How often has a carrier account manager conditioned a particular response to you around what he or she "can do" or "has to do" in light of corporate directives? Pretty often, I bet. Carriers find it convenient to tie the hands of their people in the field around various sourcing and operational requirements -- or at least let account teams give the impression that their hands are tied.

Keep that in mind the next time you're dealing with the mixed blessing of a corporate directive from your company. Obviously many telecom buyers are hearing demands from senior management for specific and immediate cost savings -- a double-edged sword that can lead to manipulation by carriers when these demands come out into the open. But you may also be dealing with a new set of additional mandates rooted in the pressure that companies feel to standardize the procurement function in today's economically stressed environment.

These mandates come under many names and cross the boundaries between sourcing and ongoing operations. You may have a "Supplier Governance" process that you have to instruct your carriers and equipment vendors to follow. There may be a set of "Procurement Compliance" procedures that you receive from higher-ups and must be satisfied. You may now even have a "Chief Procurement Officer" to deal with, to go along with the demands of CFOs and other top executives.

Even if you don't hear these terms in your company, you may be part of an over-arching IT organization with a steadily increasing diet of standard demands that alternately assist and hinder you in your job. Some companies even try to force standardized IT agreements onto the telecom process -- misunderstanding the unique structure of telecom agreements and making it more difficult to include critical, telecom-oriented terms and conditions.

Of course, IT organizations are also very concerned about data security, both in a generic sense and in terms of industry-specific mandates that derive from legislation in the healthcare, banking and other fields. But sometimes, generic IT requirements just impose an additional layer of bureaucracy and makework in the supplier-user relationship. These extra requirements can present a mixed message about priorities to your key suppliers when they overwhelm the process.

The key here is to harness these "facts of life" in today's environment to your advantage, instead of letting them control you. One way to harness them is to let suppliers know that both sides of the negotiation are operating under mandates, so their mandate isn't the only one that counts.

Take the issue of billing. Companies love to standardize terms for their accounts payable, and they often pressure their managers (such as you) to enforce them with all their vendors. Up to a point, that's a great help. Carriers need to be told not to require silly terms, such as 30 days to pay a bill after a "bill date" that they arbitrarily assign and may not represent actual delivery of the bill.

But telecom billing platforms do have notorious built-in legacies, and some enterprise-wide billing mandates can have the counterproductive effect of forcing a demand into RFPs that none of the bidding carriers will accept. That leaves you without an effective stick to meet your company's mandate. It's an example of what can happen when a mandate controls you rather than you utilizing it to your advantage (such as putting yourself in a position to negotiate the carrier rep away from his or her company's mandate).

The bottom line is that you can't wait until everyone's gathered around the negotiating table to start whining about what bureaucratic checkpoints you need to fulfill. Determining requirements up front in a competitive RFP (or other initial sourcing communication) helps settle what sort of mandates you will need to get from carriers even if they aren't core to the telecom process, and where you are willing and able to go to the mat for a particular requirement.

Do this work up front, and you'll be better prepared to "trade points" with carriers and their actual or perceived corporate requirements. In the end, it'll make it far easier for you to put the energy of the procurement on the core pricing, service levels, and key terms that you know you need for your network rather than let the process get overwhelmed and sidelined by other issues.

You might have thought that the IP convergerce era would have brought in easier networks and simpler contracts. You know, buy one service from one carrier, have it do everything, sign a single document where all the conditions for buying that service are lumped together, and plan to work 9-5 during the term of the deal.

Of course, things haven't worked out that way. Complexity is built into the very act of installing new technologies that render faster and more flexible results for end-users. That's true for the network engineering side, the provisioning and service levels, and the contract deal itself.

One way in which we see this is in the carriers' reaction to innovative mechanisms in terms and conditions. Carriers like to set up a game of whack-a-mole whereby they try to offset apparent new flexibility in one contract idea with a straitjacket somewhere else.

The reason they usually get away with this relates to a simple truth in telecom and networking: Nobody rips out an entire network at once and immediately replaces it with another. New services are usually additive. That gives carriers a self-replenishing supply of rate elements on which to sneak in restrictive conditions that prevent you from riding down the market price.

