If your principal carrier is the one that starts with either the letter "A" or the letter "V," then you've already been asked to broaden your relationship with them, or you will be asked to do so soon. I guarantee it.

These guys didn't roll up national interexchange networks, legacy Bell telcos, and comprehensive wireless footprints for no reason. They want it all. In their mind, they paid big money for all this (never mind that a lot of it is sunk investment from ages ago or, like Verizon's purchase of MCI, was basically a fire sale), and they want a big return. Besides that, A wants to shut V out of your company for years to come, and vice-versa.

One big consequence of all this is a growing concern that we at TC2 and LB3 call the Lowest Common Denominator Problem. As a general proposition, the broader the demand set you put out to market at the same time, the better the deal you can get. But that's only really true to the extent that the components of the demand set are logically related.

The reality is that local, national, global, wireless, and managed services markets still have distinctive terms, pricing mechanisms, and competitor line-ups. If the only commonality among all these markets is that the same parent company has an entry into them, then what may happen when you mash them all together into one broad contract relationship is a deal that features the worst -- not the best -- practices that the carrier can throw into your terms and conditions.

Interestingly, the ways in which smaller carriers are attempting to break into these markets can also create their own Lowest Common Denominator issues. That's because of the new technology choices that they have to promote to get your ear.

Areas in which smaller carriers and alternate suppliers are obviously trying to break in include SIP Trunking, Cloud Computing, local and national Ethernet, and 4G wireless such as the Sprint/Clearwire WiMax initiative. All of these have the potential to dramatically lower costs and/or create breakthroughs in end-user access and network experience. But they compete against legacy systems and services that virtually guarantee data network throughput, or provide advanced call center features as a matter of course, or ensure that you can reach an emergency number from any phone.

Experience has shown that large enterprises will not embrace new technologies until they provide rich feature sets and something very near the network performance level of the technology it's replacing. If a large business happens to accept a trial service that only provides a Lowest Common Denominator of voice or data throughput, it won't completely roll it out until features and performance match up well against its legacy services.

This phenomenon as it applies to the technologies, contract practices, and supplier choices of 2010 going into the 2011 is a major focus running throughout CCMI's upcoming Telecom Negotiation Conference in San Diego. New sessions and new content will address these issues in a way you simply won't get at even the best of the "trade shows." For each issue you'll get a specific look at the trade-off between embracing new practices vs. falling into a Lowest Common Denominator trap.

At the conference, LB3's Joaquin Gamboa and Marc Lindsey will speak from experience on cloud computing. That's an unavoidable hot topic -- you need to identify the key issues that set cloud computing deals apart from traditional telecom and IT transactions. Marc and TC2's Ben Fox will speak on the crucial connection between MPLS and SIP Trunking, and give the specifics on MPLS/SIP product structures, pricing models, and contractual considerations you'll need to move forward.

I'll be speaking in tandem with LB3's Ellen Block and TC2's Jack Deal about the crucial connections between SIP, unified communications, and the often-confusing world of "deals" for local wireline service provided by incumbent (and thus near-monopoly) providers. That's an area that Ellen notes is especially susceptible to the Lowest Common Denominator problem when the big, integrated carriers try to transfer their monopoly-related terms to the historically competitive national interexchange market.

I will also host a special Day 2 breakfast session called "Matching the Players to the Project" which will unravel the trade-offs between throwing all your business to a big carrier vs. considering specialized players for key services. That's a product of both the Lowest Common Denominator problem and the unmistakable fact that AT&T and Verizon are around for good while many other carriers still strain for financial resources.

That's just a sample, and a look at the full agenda will give you a view to its direct relevance to your current challenges and upcoming decisions. One note: As conference chairman Hank Levine often remarks on site, the conference plate is very full and, as a result, we have to include multiple breakout sessions toward the end of the two days. So you may encounter conflicts in getting to every session you want (including a couple I've mentioned here).

The best way to solve that problem is to bring a couple of people from your company. We've noticed a recent trend where, when established enterprises give a new person telecom responsibility, one of their first steps is to send them to this conference, or to bring them along with a more experienced person. Check out conference organizer CCMI's reference to Team Discounts on the registration page and call the number there for details.

I look forward to seeing you in San Diego!

I recently received a Wall Street analyst note that read for all the world like it was 1999, not 2010. The analyst at JP Morgan was assuming coverage on an alternative local carrier and assigning it an "overweight rating" (translation: BUY). He said that the carrier's "recent initiatives are expected to benefit growth" and its "valuation favors upside."

And in a familiar echo of hot-telecom-stock days gone by, the analyst said of the carrier: "We believe it can achieve double-digit compounded EBITDA growth over the next five years." Even if that's only Wall Street babble to you, doesn't that just sound like the go-go CLEC days of yore?

So here now is the twist: The carrier in question is Cbeyond, one of the new breed of SIP-centric carriers targeting small and medium-sized businesses that we've mentioned in the past. These companies are far from the old CLEC model, where many alternative carriers without last-mile facilities were basically attempting to sell themselves on price and service vs. the Bell companies (while often fighting them in court). Cbeyond and a group of others add new technology to the mix -- the SIP trunking methodology which attempts to supplant traditional telephone trunks.

