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Carrier NDAs Threaten TEM Providers

With telecom expense management providers uncovering millions of dollars in billing errors, overcharges and redundancies, it was only a matter of time before carriers would try to shut them out of the mix. Although carrier contractual language has been making stipulations about third-party involvement for years, TEM providers are reporting an increase in restrictions made by carriers, therefore incapacitating them and stifling their customer relationships.

July 28, 2008

9 Min Read
Carrier NDAs Threaten TEM Providers

By Cara Sievers

With telecom expense management providers uncovering millions of dollars in billing errors, overcharges and redundancies, it was only a matter of time before carriers would try to shut them out of the mix. Although carrier contractual language has been making stipulations about third-party involvement for years, TEM providers are reporting an increase in restrictions made by carriers, therefore incapacitating them and stifling their customer relationships.

The matter might be exacerbated by heightened customer proprietary network information (CPNI) rules that took effect December 2007. The new CPNI rules require providers to:

  • authenticate a caller before releasing information

  • immediately notify subscribers of certain account changes

  • have new customers create passwords when they sign up for services

  • contact law enforcement officials if a customer’s CPNI is given to a third party.

Information protected by these rules includes anything related to the type, quantity or configuration of the telecommunications service subscribed to along with any information contained in the bills for these services. It’s no wonder that carriers are being overprotective of this information in light of CPNI rules since they are set to face minimum fines of $100,000 for non-compliance.

Michael Shonholz, director of channel sales for TEM provider iTEMize Technologies, said while his company appreciates why the FCC has definitive rules surrounding CPNI, it believes “certain carriers may now be using the new regulations to deploy monopolistic actions. …A client should always be entitled to avail itself of professional assistance and secure the requisite help to ensure that they receive the best value for their telecom dollar,” he explained.

TEMIA (Telecom Expense Management Industry Association) secretary and Asentinel CEO, David Perdue, said the uptick in carrier contract restrictions is not related to CPNI rules, but Timothy C. Colwell, vice president of knowledge operations for AOTMP, said the they are “directly tied.”

Neil Ende, attorney with the Washington, D.C.-based Technology Law Group LLC, said despite any similarities between the NDAs and CPNI rules, he does not believe that the FCC’s “tightening” of CPNI rules has or will cause an increase in the use of restrictive contractual language. He added, “like many NDAs, the FCC’s CPNI rules are very difficult to enforce both because of problems in proving the alleged violation and because of the specific limitations found in the governing documents themselves.”

Hit The Road, TEM

Whether the carrier agreement is accompanied by a standalone NDA or incorporates confidentiality terms within the agreement itself, such stipulations might stand to threaten TEM providers’ ability to perform their job functions. This also applies to any agent or reseller performing third-party duties, especially in the expense management realm where billing information is concerned.

Of course, there are many different versions of carrier NDAs, but some of the most severe hit right at the heart of TEM providers. “One particular NDA states that the billing information provided from the carrier to the client can only be used for the limited purpose of contract management and rebilling, and that all of the information must be returned to the provider upon request,” said Al Rossini, senior vice president global sales and marketing for TEM provider Tangoe Inc. “These types of NDA may limit the ability of an enterprise to secure TEM services from a third party – both agent and traditional TEM provider.”

Shonholz said this language can prevent or severely restrict a client from having a third party act on its behalf to pull billing records, assist with service acquisition, negotiate credits or perform audits. And a large part of the value that third parties, such as agents, consultants and TEM providers, provide is wide industry knowledge in a very competitive and ever-changing industry. “In order for clients to leverage that knowledge, and potentially engage a third-party vendor as an extension of their communications department, we all need the ability to be proactive on our clients’ behalf,” said Shonholz. And although Shonholz said iTEMize has not yet run into any problems or restrictions that a typical letter of agency can’t get around, but its employees and representatives are aware of increasingly limiting language in carrier contracts and have begun instructing their clients to watch for such terms in any carrier agreements they sign.

Tim Wise, president of Atlanta-based TEM provider Advocate Networks, said his company has run up against problems caused by NDAs, but said it’s typically the customer that is concerned about confidentiality clauses in their service contract. Wise said it is usually just a “speed bump” that they usually can get by fairly easily by obtaining an LOA and getting the information directly from the carrier.

However, according to AOTMP’s Colwell, LOAs might not be an easy antidote for long. “LOAs afford third parties access to subscriber accounts, but they do not address non-disclosure terms that many carriers are seeking to protect themselves against data privacy regulations,” Colwell said.

TEMIA’s Perdue agrees. “Carriers that are imposing these new restrictive NDAs are insisting that they be signed before giving the TEM supplier any information even though LOAs are in place,” he explained.