We often see this in both explicit and implicit terms that apply to individual circuits. A per-circuit term plan that applies to a newly installed circuit (often a very high-cap metro or national circuit, and/or a new WAN technology such as Ethernet or an MPLS-like add-on to an Internet connection) has the effect of canceling out a "no-commitment" overall deal. Controlling the procurement process within your company is key here. Carriers know that new or naive CIOs who want to "make their mark" by forcing telecom vendors into what are superficially no-commitment, top-level contracts are fodder for this kind of misdirection.

A stealth variant of this is an innocuous-sounding "minimum payment term" slipped into a separate pricing schedule for a new data and/or VoIP service being rolled out to many locations. If the term is expressed as applying to a certain percentage of the affected circuits, and the service involved is your growth platform, then you've bought yourself a treadmill: A fixed percentage of the installed circuits subject to a minimum payment term will become a continuously increasing number of circuits installed at later and later dates. By the time you've finished rolling out your network, the minimum payment term of this one element will exceed the expiration date of your overall contract.

Try re-negotiating lower rates in the middle of this kind of deal, and you may see that what seemed like a good price at the beginning of the contract can no longer be matched to the market. What you want instead is an airtight deal that flows to your benefit from start to finish on both prices and terms, where each quantitative and qualitative element complements all the others.

These are the kinds of critical considerations you must know about at the beginning of your procurement process rather than the end when it's too late. They're what my TC2 colleagues Jack Deal and Larry York, along with LB3's Andrew Brown, will be addressing in a session called "Blueprint for a Successful Procurement: 7 First Steps to Maximize Leverage" at the 2010 Telecom Negotiation Conference in Washington, D.C. on March 11-12.

Past attendees of Telecom Negotiation, chaired as always by LB3's Hank Levine, will tell you the conference is about as chock-full of meaty detail as anything they've ever gone to. I'll also be speaking along with a number of other TC2 consultants and LB3 attorneys about the latest in the art and science of negotiating fully coherent telecom deals that actually deliver market-based benefits both now and going forward.

Check out the full agenda and other conference information. I look forward to the opportunity to see you next month here in Washington!

The following is a guest post by LB3 partner Kevin DiLallo, whose practice includes a specialty in the negotiation of enterprise wireless service contracts.

Putting mobile devices with far more independent intelligence than the regular desk phone into the hands of thousands of employees has always carried the risk of unintended consequences. Society as a whole now practically considers cell phones and smartphones as traveling personal transaction machines, leading to increasing public discussion about using mobile devices for personal and civic purposes.

All of that is highlighted by the wireless industry's successful campaign to raise money for Haitian relief by allowing subscribers to send contribution pledges via text message. This phenomenon has raised over $22 million to date for the American Red Cross. But it's also put telecom managers who issue corporate-liable devices in a tough spot, as large numbers of holders of those devices have effectively pledged funds on the company's dime.

Yet this dilemma simply reflects two recurring issues in enterprise procurement of wireless devices: (1) whether to hold employees accountable for personal use of wireless devices; and (2) how best to employ technical solutions to curb unauthorized uses of those devices.

There are actually many reasons for a company to require employees to account for their personal use of company-subsidized wireless service and devices. One is the arcane, but still in force, IRS recordkeeping and reporting rules for company-issued cell phones. Another is to discourage personal use of company assets that could cut into the employee's normal work routine.

And of course, your company has a purely economic interest in preventing the diversion of corporate funds to unauthorized, personal uses while not appearing as uncaring to your employee base.

Going forward, it's probably easier to simply use technical measures to prevent such personal uses of company-issued mobile devices from the get-go, rather than leaving the door open for such use and then trying to recoup the cost of employees' personal use after the fact. For this reason, we often advise clients that an internal company policy regarding "acceptable use" of company-issued cell phones, while a good idea, is not self-enforcing, and needs to be backed up by technical safeguards.

For programs that allow subscribers to bill fees or donations through their monthly wireless bill -- i.e., using their cell phone like a credit card -- enterprise customers can prevent such costs from showing up on their bills in the future simply by asking their national account reps to block all texting to short codes from corporate-liable devices. Ordinary SMS messaging should be unaffected, but promotions accessed via short codes -- which often entail fees -- will be out of reach of corporate-liable subscribers, at least from the devices their employers subsidize.

But for right now, in the wake of the Haitian crisis, it might be helpful to coordinate with your human relations, public relations and/or corporate giving departments to craft a comprehensive message to employees about why messages are being blocked, and to state any position about both corporate and employee participation in humanitarian relief and alternative ways to contribute.

