Responding to the Mystery of Rising Telecom Expenses

Rates for most telecom services are declining, yet many organizations are surprised to see telecom expenses keep growing. How is this possible?  It takes some detective work, but if you have TEM systems in place to understand consumption trends in your bills, you will find that employees are consuming more voice and data services or bandwidth. First, the average web page transfer size has increased by 15% or 88 KB ( In October of 2010, the average web page on the internet contained 590 KB of data. Now, the average page weighs 678. This is due in part to larger files for images over this same six-month period.

Large web pages are just part of a trend that is driving data consumption higher. Consider the amount of data that employees use now to do their jobs. In addition, how employees work is changing with more web and video conferencing. Many organizations are adding more data circuits to accommodate employees’ needs. Increased use of cloud computing applications means that employees are not storing data and applications locally on their computers. Employees need a persistent connection to applications and data that are stored in the cloud. This drives more consumption of data on the telecom network.

Another important trend is the adoption of smartphones. This adds data plan expenses to voice expenses incurred with a cell phone. The conversion of each cell phone user to a smartphone doubles their expenses. Over the past four years, AT&T CEO Randall Stephenson reports that mobile broadband traffic has grown by 8,000% and the company expects it to grow by 1,000% over the next five years. Tablets, which provide many of the same features of a smartphone, can use 122 times more spectrum as an ordinary cell phone.

As employees use new technology, expect acceleration in consumption of data. Telecom Expense Management programs can do more than simply validate expenses. Charge-backs can help provide better visibility and accountability to business units and individuals to see how their consumption affects costs.

Before negotiating new contracts, organizations should review consumption trends and determine what services will be growing over the term of the next contract. In addition, data and analytics from TEM reports can identify services that employees no longer need as they switch from fixed voice calls to use of data and wireless services. TEM programs can help managers find telecom services that can be optimized. In some cases, this can mean grooming of services to higher capacity lower cost services. Savings can come from replacing eight T1 data lines with a T3, which is the equivalent to 28 T1 lines.

Now, more than ever TEM programs can help managers by develop strategies and responses to control telecom expenses before they become a runaway problem. What do you think?

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