The following is a guest post by TC2 Senior Consultant Janis Stephens, whose special expertise includes many of the disciplines surrounding contract compliance and bill auditing.

Everyone assumes that their telecom bills will contain errors. But most enterprises accept their carriers' commitment tracking reports at face value. Why is that?

Commitment tracking reports are spreadsheets or tables designed to show the progress that customers are making toward retiring the dollar commitment that's typically embedded in an enterprise deal. They're often referred to as "MAC tracking reports" because the "Minimum Annual Commitment" is the most common (but not only) type of quid pro quo built into carrier deals.

But these reports are notoriously unreliable. And it's easy to let carriers get away with bad tracking reports, either because they're presented at an extremely high level -- monthly spend grouped into broad categories with no further explanation -- or because they contain excruciating detail that makes it a real chore to pinpoint problems.

Often the basic categories on these reports include such broad strokes as "domestic" and "international" that leave it to the imagination what exactly is being included. And some items may never find their way into the reported revenue, such as data and managed services that were introduced after the the deal was first signed, or international access revenue that your carrier may not think of as its own but is definitely part of your deal.

But the really big challenge in commitment tracking is the complex interplay between billing systems, contracts, service guides, and tracking reports. The last thing you should assume is that your carrier has a clean, "push-button" way to produce an exact revenue match to the services listed as commitment-eligible in your contract.

In some carrier organizations, account teams may be asked to grab bills and reports from different places for MAC-eligible services to produce the tracking report, leaving you at the mercy of essentially manual procedures. In other cases, there may be a conflict in the parties' understanding of the list of MAC-eligible services, especially if the carrier's service guide is more specific than the contract. Example: If your MAC-eligible list doesn't specify advanced features for call centers, and you assume that merely listing the name of your carrier's dedicated inbound call platform covers it, you'll have a problem if the service guide says that features aren't commitment-eligible.

And in some cases, even the MAC-eligible "list" is really an amalgam of several different contract attachments and side letters, practically begging for tracking report problems. Just as billing errors are almost always in the supplier's favor, tracking report errors most typically understate your commitment-eligible spend. But correcting those errors through a tracking-report verification is a broad, all-encompassing process that often requires you to examine the entire chain of procurement and fulfillment to unlock the puzzle.

If a tracking report indicates a potential shortfall, or if it indicates that a customer's spend is close to the commitment, a comprehensive analysis of the tracking report is warranted (which, of course, is something that TC2 can help you with). And if the supplier is providing inaccurate information, it's best to challenge it early rather than wait for the supplier to formally declare the company in shortfall, and then try to dispute a shortfall penalty.

But in almost any situation, customers will gain leverage during their contract term by knowing where their spend really stands vs. their commitment. In the current recession, the big carriers continue to try to box in customers with non-market-based renewal and extension offers and other one-off arrangements. An inaccurate or even uncertain view of how much cushion you have vs. your commitment robs from your ability to present a competitive face to the market and bring out the carriers' more aggressively competitive personality.

And think about it: Even if you do have a substantial cushion, you still aren't likely to use it to move traffic to another carrier, or to generate a better offer short of an optimally timed RFP, unless you know for certain what that action will mean for your remaining flexibility.

Some of these same dynamics are increasingly playing out in wireless deals. Customers often eagerly track their spend, usage or device counts according to how they contribute to the discount tiers that the business is expecting (or, in some cases, that they've effectively promised to individual-liable users). But many enterprises also need to verify the dollar spend or usage that contributes to average monthly spend/usage commitments that competitive flat-rate (but not all-inclusive) voice plans often entail in corporate deals.

Many of these customers are experiencing the same uncertainty over supplier tracking reports that steal their confidence in securing the benefits of existing wireless deals and gaining forward leverage. Unraveling the complexity of the back-office systems that carriers employ to bill and report is a key management task that enterprises are facing across their entire telecom spend. The dedicated effort to solve this challenge will pay dividends in both dollars and confidence.