Short code SMS messages are just one example of the many uses of wireless technology that could increase enterprise subscribers' costs and distract employees from their day-to-day responsibilities. Other examples, all of which can be blocked upon request, are video and music downloads, voice calls to 900 numbers and directory assistance, ringtones, and wallpaper. And for security purposes, enterprises might also consider disabling the camera functions on devices equipped with cameras.

One thing's for sure: Your employees will be asked to reach for their cell phones many times in the future by forces outside your company's control. So this is an ideal time to be coordinating your wireless policies with technical safeguards and good, positive employee communications that acknowledge both their corporate obligations and desire to be good citizens. It's another example of the growing general management challenges of the corporate telecommunications function, and it's something we're continuing to follow closely.

Most corporate telecom managers have a pretty big to-do list for 2010. For many of you, that list includes deciding what to do about your Nortel voice equipment, and when to do it.

Last Friday, Avaya closed its $900 million deal (including debt) to buy Nortel Enterprise Solutions out of Nortel's bankruptcy. Avaya then scheduled a January 19 video webinar to explain its roadmap for the combined product set. But prudent managers are already laying the groundwork for communicating throughout their telecom and IT organizations the directions the combined Avaya/Nortel may well take.

Obviously Avaya is in the driver's seat, and it's helpful to know their corporate thinking as well as their product leanings. Avaya, which is an enterprise equipment/software pure play that was formed out of successive spinoffs from legacy "Ma Bell" type organizations, is currently privately held. But almost everyone believes that Avaya's private-equity owners, Silver Lake Partners and TPG Capital, want to bring the company public again as an exit strategy for themselves.

With Cisco gaining rapidly in voice market share, the Nortel buy was necessary for Avaya to ensure that it comes to the financial markets as the No. 1 vendor for corporate voice gear and unified communications. In particular, as PBX market share guru Al Sulkin has explained at recent VoiceCon events, Avaya/Nortel can still lay claim to dominating the contact center market, where enterprises have been less eager to move to new vendors. Avaya and Nortel still add up to half the market for call center premises switches/software, with Cisco and Genesys taking about 15% each and others battling for the rest.

So Avaya is hardly likely to thumb its nose at the big Nortel base during the period it presents its case to the financial markets (and it is hiring 6,000 Nortel employees). But promises to maintain duplicative product sets for a long time won't earn Silver Lake/TPG a big stock market payday either.

Many if not most observers draw a distinction between users of Nortel's venerable PBX product, the Meridian 1, and its next-generation IP PBX platform, the CS (Communication Server) 1000. Some observers are advising Meridian 1 users to order crash kits and all the spare parts they can find, although the Meridian installed base is believed to be big enough in enough important places for Avaya not to do anything hasty.

As far as the CS 1000, Nortel made a show earlier this year, even after its bankruptcy filing, of introducing a comprehensive Release 6 with notable features such as, for big financial institutions in the capital markets, a SIP-based turret system. Some PBX industry watchers are speculating that Avaya will likely provide full-scale support for CS 1000 for 2-3 years, although that presumes being current on the releases.

All this is taking place at a time when Avaya is rolling out its own distinct architecture called "Aura." It's a sort of bridging technology where Avaya uses SIP as a session manager to interoperate with its own and other (including Cisco) gear across multiple sites and a wide range of applications, including many that are critical to call center managers. But how far this goes in pulling Nortel platforms into the fold permanently -- or, alternatively, drawing Nortel users to core Avaya platforms -- is something Avaya officials will have to explain in their January 19 show.

You could say that in the Nortel situation we have a "consequential bankruptcy," one that isn't simply a reorganization of the company but a wholesale reordering of the market. In Internet discussions, many users have actually lauded parts of Nortel for engineering prowess that they view as superior to Cisco's (for some things) and Avaya's (for others), and ex-Nortel and Bay Networks employees can be found saying the same thing. But the center didn't hold, and here's a hat tip for an old colleague of mine at the trade publication Network World, Jim Duffy, who earlier this month wrote a very informative (and morosely entertaining) article documenting the systematic dismantling of Nortel in bankruptcy.

In short, there was something about the organization as a whole that just didn't work once the new IP era came along. As we say good-bye, apparently for good, to the venerable old "Northern Telecom," outside players will be writing the script for the users of its products, starting very soon.

The next time you go out to bid for anything, I hope you can stir up a fight between AT&T and Verizon that's as good as the one they're having on television and in federal court right now.