Perhaps this proves the truism that it takes a new technology, not just a theoretically competitive business plan, to bust markets open. Now, the analyst, Mike McCormack of JP Morgan, didn't burden his readers with the technical details. In fact, he didn't even refer to SIP per se. The way he put it was that Cbeyond "operates an IP-based network through which it delivers integrated voice and data services," which is a good enough explanation for Wall Street.

McCormack also credited Cbeyond with offering a "large business approach to the small business market," noting that it offers "popular calling features" to small business. While of course what Cbeyond offers isn't really an enterprise package -- what a Fortune 500 business needs for its call centers is hardly the features he's talking about -- I'll grant him poetic license within his sphere of influence (institutional investors).

And to McCormack's credit, we're hardly talking about a stock call like the old days, where an analyst would take a $50 stock and predict it would zoom to $250 (usually before it fell to $1 or $2 a share). Cbeyond was trading around $13 a share at the time of McCormack's report, and McCormack (who actually has quite a good track record) set a yearend 2010 target of $18 a share for the stock. Hardly something to spawn new stock market billionaires!

The point is that there's renewed telecom attention in the investment world driven by the unmistakable battle now unleashed over true, full-featured POTS vs. IP voice for business. As is often the case, in some ways it may be easier for smaller customers rather than larger ones to take the first advantage of the new wave. But when even a chastened Wall Street is dusting off old analytical methodologies in service of a technology that's actually sticking in the marketplace, you know that SIP trunking isn't going away. Up and down the ladder of customer size, from small business to multinational enterprises, SIP is now in the mix.

Frame relay users are becoming a diminishing breed, even at AT&T. In a little-noticed statistic buried in its fourth quarter earnings report, AT&T said that two-thirds of its frame relay customers have migrated to IP-based services.

And that could have implications for the types of services -- even IP services -- that begin to generate the ever-rising USF surcharge pass-along where they never have before.

Let's see why that is. First, AT&T put a rather distinctive spin on the frame relay news. Here's how they reported it: "Two-thirds of AT&T's frame customers have made the transition to IP-based solutions, which allow them to easily add managed services such as network security, hosting and IP conferencing on top of their infrastructures."

That's an interesting way of putting it, especially when you consider that AT&T's primary platform for ex-frame users over the last few years has been the AVPN un-managed MPLS service. I'm particularly amused by the part about "easily" adding managed services, where AT&T cites the kinds of managed services that happen to add to AT&T's revenues.

Funny, I thought that users would like to "easily" add to their IP and MPLS services such rigorous VoIP networking services as SIP trunking. You know, the kind of additional service that would subtract from some other part of AT&T's revenue set, like local telephony infrastructure. But clearly, AT&T is looking for a way to make IP and MPLS mean "more money," not less.

And that's where the USF surcharge issue starts to intrude. One thing that the furious competition between AT&T and Verizon for national and global MPLS deals has kept at bay is the threat of USF pass-throughs on interstate MPLS revenues. But once the competitive bidding is out of the way, we could see these moves begin to creep in.

In addition, all of the interexchange carriers have to be on pins and needles about recovering USF charges on MPLS because of steadily increasing pressure from the FCC about counting MPLS elements in their contribution base. That's happening as the legacy revenue base of traditional telecom services generating the surcharge continues to contract -- the very issue that is forcing the contribution factor percentage ever-higher.

Remember how the shift from a non-surcharged to a surcharged service comes about. It's a continuum, not a single discrete event, because whether carriers pay the surcharge to the fund, and then pass it along to you, are two separate questions with several inputs each.

As LB3's regulatory lawyers have pointed out, even before USF on MPLS ever became an issue, the carriers could have reported interstate MPLS revenues, based on their own judgment that if frame relay was basic telecommunications, so was MPLS. Then, early last year, the FCC suggested MPLS as a service to be reported by adding it to its examples of the type of basic telecommunications" revenue carriers needed to include on their 2008 reporting forms.

Now the FCC appears to be something close to demanding MPLS revenues both now and in the past because it needs 14.1% of the money -- whoops, 15.3% as of April 1! -- especially as MPLS has become the flagship data networking service for enterprises.

Plus, consider this: AT&T recently placed a note in its Service Guide that its Ultravailable Network Service will start generating the USF pass-through on April 1. One of my LB3 colleagues labels this a form of "self-confessing" the applicability of the revenues of a relatively specialized service (in this case, high-capacity wavelength technology) to the Universal Service regime. It's circumstantial, but it's an example of how AT&T (and potentially others) may become quicker to add other, more widely deployed services to the universal service revenue base than they have in the past.

Thus, once the bulk of frame/ATM users have chosen their MPLS carriers and signed up for multiyear contracts, both AT&T and Verizon could lose their inhibition about tacking on USF for the MPLS ports and Class of Service charges. In competitive bidding, such a move will have the effect of raising the price of these elements by 15.3%. That's something neither carrier has been willing to do when worried about losing a deal to the other mega-carrier. But when that fear is gone, the surcharge pass-along could be on its way.

Before assessing how to deal with all this, there's one final input -- the effect of the FCC's newly released National Broadband Plan that appears to redraw universal service around the ambitious (and expensive) notion of universal broadband access. I'll take that up next!

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.