May 2021
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Ways to Cost Analyze and Reduce Telecommunication Expense

Cost analysis is a must for all operations of a business. Expenses incurred due to telecommunication service charges require a considerable budget allocation and hence have to be analyzed with care to minimize cost.

The first step in the analysis will be to consolidate all the voice and data services used, and then to analyze the monthly telephone bills. The charges for the local lines, T1s, networks, and Internet should be considered separately. Their usage should be justified and it should be checked to see if plans are used to their maximum limit. The usage pattern of local and long-distance calls also should be studied. The suitability of switched and dedicated lines should also be assessed. A wide range of data services like WAN, MPLS, IP Sec VPN, Private Lines, VoIP, Web Hosting, etc. are available. The choice of data service used should also be validated. Internet plays an inevitable role in business and as per the needs of the business DSL, T1, T3, high speed Internet, fractional or burstable T1 can be selected. Audio, video and web conferencing should also be borne in mind while choosing services. The phone systems, LAN/WAN set up, cabling equipment used should also be evaluated and the apt type of equipment should be chosen as per the requirement. As per the traffic volume the quantity of trunks should be determined and distributed among the trunk groups. Once the analyses on all these fronts are complete, we will be able to assess what exactly are our requirements. Once the requirements are fixed, the second step will be to identify services which are not a perfect choice, eliminate them, and replace them with suitable ones, and the third step will be to identify the services in which the expenses are not justified. These data now have to be carefully analyzed and investigated to reduce cost.

The next step will be to look out for service providers with competitive prices. The service cost and rates of local exchange companies and long-distance carriers should be analyzed. The most suitable plans and services should be chosen in such a way that they are fully utilized and no compromise on services is made.

The usage and cost incurred should be strictly monitored. In short, review and analyze the existing system and ensure optimization of resources and minimization of costs. Relocations, upgrades, network planning, security assessment, and project management will help reduce cost.

It would be best to negotiate contracts based on the volume of calls. Best deals would be offered when the volume is more. Minimum monthly usage commitments should be avoided as they may prove to be expensive. Customer service should be provided 24X7. Least second billing (say 6 seconds or less) would be advisable. Consolidated billing on a two-week bill resolution basis would help establish strict control over the overheads. Several bill analysis tools are readily available. A suitable tool can be used to analyze the bill.

The efforts taken to cut costs in voice and data services directly reflect on the profitability of a business. Cost analysis of data and voice services is a must for every business.

About Author
Mark Brown is the President of National Telephone and Technology (NT&T). NT&T is a full-service, family owned Communications Company serving Northern New England since 1972.

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