Verizon is sticking it to AT&T in U.S. TV ads for lacking 3G wireless coverage. Here's Verizon's ad technique: Show big, white spaces around the USA on what Verizon says is an AT&T network map. A putatively outraged AT&T has gone to court to stop the ads, claiming that of course it has good wireless coverage throughout most of the country, and the average viewer doesn't realize Verizon means a more-advanced network exclusively relying on 3G technology.

Verizon says that AT&T just can't handle the truth, and the ads do clearly use the label 3G. But some analysts say that Verizon is pushing the edge of how it presents its claims because it still can't match the momentum of the iPhone. So far the court has declined to stop the ads, but the judge is continuing to hear the case, and meanwhile AT&T and Apple are putting up their own ads touting both coverage and unique capabilities as much as they can.

Finding telecom carriers in court is hardly a new phenomenon, but I think this contretemps has a much different feel than the old days when the "RBOCs" and the "long distance carriers" would slug it out before the judge. In my view, the war of the maps has the potential to benefit both Verizon and AT&T at the expense of everyone else, no matter how it turns out. That's because the highly publicized incident furthers the Coke-and-Pepsi-fication of the telecom industry, something that the budding duopolists have to realize beneath it all.

In marketing, choosing to attack another vendor by name without being prompted to do so is, in part, a subtle way of paying respect to them. Besides, both carriers are continuing to build their networks, and the long-term potential for leapfrogging each other in capabilities is in place.

On a customer-by-customer basis, obviously AT&T and Verizon are playing for keeps, and they mean it when they battle for each customer contract. But as considerations of end-user preference on both carriers and devices seep further into the realm of corporate telecom procurement, image and status threaten to create a two-tier system where corporate executives may be forced to consider only a diminishing slate of brand-name vendors for large group purchases.

If those brand names cite only each other -- everywhere from the point of sale to Super Bowl ads -- it could create a self-fulfilling prophecy whereby they split the lion's share of the business. And the fact that in large parts of the country, either AT&T or Verizon can bundle end-user telecom and media needs in a way that Sprint and T-Mobile (or anyone else) can't helps keep these brand names on end-users' lips.

Thankfully, we're not at the point yet where wireless competition has been reduced to an either-or. But in the broad strokes of the telecom industry's future, I'm willing to bet that Verizon has finely calculated what attacking AT&T in this way means, and AT&T understands the publicity it's gaining from a legal war with Verizon, no matter how plainly it seems to many people that Verizon's ads are technically clean. Keep an ear out for how your user base talks about telecom vendors, for surely they're talking about them more than ever before. Ultimately, that's part of what all this is all about.

The following is a guest post by TC2 Asia-Pacific managing director Joe Schmidt, who is based in Singapore.

If you're a buyer of wireless services, which has a higher priority in your decision process, the carrier or the device?

For buyers who negotiate enterprise deals, the answer has always been the carrier. But lately, due the runaway success of Apple's iPhone, as well as Apple's exclusive iPhone relationship with AT&T and company executives demanding "I want an iPhone," enterprise buyers are wondering whether to reconsider their approach to buying wireless services.

Wireless services and the use of smartphones, such as the BlackBerry and now the enterprise-ready iPhone, continue to gain strategic importance in the enterprise. By reading the recent earnings announcements from AT&T and Verizon, it's also clear that wireless services are a significant growth area for the carriers.

Both carriers added net new subscribers last quarter -- AT&T added 2 million and Verizon added slightly less at 1.2 million. What's more, both indicated they expect wireless revenue to continue to grab a significantly greater share of their corporate revenue. And that's particularly due to the demand for smartphones and the use of wireless data services, which are markedly more profitable for the carriers once they get past the initial marketing expenses.

But dig deeper into these earnings announcements and you begin to see how dominant the iPhone has become and why enterprise buyers are likely feeling some pressure to alter their procurement approach. Of the 4.3 million smartphones added to AT&T's network in the third quarter, nearly 75% were Apple iPhones. And, according to AT&T, nearly 40% of those iPhone activations were from customers new to AT&T.

How many of those new subscribers do you think said, "I want an iPhone, so I'll subscribe with AT&T" rather than "I'd like to subscribe with AT&T and I'll take an iPhone please"? My guess is that it's probably a lot more of the former than it is of the latter.

So, we know devices do matter, but can enterprises take this same approach -- select a device first and sign up with whatever carrier supports it? Not so fast -- not if you expect to negotiate a competitive agreement with your wireless carrier.

