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Telecom Contract Tips
By Steve Taylor and Joanie Wexler
Network World Wide Area Networking Newsletter, 12/09/02.

As you are likely aware, the brand-name carriers are all facing serious financial challenges brought about by two years of industry overspending and artificially induced pressures to drop prices.

WorldCom, of course, is restructuring after filing for Chapter 11 bankruptcy protection in July. AT&T and Sprint remain profitable by cutting expenses - moves that could affect you in terms of service and support, if they haven't already. And the mainstream local phone companies are slashing capital spending.

Hank Levine, a partner at Washington, D.C., law firm Levine, Blaszak, Block & Boothby LLP, says that " AT&T is currently in the strongest position. " But he advises you to assume that " there are no safe harbors. "

Levine's firm co-sponsors the Telecom Negotiation Workshop, and a recent presentation by Levine called " Bankruptcy Bootcamp " targeted a group of large WorldCom customers that have banned together to lobby the bankruptcy court.

Levine warns that currently, bankrupt carriers are required to give customers just 30 days' notice before they shut down service. Levine's firm is lobbying the Federal Communications Commission to extend the notification period to six months.

Meanwhile, Levine advises trying to negotiate contracts with the following goals in mind:

* Retain the right to hire carrier employees supporting your account.

* Make sure any extension or expansion of a contract is a new agreement.

* Do what you can to reduce your volume commitment to WorldCom (or any individual carrier).

* If you are going to use WorldCom, evaluate the carrier's 180-day " free to terminate " deals, which allow you to waive the penalty if you back out of your commitment within that time frame. Better yet, he advises, shoot for a 360-day, penalty-free contract, given that bankruptcy resolution can take 12 to 18 months.

* Do not give WorldCom more than half your network volume and take advantage of the aggressive pricing and terms the company is now making available in an effort to retain customers.