TEMIA, among other sources, stated that AT&T Inc. started including such limitations in its contracts or NDAs, and that Verizon has followed suit. Both AT&T and Verizon declined to comment for this story.

It’s My Record and I’ll Look If I Want To

Tangoe’s Rossini said he’s recently noticed changes in the NDAs that carriers are asking enterprise clients to sign, and in some cases, “companies report these new confidentiality agreements as restrictive and view them as an attempt to take away the company’s control of their billing information,” he explained. Hence, the language of these agreements could not only restrict a company’s ability to work with a third party, but it might also prohibit the company from accessing its own records.

AOTMP’s Colwell agreed. “Data privacy is everyone’s concern; however, the more protected the data, the harder it becomes for everyone – including the data owner – to access it,” he said. “I suspect data privacy concerns will continue to drive legislative behavior, which may create a scenario where the price of data privacy is paid through more paperwork, approvals and responsibility releases.”

Adding insult to injury, there is rumor that carriers are more often asking customers to pay a fee to view their records. Colwell said although administrative fees for CSRs (customer service records) have been around for years, he suspects the fees are becoming more prominent in carriers’ effort to persuade subscribers to access CSR information online or through electronic information presentment as opposed to paper format.

Fighting for the Right to Third-Party

The idea of continuously augmenting carrier restrictions, if taken to the extreme, could potentially destroy an entire portion of the telecom services market. Third-party providers, agents, brokers, consultants and the like would have to cease operations due to the inaccessibility of their clients’ network and billing information.

TEMIA’s Perdue said he hopes carriers will want to work toward a mutually agreeable solution, but in the meantime, he asks those affected join with TEMIA in “speaking collectively with the carriers” on this and other matters.

TEMIA’s official position statement on this matter, issued on July 10, 2008, stated that consultants and analysts should not sign these NDAs and that customers should prohibit their TEM vendor from signing it because:

  • Clients and TEM vendors have confidentiality provisions already in place.

  • The NDA is a blanket NDA that commits the TEM vendor for all of its clients, not only the single client in question.

  • Carriers are asking clients to forego their rights to their information.

  • Carriers unilaterally can force the TEM vendor to breach its contractual responsibilities to clients.

  • By directly contracting with the carrier, the TEM vendor is put in a potentially compromised position to the carrier, directly impacting the client’s ability to get unbiased advocacy from the TEM vendor.

TEMIA said carrier account executives are promoting this as a widely accepted practice, but can find no evidence from its members that supports this assertion. Furthermore, the statement suggested that if a client has signed a “‘Letter Agreement,’ onerous or non-standard LOA or other similar agreement that forces its TEM vendor to sign a carrier NDA, it should seek counsel and consider cancelling that agreement as soon as possible,” adding that there is usually a termination clause.

“Enterprise customers should not cooperate with the carrier related to this issue since they are only hurting themselves,” said TEMIA’s Perdue.

Likewise, Shonholz said iTEMize plans to advise its clients to carefully consider the ramifications of signing agreements with this type of language and also ask their carrier to explain why such language is necessary and why they would want to limit their customers’ abilities’ to obtain professional support.

Attorney Ende urged parties to pay close attention to the language in the NDA, explaining that there is nothing “inherently evil” about them and that they can be an important tool to protect “the legitimate confidentiality interests of resellers and agents, for example, to the identities of their end users.” Ende explained generally the language of NDAs and confidentiality terms is “directed to the disclosure of trade secrets and should not preclude access to call detail records of the like by third-party auditors or similar persons acting on behalf of a reseller or agent.” Therefore, he suggested seeking telecom counsel before entering into any questionable agreement.

On the lighter side, Shonholz said he believes such restrictive and aggressive practices by carriers might actually reinforce the need for an agent, consultant or TEM company. “It is believed that certain carrier positions are a subtle acknowledgement that third-party vendors are holding these same carriers responsible for delivering accurate and high-value service,” he said, explaining that strong third-party relationships with carriers are very important and should be valued by both sides. “A knowledgeable third party involved in a proactive engagement with a client reduces the amount of front-end issues as well as ongoing work. This ‘bridging of the gap’ between carrier and client, improves the overall client experience, makes the carrier of choice stickier, and the relationships that much more profitable.”

Rossini agrees these objections might stand to strengthen end-users’ need to form strong, reliable third-party relationships with agents. Agents have the opportunity to be omniscient where end-users do not. And, agents can use this opportunity to migrate their customers to less restrictive NDAs and demonstrate the savings and benefits to lifecycle management.


Editor’s Note:
Tell us what you think. Have you run into restrictive language in carrier agreements that prohibited you from assisting your customers? Are you worried this could balloon into something bigger? Do you feel your LOAs are sufficient? Tell us about your experience with NDAs in the field by submitting a comment below or writing to the author at [email protected].


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