The moment you put the device before the carrier is the moment you lose your leverage, your ability to negotiate market-leading pricing and commercial arrangements, and your ability to influence operational support. You eliminate the healthy tension caused by having multiple suppliers trying to win your enterprise business. You end up having only one default carrier choice -- the carrier that has the exclusive device relationship.

Think of it this way: Making your enterprise wireless buying decision based on the availability of the iPhone, or any other carrier-exclusive device, is akin to jumping off a building, being told you're in trouble, and then responding that, no, so far you're doing alright. Trust me, at some point your decision is going to hurt.

What you do want to do is make sure you have a real-time handle on the behavior of your user base as you go into the buying process. This suggests monitoring not just the device market per se but also the burgeoning wireless applications market. When you consider that Verizon Wireless is bringing out mobile devices on Google's Android operating system and mobile application platform, and that Apple is now broadening its iPhone availability in the U.K. from one exclusive carrier (O2) to two more (Vodafone and Orange), you can see what's coming down the pike.

It's absolutely fair to demand that carriers support the specific mobile capabilities your base expects without premium pricing, given that a wireless-device rollout under the guise of a corporate-liable deal is itself a marketing function on your part. But as the major carriers sort out their mix of 3G/4G coverage and hardware/software offerings, you should be able to play them off against one another in procurements if you don't get laser-focused on only one device.

Our advice to buyers of enterprise wireless services right now is to continue to evaluate and select your wireless carrier based on the merits of the carrier, its network, its pricing -- and then also its ability to support your enterprise mobility program. Look for carriers that offer a broad array of devices, since smartphones and the applications that run on them are clearly important to the enterprise.

And remember, nothing lasts forever, so when AT&T loses its exclusive iPhone advantage in the U.S., which it likely will in the coming months, you'll be glad you didn't blindly jump while the market was rapidly evolving. We'll be following these developments closely.

If you got a memo today from a senior executive in your company ordering you to get rate reductions from your principal carrier right now -- and never mind when your contract actually terminates -- could you do it?

An equally interesting question is: What would you have to give up to get it?

On the surface, many people would say that it's becoming more difficult to achieve mid-contract rate reductions. That's because carriers are becoming markedly stingier about rate review clauses. In many cases they're refusing to offer rate reviews in new contracts. In other cases they're offering rate reviews, but not annually.

That's leading to silly proposals such as offering an 18-month rate review on a 2-year contract -- silly because if you're negotiating a rate review rather than a new contract six months out from termination, something's wrong.

But looked at another way, instant rate reductions are very doable right now. That's because carriers have ramped up their activity in pre-emptive contract extensions and new term agreements with customers who are well short of termination.

Such activity appears to "solve" an additional problem that's been plaguing users in 2009 -- the recession. But that's led many people and organizations into a survival mode of thinking.

Think about it: rate reviews and pre-emptive contract extensions may both appear to be dealing with straight dollars, but the logic of the ongoing relationship is reversed in each. In a well-structured rate review, rate reductions occur because the carrier is fearful of having your commitment to it reduced. In a pre-emptive new contract term driven by the carrier, the carrier very often gets your commitment increased -- via length of term, percentage of spend obligated to the carrier in a MAC, even pseudo-exclusivity clauses that effectively prevent you from seeking competition.

One of the main points we make with corporate users is that there is a continuum of contracting tools that are available at any given time. For example, if there's a trend to scale back rate reviews, there may also be a trend toward term (rather than annual) dollar commitments. Regularly retiring a term commitment more than a year early has much the same (if not better) impact than rate reviews, because it knocks out the final year's obligation and you are regularly free to "discover" the market via competitive bids.

But in today's environment, carriers love to mask this exploration of counter-trends with what my colleague Ben Fox calls "new temptations" such as slightly lower pricing and credits that end the search for competitive contract terms and market-based rates.

These themes are explored in a major piece that Ben has authored for our friends at VoiceCon and NoJitter.com called There Is Only One Sure Way To Get The Lowest Possible Telecom Prices. Ben explains how you can change the toolbox that your carrier is using if you 1) don't get stuck on a single trend such as the decline of rate reviews, and 2) know how to introduce competition even under the pressure of today's economy.

