Hello. My Name Is Inigo Montoya. You Killed My Telecom Budget. Prepare to Die.

The Rate Plan Mess

The answer is about 22%. Now, figure out the question, multiple choice style:

A. The estimated amount of body weight the author could lose if he stopped snacking.

B. The percentage of readers who are upset that the author pulled a "Bait and Switch" from Star Wars references to Princess Bride references.

C. The initial savings, on average, from Rate Plan Optimization alone across three of our clients.

D. All of the Above.

The correct answer is D, although it seems unlikely that this can be proven in practice given the author's well-known snacking prowess.

For those readers who are not telecom professionals, you may be thinking: "What rate plan? My entire family is on an Unlimited Plan and there is nothing else to it." Unfortunately, in the world of corporate rate plans, the landscape is more treacherous than the Fire Swamp, with its Rodents of Unusual Size (OK, if you require: a Star Wars reference--the Death Star Trash Compactor).

Here's the short version of why that 22% number exists. Your wireless carrier offers a confusing menu of rate plan options - some of which you can see and some of which you are unaware of, some of which are in your contract and some of which require a contract amendment.

Here's what optimizing that looks like across three recent clients after the initial 12 months of our work:

Three industries. Two carriers. One story: Rate Plan Optimization drove 22% in immediate savings. That's before we've touched the "Other Savings" line item that includes international, zero-usage devices, or various items covered in subsequent posts.

Problem One: Nobody is on the Right Rate Plan

Your wireless contract almost certainly offers a menu of data plans that would make your head spin. Start with unlimited - except there isn't one unlimited plan, there are probably six. Maybe it includes a hotspot, maybe it doesn't. Maybe it's throttled after 22 GB, maybe it isn't. Maybe it's just more expensive in the quiet hope that you'll pick the pricier option without asking too many questions. Who knows? And that, rather precisely, is the point.

Below unlimited, there's a cascade of Pooled Data plans that the carriers don’t really want you to use. Do they make sense for you?  That depends on how much data each line uses, the contract status of the lines, month-to-month consistency across the group, and the gap between unlimited and pool plan pricing.   Is it possible to create a Data Pool for low data users and give each, on average, 2 GB of data while putting higher usage employees on one of the various flavors of Unlimited? Absolutely, so long as someone monitors data usage and you choose the correct Unlimited plan, avoiding the expensive one possibly designed by the Evil Vizzini (or Lord Vader, if you aren't a Princess Bride fan).

Now multiply this across 100 phones, or 1,500, or 5,000. Now factor in that any given user's usage pattern changes month-to-month based on PTO, business travel, a company crisis that has everyone burning through data for three weeks, or the employee on a family road trip who hands his agitated four-year-old his company phone to stream whatever the current kids' obsession is - Blue's Clues, Bluey, sadly nothing Star Wars related yet - for the next 200 miles.

What you have is both an optimization problem and a monitoring problem. The optimization requires reviewing each user's usage across multiple billing cycles, not one month, because one month lies to you. Monitoring requires an ongoing process, because the right plan today may not be the right plan in six months.

If you think reading about this is tedious, just imagine doing it. We do so you don't have to. The savings are real, they are recurring, and every month you delay is another month of overpayment.

Problem Two: Negotiating Rates is Not Enough

"Oh, we just renegotiated our rates. We got a great deal."

I smile. I nod uncomfortably. The way you nod when you must tell someone their kid's pet turtle just died. Or if you just found out that your best friend never introduced their kids to The Princess Bride. And then I look at their invoice.

Negotiating rates without first understanding your usage profiles is like negotiating the price per square foot of a house before you've decided how big a house you need. You might get a wonderful price on a 6,000 square foot house when a 3,000 square foot house was all you needed. Congratulations, I guess?

The carriers want you to put all your lines on Unlimited because it is “easier” and more profitable, but you might have large numbers of low data use users (that’s like a nice retired couple who just bought a 6,000 square foot house).  It's all complicated, possibly by design, or possibly just the natural entropy of a system that nobody has had a financial incentive to make simpler.

And here's the other problem: you almost certainly don't know what other companies are paying. Carriers don't publish rate cards of what customers are actually paying. Every contract is a bespoke negotiation, and the carrier's goal is to make sure you don't know what leverage you have. Which brings us to a story.

The Darth Lawyer Strikes Back

Working on a sister account to one of our clients, we made a simple ask of their carrier account rep: please match the rates already provided to a customer of similar size.

"No problem," came the reply. "Can you provide me with the Rate Plan codes that the other customer uses? It will make everything faster and easier."

Except it did not.

Out of nowhere, we received a cease and desist letter for sharing "confidential customer information." The confidential customer information in question was a rate plan code. That we had provided. To an employee of the carrier. Who had requested it from us. To help that carrier's own employee look up a rate plan that the carrier itself had created.

A Darth Lawyer had materialized - the kind who appears out of nowhere to protect information that was never confidential, armed with a cease and desist letter and an apparent need to demonstrate value to his dark master.

We still got improved pricing a week later. But we think about that letter every time someone tells us the carriers are operating in good faith.

Incompetent or evil? We genuinely do not know.

The Takeaway

Rate plan optimization is not a one-time event. It's a process. Optimize with existing plans, negotiate for new plans, repeat.

The carriers know this. They're counting on the fact that nobody on your team has the time or the mandate to sit down with months of invoice data and figure out who is on the wrong plan. That's the gap. And whether it exists because their billing systems are genuinely too complex to navigate, or because the complexity is the product - well.

Incompetent or evil. Does it even matter?

Should We Work Together?

Hi, I'm Rick Friedman, CEO of Anilix. This blog is my attempt to pull back the curtain on an industry that has made a science out of overcharging the companies that can least afford the distraction.

When I'm not writing, I run Anilix, a telecom cost reduction firm I co-founded in 1998. We work with companies large and small across every category of telecom spend: mobile, voice, data, and everything in between. We work on a contingency fee basis. That means no upfront cost, no retainer, and no invoice from us unless we save you money first.

If any of this sounds familiar - the invoices that never quite make sense, the rates you suspect aren't optimal, the team that's too busy keeping the lights on to audit invoices - let's talk. A 30-minute call costs you nothing and usually tells us both everything we need to know.