Media Center

Media Center

Pounding the table isn't the way to limit surcharges

Once less than 5%, carrier surcharges now total 20% or more.

Like hotels, banks and car rental companies, telecom carriers have become adept at padding their bills through the addition of surcharges that can’t be negotiated and that they can change at will.

New telecom managers and corporate IT bosses look at the outrageous levels of universal service surcharges and other add-on fees and vow to “do something” about them. But when they demand that the surcharges be eliminated—and find out their account team can’t do anything about them—they become resigned to never having any influence over surcharges. A more sophisticated view can yield better results.

The competition between AT&T and Verizon for MPLS deals has inhibited both from widespread pass-throughs of USF surcharges on interstate MPLS. But all of the carriers are under increasing pressure from the FCC to count MPLS revenue in their USF contribution base, and they’re aching to pass along the charges when they think they can get away with it. When a service that belongs to the new generation of IP-based data (or converged) services is in this state, it’s time for proactive moves.

There are measures you can take in your procurements to eliminate any attempted retroactive application of surcharges; to make carriers justify the application of surcharges on key services over the course of your contract; and to look for offsets to crushing surcharges elsewhere in a competitive deal. Realism and proactive approaches, not bluster and after-the-fact protests, are the right approach to surcharge issues.

USF on MPLS: Protecting against both future and retroactive applicability