All of us at TC2 have experienced how the carriers have two entirely different sides -- Ben calls them the Dr. Jekyll and Mr. Hyde personalities latent in each carrier -- when you change the discussion in this way. Ben also discusses the internal management challenge of positioning your organization to face Dr. Jekyll when your executives and peers may be unwittingly setting you up for a date with Mr. Hyde.

Simultaneously dealing with the external and internal pressures on your job is a major theme of this blog, and Ben's article deals in depth with the very situation that many users are facing right now. Check out the piece and let me know any of your thoughts as well.

The following is a guest post by TC2 Asia-Pacific managing director Joe Schmidt, who is based in Singapore.

Mobile Device Management (MDM) is a conundrum for enterprises that provide smartphones and other mobile devices to their employees, or who allow employees to access company resources using mobile devices. At TC2 we've been advising clients to pay attention to this burgeoning support requirement and to take steps to implement a solution, or risk exposing the enterprise to security breaches and support issues down the road.

It's certainly a major consideration in the more-developed regions of Asia, where wireless device deployment is almost universal and user demand for mobile business applications functionality is pervasive. As a result, last week's Mobile Device Management Asia conference in Hong Kong, where I spoke, was heavily attended by handset manufactures like Nokia, regional service providers such as Optus from Australia and Maxis from Malaysia, and third party MDM software and service providers. And it provided a great window into what's coming down the pike globally, especially as smartphone use displaces older devices in many vertical industry markets.

What was clear from the presentations and my discussions with attendees is that MDM is being targeted at the enterprise market. But one key hinge point I'm watching is whether the service providers and device manufacturers are using MDM more to support the enterprise or more to grow their own revenue by selling applications and value-added services.

After the founder of the Device Management Forum gave his opening remarks, he launched into a presentation on the evolving landscape of MDM in the enterprise. The main points of his talk were that in order for MDM to deliver business and end user benefits, it must be able to acquire, configure, deploy, secure, and maintain mobile devices.

He went on to say that the key players that have emerged in the MDM market are the mobile service providers, device manufacturers, and third party software houses and integrators. Many of those players followed on with presentations on the latest developments in MDM.

These presenters explained how MDM can provide over-the-air software updates and how their products and solutions can remotely lock a device or wipe it clean if necessary. The MDM providers elaborated on the level of information that can be loaded and maintained for a device, including a device's operating system, the applications loaded on a device, how the applications are used, and even the location of where a device is used.

But one service provider openly explained how it is using the massive amount of data it captures to build life logs of each subscriber. It then uses the logs to create marketing campaigns and promotions targeted at the subscribers. That's fine for them, but what does it do for you? Well, one of the reasons the conference producer invited me to speak was to "keep it real" and to let the audience know what enterprises really want when buying mobile services and to provide the enterprise's view on MDM.

I told the audience that mobile services are indeed strategic to enterprises and that demand would continue to grow, thanks to the proliferation of smartphones and the expansion of high-speed wireless networks. I said that MDM ranks very low on an enterprise's list of requirements when initially buying mobile services, but that MDM does hit the radar screen once a deal is done. I explained that enterprises grapple with tough questions when they consider supporting an enterprise mobility program, such as:

-- How can enterprises permit user choice while enforcing corporate governance?

-- Are mobile applications productivity enhancers or security threats?

-- Where should MDM stop and user privacy start?

My takeaway from the conference and what I've seen while helping clients procure mobile services around the world is, like it or not, if you're an enterprise that uses mobile services, you're going to need to understand MDM and eventually you'll need to implement a solution. But before you do, make sure you define your mobile strategy, then develop and implement mobile policies that address corporate vs. employee liable plans, entitlement and reimbursement, acceptable use, demand management, support, and security.

If you take these steps first, you'll have a better understanding of the type of MDM solution that works best for you and your users -- and that enables most of the benefits you're paying for to flow in your direction. We'll be keeping tabs on this key emerging support requirement and invite your comments as well.

A general principle of effective telecom procurement has always been that the broader the basket of services, the better the offers -- up to a point. That point is reached when you go beyond the boundaries of what a discrete set of bidders can bid on by virtue of their footprint or skill sets.

As a practical matter, we've seen two such boundaries for some time. One is the split between domestic and global services, because the lineup of bidders is likely to be different for each. The other is between wireline and wireless, because the product houses within the big carriers (other than Sprint) have non-parallel service platforms and discount structures between their fixed and mobile services, and simply haven't wanted to combine the two under a single agreement.

