Telecom Terms that Become Expenses

Telecommunications are a necessary service for businesses of all sizes.  Contract negotiations often focus on discounts and business terms and overlook terms that can eat up negotiated savings later.  

Carriers will use their standard contract templates that often include language that requires a annual revenue commitment (ARC).  Failure to purchase sufficient services results in a shortfall and a check  issued to make up the gap.  Clients assume that all the services contracted for contribute to their ARC, but often that is not the case.  Telecom companies often exclude certain services, such as access, from contributing to the ARC.  Clients assume that their average bill, which includes the exclude service, will cover their ARC only to find out that they have a surprise expense at year end.  

Before signing have the contract have it reviewed by an attorney for terms that could become expenses, such as ARC and indemnifications. 

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