Free ‘nights and weekends’ would then start at 9:00 p.m. (or 7 p.m.), and these minutes do not count against your rate plan allotment of minutes. Free ‘mobile-to-mobile’ calling is when you call another cell phone for the same carrier. These minutes used are not subtracted from the total number of peak minutes in your plan.
Rate plans and overages
The most common mistake that companies make is to try and assign a designated rate plan for each individual employee, and essentially estimating the amount of minutes an employee needs by pulling a number out of, well, you know where. They are thinking that “Mary probably needs 600 minutes, so let’s give her the 600 minute plan”. Given a 22-day work month, that only gives Mary 27 minutes a day of ‘peak’ calling time. And no one realizes that Mary calls her friends during lunch and talks for almost the entire hour. When Mary accumulates 726 ‘overage’ minutes at 40 cents a minute, that $49.99 rate plan is now costing the company an additional $290.40. And most of the time, her additional usage and the resulting overages goes unnoticed for months.
Companies should try and get away from individual rate plans for employees and move to a ‘shared minute’ plan. Shared minute plans allow users on one account to share a larger pool of peak minutes. For example, let’s assume that your company has 1,000 wireless phones and uses about 400,000 peak minutes per month on a single wireless account. When determining the total pool of peak minutes that you need, you will want to add a buffer of at least 20% to that monthly usage amount, to accommodate fluctuations in usage. So, your total pool of peak minutes should be at least 500,000.
You will then have 500 employees that are on a 1,000 minute plan, and 500 employees that are on a plan with zero minutes; but all employees will share from this pool of peak minutes. The end result is 1,000 employees sharing 500,000 peak minutes. Then, when Mary goes over her allotment of 600 minutes, she will just draw more minutes from the shared pool, and as a result, she will not have any overages. Likewise, when an employee that previously had a 2,000 minute plan only uses 1,200 minutes, their ‘extra’ minutes are available for other users on the account.
You can’t always assume that the largest bucket of minutes is the best value. You will want to figure out the cheapest ratio of ‘plans with minutes’ to ‘plans without minutes’ (add-a-phone plans). Also, you don’t want to assign a shared plan with a large amount of minutes to an individual employee. Assume that you assign five 10,000 minute plans to five employees, and the other 45 employees are on the add-a-phone plans. If one of the phones for these five employees is turned off or canceled, then your shared pool has shrunk significantly, and overages are bound to occur. In this case, you would want to assign a 1,000 minute plan for all 50 employees, so if an employee leaves, the total amount of minutes in the shared pool doesn’t significantly decrease.
Next…
In the next edition of this article, we will look at the ‘less obvious’ charges on a cell phone invoice – where lots of little charges add up to big money being lost – mainly because people just don’t know what to look for…
Tony Darnell is President and CEO of WideVision LLC., a wireless expense management company based in Suwanee, GA.
WideVision specializes in reducing wireless expenses for companies with 50 to 50,000 wireless devices – for more info, visit http://widevision.com.
AccessGPS is a low-cost GPS tracking application for your Nextel phone – visit http://accessgps.com.
Filed under: accounting, cellular, finance, Uncategorized, Wireless | Tagged: account management, accounting, AT&T, Barack Obama, Blackberry, business, cell phone, cellular, expenses, finance, George Bush, GPS, increase profits, information technology, mobility, Neal Boortz, Nextel, rate plan analysis, reduce expenses, Sprint, T-Mobile, telecom expense management, tony darnell, Verizon, Wireless |
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