We're always on the lookout for shifts in this area, and we may be on the verge now. AT&T has been talking to some of its big customers about pulling together wireline and wireless services for one mega-commitment, with various promised or perceived concessions on the resulting deal.

We haven't really seen this activity at Verizon, perhaps because it shares ownership of Verizon Wireless with Vodafone, but we still wouldn't be surprised if we see Verizon broaching the idea of combined commitments to select customers sometime soon. And we also wouldn't be surprised if you and your IT-related colleagues get press and market research reports asserting that you can get bigger wireless discounts and a better wireline deal through combined MACs. We recently saw one such market research report purporting to define the amount of additional corporate discount percentage points you can achieve on wireless plans by rolling up enterprise wireline voice and data spend into the same deal.

It all sounds promising, but in the real world there a few things to watch out for. In our experience, you have to look closely at combined MAC offers to see whether they're really better or if it's a mirage. The initial presentation of a combined offer may be a very high-level description that has the air of "It's combined, isn't that great? It must therefore be better, right?" Basically you have to move carriers from offering a combined deal for its own sake to doing a combined deal that is in fact a better deal. It may take several rounds of discussion and bidding to do so. If there ever were a type of deal that shouldn't stop at Round 1, this is it.

In particular, you have to make sure that the key details of the "better" combined offer are not the ones you would have received otherwise, and that the "worse" separate offer is not a stalking horse that you never would have seen (or signed) in the first place.

Market-based rate benchmarking clearly comes into play here. We've seen situations where a carrier has proposed different rates on a key wireline rate element (such as high-volume voice toll price point or a typical data port speed) based on combined vs. separate commitments, but the price point under the separate commitment deal is so far out of market that we doubt we would have seen it at all in the absence of a supposed choice between separate and combined deals. That's no better than a phony "sale" at a retail store where the list price is at a level that no one actually pays for the product.

Next, examine the combined MAC itself. The first instinct of carriers seems to be that if your wireline commitment is $X million, and your wireless commitment (if expressed as a spend rather than number of devices) is $Y million, the correct combined MAC is $X+Y million.

But think about that for a minute. Combining commitments without a "haircut" doesn't lower your risk of either a technological or business shift that forces a sudden reduction in the spend of one of the component services, risking shortfall. Indeed, it raises that risk.

The carrier may respond that the combined deal also increases the number of services available to replace the spend through growth, but can you really guarantee in today's environment a set level of growth in any of your key services if one falls off? That's basically what you're guaranteeing under these scenarios. Obviously, the combined-commitment concept should be explicitly used to increase your cushion, and any combined commitment should be for less than the sum of the separate commitments.

Even worse, we've seen initial proposals that appear to total up actual wireline and wireless spend (rather than separate MACs) into a mega-MAC, or do so with a very churlish discount, providing almost no cushion. That completely defeats the purpose of combined commitments. We're actually not sure whether this is a result of the carrier trying to snow the customer, or whether it simply reflects another reality of combined MACs -- the carriers are just getting going on this concept and their initial documents on it can look like they were put together on the back of a napkin. Look for inconsistent language in labeling offerings, basic math errors and the like. When you see those, tell the carrier it will have to polish its work before you can consider it seriously.

Finally, consider whether the carrier is playing a game of misdirection here -- simply stringing you along on the annual-commitment concept by making it sound more comprehensive when there's actually a more important trend to consider: term commitments. A single term commitment that can be retired 1 1/2 to 2 years into a three-year contract may be much better (for your leverage and competitive position, and therefore your pricing over the medium run) than any annual commitment, no matter how broad.

I'm not knocking the possibilities here. In fact, it's almost inevitable that the combined MAC trend will grow, because from industry standpoint wireless is currently standing tall on margins, profits and growth, and the carriers should be motivated to find great deals for their best customers by cross-checking everything you spend. Plus, the reality is that end-users often take wireline voice and data for granted but demand a lot of value-add on wireless, and you should be able to play your big carriers' assertions on competitive differentiators for a great total deal. Finally, we also know that in certain regions of the world, such as parts of Asia-Pacific, such combined deals have already taken hold.

The guinea pig principle is very much at play here. It's early in the process for combined wireline/wireless MACs. Make sure that the benefits are tangible, not just implied, before you become one of the early adopters of this contracting trend.

READ THIS! Has that ever been the title of an email you've received from a senior manager or a lateral peer in your company, with a link to an article from the financial press about one of your suppliers, maybe even your lead carrier?