For as long as anyone can remember, AT&T has been the carrier that's held on the longest to legacy products. In recent times, AT&T has been happy to let users continue to subscribe to its global business dial-up Internet service until they're ready for AT&T's broadband virtual tunneling service. AT&T has also let corporate WANs sail along on frame relay without putting out a marker on ending frame relay orders or contract renewals, as first Sprint and then Verizon have done.

And there will probably be some companies using AT&T for straight-on, long-haul, T1/T3 private lines in the year 2030 just as in 2010.

So it was jarring when AT&T grabbed some publicity at the end of last year with what looked like a request to the FCC to retire the public switched telephone network. AT&T severing itself from POTS, or Plain Old Telephone Service? It didn't seem right.

Understanding AT&T's about-face on maintaining legacy networks requires an understanding of the concept of financial harvesting. One of the best illustrations of harvesting came during an odd period in telecom carrier finance back in the mid-1990s -- basically a few years before and after enactment of the Telecommunications Act of 1996.

Back then, the Internet was emerging in its browser-enabled incarnation as the World Wide Web, the corporate telecom deal culture was thriving, and TV airwaves and telemarketing lines were buzzing with pitches for 10-cent, 7-cent, and 5-cent long distance minutes. Yet when AT&T held its quarterly earnings conference calls, the first question Wall Street analysts would invariably ask was why AT&T had only raised its basic, no-plan long distance rate from 25 cents a minute to 26 cents, not 27 cents. Wouldn't Aunt Mary from Kalamazoo, who would never in a million years switch to MCI or Sprint, overlook a larger increase and happily pay the bill?

AT&T was essentially harvesting its no-plan customers for a revenue stream for as long as these customers existed. And the analysts, almost to AT&T's annoyance, wanted them to do even more of it. Not until somebody rang a bell around 1997-1998 and the analysts realized that AT&T had to compete elsewhere for voice and data business did the harvesting issue start to fade.

Now look at AT&T's situation today. AT&T Mobility is thriving and sales of the iPhone are zooming. AT&T's share of the enterprise networking market is basically what it's been for years, and with the decline of Sprint it's even threatening to establish a virtual duopoly with Verizon.

But AT&T's consumer telephony business seems to be slipping away. Like the incumbent local businesses of Verizon and Qwest, AT&T is losing residential landlines at a remarkable pace, now edging close to 1% a month. The result is the reverse of harvesting: AT&T says it's bleeding from the need to maintain all-copper loops in a mass market that's beginning to reject them, and it wants to get out rather than stay in as long as possible.

Of course, AT&T, Verizon and Qwest get some of their landline customers right back when the same households buy their broadband packages. And the broadband and telephony customers that the cable companies win instead represent fair-and-square marketplace losses for the telcos. But that only seems to reinforce the reverse-harvesting instinct, feeding AT&T's argument that it needs to massively shift resources.

Aside from the fact that AT&T in the meantime hasn't lost its near-monopoly dedicated access business in its local territories, here's the problem with simply accepting AT&T's conclusion that the PSTN should be retired: From a business user standpoint, there's a little more to the legacy network than consumer migration to cell phones and broadband. As our friend Eric Krapf of VoiceCon/NoJitter has already pointed out, AT&T hasn't quite defined the PSTN to be retired, leaving us to assume they mean everything. But what about Class 5 switches and their unique functionality that's still in the process of being emulated in various VoIP services? What about the fact that many of the poles, trenches and conduits are the same for both older and newer services?

And what about all the people who make calls to the businesses who make up the enterprise market? If they don't have a cell phone or a broadband triple-play package, are they out of luck, and your business out of a sale?

Many business customers would benefit enormously if AT&T does what it says that PSTN retirement will free it to do: help create universal, affordable broadband. Widespread remote-agent call center functionality, broad-based telecommuting, and many facets of unified communications do rely on a pervasive broadband network.

But it's important to realize that AT&T is responding in a classic "lobbying" fashion to the current broadband stimulus, which requires the FCC to develop a national broadband plan. In effect AT&T is saying that if there has to be universal broadband, there can't be universal narrowband. That's either one of those unintended consequences that can result from regulatory initiatives, or an unproven assertion of investment motivation by an experienced Washington player.

