Contracting your phone line
This is a question, a problem and a solution I’ve run in to many times. Having worked on both sides of the table, both selling contracts and now exclusively offering non contracted products I’ve come to see them for what they are.
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Contracts are a tool to be used wisely and nothing more. The reality is, a well placed contract may provide you with as much security, and guarantee of quality service, as a feeling of being locked in. However, we contract items all the time without much consideration, from rental cars, to cell phones, to the lease you signed to secure your property. A phone line contract guarantees you won’t get a letter in the mail telling you your rates are going up.
However, on the other hand. A phone line contract may mean you’re stuck with an old price plan on old technology for years before you can make a change. That frustration is why I’ve personally moved away from contracts and started working with NRM Telecom.
As an aside, I still sell maintenance contracts on PBX systems. You own the system, it’s in your best interest to take care of it.
The Plus Side of Contracts
There can be a plus side of a phone line contract, it depends on you rate’s, the reliability of service, your PBX or phone solution, and other variables.
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As this is just a blog, i’m sure I won’t touch on half the possible reasons to consider a phone line contract but here are some thoughts.
If there isn’t significant competition in your area, simply making an agreement to have service for up to 5 years can reduce your phone line rate by up to 25%. Depending on how many phone lines you have that can be a significant monthly savings, by the end of the 5 year term you might be able to take a vacation from the savings. Honestly, I’ve seen $5000.00 saving over the life of the contract.
Some people aren’t concerned with changing technology (ex. copper phone line to VoIP). They have a “Set it and forget it” mentality and that’s great! Those people just want it to work.
The same mentality is used when leasing a car or signing up for a cell phone. The longer you commit to service the less expensive your service will be. It’s true that during the coarse of the contract things may radically change and you’ll be paying more than the business that just opened beside you. However, that probably won’t be the case if they have the same technology as you.
The Negative Side of Contracts
Before I get started on the negative, in the interest of full disclosure, I can almost never support signing a contract at this point in my life. Your VoIP options will almost always be better than a copper line telco and I’ve never heard of a VoIP phone line provider that used contracts.
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And I guess to continue with the full disclosure, I simply love VoIP. You don’t have to pay for additional options like three way call or call waiting, every option under the sun is simply included with the line. Anyway, my option is probably skewed because of my appreciation for the technology, it’s price and it’s power.
The two truths I’ve seen are:
If you can get reliable internet, you can get VoIP and you don’t need traditional phone lines.
If you can’t get reliable internet, you probably don’t have any telco competition either so the telco won’t even offer you a contracted rate.
Here’s a couple quick reasons to avoid a telco contract.
Going out of business is already a difficult process, even more so if it’s due to a business failing. How awful it is to call your telco and find out about your cancellation fees. Most often, the cancellation fee is simply the full remainder of the contract. No discount for the remainder of the term is offered.
Locks you into a technology that is already outdated
The telco contract represents a “Too Little Too Late” action to me. Even the discounted rates are higher than VoIP lines and often have far less features and configurability.
Inflexible, say you just signed a 5 year contract for 4 phone lines, then decided to move your business and happened to pick a part of Manitoba where contracts aren’t offered due to lack of competition. Because the telco, at least the one I worked for, decided not to offer contracts in the new location; you would be responsible to pay the full termination of the contract even if you continued to have service with the same telco.