Betcha it has. Telecom managers don't have the luxury of buying primarily from niche, specialized players of interest only to the trade press. Our key suppliers are some of the biggest brand names in America -- Verizon, Sprint, and of course the quintessential brand name of them all -- AT&T. So you don't always get full control over the messages that key colleagues get about your chosen suppliers.

Trying to manage the flow of public buzz and concern about these vendors has taken up an increasing amount of time for professional telecom managers in large companies. But it's an important management task that must be handled proactively.

It's in this context that a TC2 client forwarded an article posted on Yahoo Finance by a sort of financial audit firm. The article was called "Ten Big Companies That Are Veering Toward Bankruptcy" and one of the companies cited was Sprint.

The article's overall and accurate point was that bankruptcies can occur when three bad things collide -- high debt, a poor economy, and either product obsolescence or a loss of competitive advantage vs. other players in the same industry. In the author's opinion, Sprint qualified for the last component of the trifecta by virtue of its brand degradation and relative inability to attract and hold consumer wireless subscribers compared to AT&T and Verizon Wireless.

The client, however, noted that the financial tools to which his company has access show an improvement in Sprint's financial standing through the second quarter. Although he didn't put it this way, that was basically a reference to Sprint's increase in free cash flow compared to the first half of 2008. So how on earth could this author say Sprint is going bankrupt?

Well, I'm trained as a journalist, so the first thing I noticed was a classic phenomenon: the headline didn't match the story. The article didn't actually say all ten companies were going bankrupt. Rather, you had to consider the medium and the message to get an accurate takeaway.

In a bull market, people sell financial information primarily by promoting hot stocks that people can buy. In a bear market (which we're still in despite this year's intermediate rally), people sell financial information primarily by trashing struggling stocks that people can short. Of course it should be the other way around -- buy low, sell high, right? But you can't change human nature.

So this article was a clear appeal to prospective short-sellers to give them ideas on stocks to go after. It could have been more accurately called "Ten Big Companies That It's Plausible to Foresee a Bankruptcy Scenario, Any One of Which Could Prove Us Right." But that would obscure the fact that the article isn't taking responsibility for the resulting actions of its target market -- bearish stock market players -- if they choose the wrong stock from the list to attempt to run down.

In that context, for business users, the article makes some decent points about Sprint (which does have heavy debt and still too much churn in its subscribers), but in the sense of planning for change, not pushing the panic button. A much more complete picture emerges from combining positive and negative trends and understanding the impact on the enterprise user market specifically.

Sprint does have substantially improved free cash flow from extremely depressed levels in the corresponding periods last year. But this improvement is largely a result of ongoing operational cost cuts and severe cuts in capital expenditures. Sprint's capex declined 69% in the first half of 2009, from $2.006 billion last year to $612 million this year.

This financial measure does protect Sprint's liquidity, but does not represent an improvement in Sprint's business outlook. Its operating margin on wireless is only about 22%, roughly half of Verizon's 46% and AT&T's 40%. On an accounting basis, Sprint is still posting net losses. It has about $4.6 billion in cash reserves, but also approximately $20 billion in debt. And it's a matter of perspective whether it is appropriate to cite the cash reserves as "money in the bank" or simply a subtraction from the gross debt pile to reach a net debt calculation.

Our perspective is that carriers do not easily maintain their market presence once they start slashing capital expenditures -- except for resellers, telecom is simply a capital-intensive business. And Sprint is struggling in its basic business, particularly in the face of the move to smartphones where AT&T has the iPhone and Verizon promotes BlackBerry, while Sprint is promoting the Palm Pre.

Meanwhile, Sprint's current credit rating is BB. That's low but not nearly indicative of near-term bankruptcy, especially when you recognize the value (as we do but the stock market essentially does not) of Sprint's wireline enterprise base. However, we also believe that the value of this base is at risk of degrading, particularly if an experienced and diverse telecommunications player (such as Deutsche Telekom) does not step up soon to purchase some or all of the company.

The bottom line is that Sprint is not exactly on the brink, but that it's wise to recognize that the company is facing significant challenges, including financially, and is likely to undergo some sort of significant ownership or structural change, and you do want to be able to explain that change when it comes. That's part of the very purpose of this blog, and in fact, I wouldn't mind if you send a note titled READ THIS! to your key management colleagues with a link to this post and our other notes about Sprint, which you can find by putting "Sprint" in the blog search tool.