At this point I think there are two key things for corporate telecom professionals to remember. One is that AT&T, with all of its legacy pressures and characteristic behavior patterns, has many piece-parts. In this case we're clearly talking about an AT&T whose heart is the former RBOC SBC, not the former interexchange giant.

The other is that some of the regulatory nuance got lost in some of the initial reports. What AT&T is supporting, in the context of a question posed by the FCC, is the initiation of a Notice of Inquiry about the PSTN, which is a more preliminary proceeding than even a Notice of Proposed Rulemaking, which itself has many procedural checkpoints before it results in new rules. It's unlikely that AT&T really wants to lose all its POTS customers in one fell swoop right now. More likely, it's just drawing a line in the sand.

So we'll have some time to watch this, and the market will invariably shift more along the way. Let me know if you have thoughts of your own on this fascinating matter that threatens to turn the tables of telecom history upside down.

In the telecom industry, life is different when your name is AT&T.

Recent network difficulties that iPhone users have experienced in big cities such as New York and San Francisco are reminiscent of any number of past capacity and congestion incidents with AT&T services. So is AT&T's stated determination to furiously catch up -- and, in the current situation, also blunt Verizon's "war of the maps" 3G claims now that AT&T has dropped the legal attack on Verizon's ads.

Going back many years and generations of technology, AT&T has often given the impression of being constantly surprised by the popularity of the new services it brings to market. Incredibly, this tendency seems to carry over to whatever entity newly obtains the AT&T moniker as the makeup of the company changes.

Is there something about hanging the old "American Telephone & Telegraph" legacy around your neck that causes this phenomenon? Perhaps it's really because the AT&T brand is so powerful that it pulls in users beyond what the company originally plans for or, sometimes, merits.

During my time as a writer at Network World from 1994 to 2001, this kind of thing happened at least three times, and veteran telecom managers may remember all of these incidents:

-- AT&T was late to market on frame relay, having been beaten by the "first WilTel," an innovative carrier that later got sucked into the vortex of WorldCom mergers, and then by Sprint. AT&T executives had poor visibility into the popularity of the service, and within a year or two ran out of capacity and had to quickly order up more "Stratacom" (later Cisco) switches to catch up.

-- Later in the decade, AT&T management missed the speed of a trend by branch offices to move from switched to dedicated access. (Believe it or not, back then the only dedicated connection to interexchange carriers that even some sizable offices had was a 56K bit/sec frame relay link.) Rapid price-downs on dedicated-to-switched voice, plus growing data bandwidth demands, led many offices to finally order T1s. AT&T literally ran out of T1 ports in a number of POPs and had to hustle to recover.

-- Around the turn of the decade/century, capacity problems bedeviled the original, pre-Cingular AT&T Wireless network. This caused significant embarrassment for a veteran AT&T wireline executive who had lost a battle to become CEO of the main company -- that prize went to an outsider, Michael Armstrong, which is a whole other problematic story -- and who tried his hand at the wireless operation instead.

Make no mistake -- AT&T is responding now. In fact, AT&T's huge $18-$19 billion capital expenditures budget for 2010 includes a doubling of wireless network investment. That throws light on the capex-vs.-"free cash flow" paradox that we've highlighted as a key financial point in evaluating carriers. A modern-day carrier can almost never declare its networks "finished" and push away from the table.

There's another factor driving AT&T's situation besides capacity, and that's the urgency of the applications themselves. For significant portions of your end-user base, gone are the days when they considered mobility a second choice to fixed lines. We've noticed this in increasingly strict service management requirements demanded by enterprises in wireless competitive bidding -- device delivery, line activation, feature and call plan changes, that sort of thing.

Often telecom managers who do recognize the difference in maturity between wireline and wireless services say they're nevertheless driven to demand stricter wireless metrics by their end-user base. Not only AT&T but the other wireless carriers are learning this quickly as well.

And AT&T's 2009 earnings announced yesterday? They came in at $12.5 billion. And look at this: $17.1 billion in free cash flow even after capital expenditures. How about that?

Obviously there's no shame in asking for a great deal and a great network all at the same time -- even from, or especially from, the greatest legacy name in the telecom industry and one of the most enduring brand names in the history of business.