TC2's David Rohde on Telecom - Leverage

Your carrier, your technology choices, and the Lowest Common Denominator

Mon, 23 Aug 2010 08:18:00 -0400

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!

Apple's antenna issue and the soaring wireless demands on enterprises

Wed, 21 Jul 2010 16:14:00 -0400

So Steve Jobs had to go before a big press conference and defend the iPhone 4 against accusations that its antenna design uniquely runs the risk of blocking reception. Ha! Apple's problem is quite the relief for enterprise telecom managers! I should explain what I mean. After all, it's the general consensus of my TC2 colleagues that the iPhone antenna story is something of a mild tempest. Enterprises that were previously hooked on the BlackBerry may be diving into the Apple world, but it's not like they're out buying the latest model for employees. Other companies' smartphones may or may not be subject to the same issue (though none of us has experienced it). And user behavior that can be unlearned may be the real culprit. Meanwhile, media coverage of the controversy is fading, and Apple's latest earnings, announced yesterday, are soaring anyway. But from a procurement and ongoing management standpoint, it's heartening -- and potentially constructive -- to see a key vendor taken down a peg or two. End-user pressure for certain supplier choices has dramatically increased in recent times. And the (expensive) iPhone has been nearing iconic status. Vendor worship is not a good place for corporate telecom management to be! All of this also serves as a reminder that there's still a difference between wired and wireless networks. Actually, nothing would be better for telecom and networking's position and prestige within large enterprises than to have a quantum leap in the reliability and flexibility of employees' access to applications. And that means pervasive, unwired, full-speed availability. But we're not about to see SLAs for wireless in the "five nines" category of traditional wired voice networks, or even the robust network metrics of generations of enterprise data networks like frame relay and MPLS. It's good to have a reminder of that every once in a while, and if it makes end-users stop and think about their attachment to given vendors, so much the better for long-term leverage. In particular, the increasingly grabby AT&T -- still today the only network source for the iPhone -- is trying all kinds of gambits with customers to attach every offering under their corporate roof to new, all-encompassing contract commitments. Enterprises hardly need their own employees' help in letting AT&T's attempts at excessively broad, long-term lock-ups succeed. As it happens, we are at a moment when the carrier-network side of wireless really is set to try to make a quantum leap toward the seamless, always-connected feeling of robust wireline data networks. Next quarter Verizon Wireless is supposed to make the first metro area introductions of its 4G LTE networks, and it's supposed to do them in a bunch, as opposed to the relatively quiet introductions of the Clearwire/Sprint "WiMax" 4G services. But in preparation, enterprises should be building more, not less, flexibility into their contracts, with such best practices as the ability to upgrade plans and devices without restarting individual line terms. In this light, it's not a bad thing to have a timeout on the headlong rush by one device or network supplier toward dominance in the public's mind. Even if the respite is brief, the recent demonstration that no vendor is perfect is a welcome window for corporate telecom professionals to organize themselves, and their entire organizations, for the procurement challenges going forward.

Lower USF surcharge brings illusory benefits in the heat of midyear changes

Fri, 18 Jun 2010 09:03:00 -0400

Do you want to hear some good news about surcharges? I could pretend to have some, if that'll make your day! The federal universal service surcharge for the quarter beginning July 1 will be 13.6%. And while that's really high, it's down from the amazing 15.3% of the current quarter. So why couldn't an optimistic, glass-half-full person treat that as a positive development? Because the quarterly USF contribution factor -- you know, the bit owed by carriers on their interstate revenues that they don't have to pass along, but always do -- is never the end of the story. The very idea that the landline surcharges with the biggest bite are "revenue-based" is an open invitation for carriers to play with their entire line-up of surcharges so that you never really get a break. And looky here: Verizon at the same time is increasing its "Property Tax Recovery Charge" from 3% to 3.65% of applicable revenues. That's an extra chunk of money out of the same or similar revenue base, instituted through a quiet change that Verizon has just made in its Service Guide. That move alone cuts in half the benefit of the USF reduction for Verizon's national enterprise customers. I've had some fun in the past with Verizon's particular love of collecting extra dough out of the property tax allotment, given that the "revenues" in question have nothing to do with Verizon's real estate for its POPs and central offices but rather your revenues to Verizon for voice and data services. But by no means am I meaning to just pick on Verizon today. Turns out that midyear of 2010 seems to be a red-letter day for AT&T on two other fronts: -- June 30 happens to be the expiration date for some multiyear regulatory conditions of the AT&T-BellSouth merger -- remember that one? Under the conditions, AT&T had to file tariffs over three years ago that dropped its unregulated rates down to regulated levels in order to get its merger approved. But AT&T's filing will also kick the special access rates back up again automatically when the merger condition expires. That's pretty clever -- where else can you announce price increases three years in advance? -- The folks at LB3 have noticed that AT&T has started making an interesting, and potentially nefarious, change to proposed Master Agreement wording for enterprise customers. It's technically a replacement for the "Regulatory Charges" clause but it allows AT&T to raise the rates or impose new charges for goods and services, period. Unlike older form contracts, this right is not limited to increases prompted by changes in AT&T's regulatory obligations. Now, if you have a well-designed current deal with AT&T, neither of those two developments necessarily change your operating and procurement results ... yet. Free-flowing T1/T3 access price negotiations continue to be a crucial part of competitive bids for national data networks. The AT&T special access price move directly affects only those who buy access directly from "AT&T the ILEC" (the legacy RBOCs that it rolled up) or those whose current contracts with the national legacy AT&T fail to stabilize prices. And of course, the idea that AT&T wants to extend a sense of user helplessness against price increases beyond surcharges to the price of actual services is something you'll want to fight if it's proposed to you! But all of these things certainly change the procurement environment going forward, and it's a predictable by-product of the looming duopolization of the U.S. market. The leverage you'll want to bring to the table to fight these fights on multiple fronts will have to grow as the big carriers' market positions appear to strengthen. What you don't want to be is surprised, and TC2 and LB3 stand ready to anticipate and deal with these issues for you. Look for follow-ups on these individual issues soon.

Gauging the impact of individual-liable wireless lines on your procurement strategy

Thu, 27 May 2010 16:59:00 -0400

The following is a guest post by TC2 Senior Consultant Theresa Knutson, who is based in Sioux City, Iowa. U.S.-based wireless suppliers offer an interesting side benefit in their corporate contracts -- employee purchase discounts that deliver savings on your employees' personal use devices while adding to the total line count and contributory spend in your overall contract. This translates into higher discounts on your corporate liable devices, saving your company money. Sounds like a win-win scenario, right? It can be, if managed correctly. Each supplier has a different way of referring to these employee purchase programs. Some call them individual liable (IL) or employee accounts (EA), and others refer to them as individual responsible units (IRU). Whatever the reference, the definition is simple -- these are wireless devices that your employees and their families have for personal use that are paid entirely by the employee but that are also eligible for discounts under your corporate contract. For most companies, the number of individual liable lines can greatly outnumber the corporate liable line count. All of the wireless suppliers are in a "race to win the market share" game, so leveraging their corporate relationships to build their consumer base of users is a smart move. And on the surface their interest in promoting these programs is similar to yours. Suppliers typically have tiered discount tables that provide increased discounts as the total number of corporate liable and employee liable line counts grows. If you have a company with a significant number of employees, you can leverage the employee purchase programs to increase your total line count/spend under the contracts, increasing the discount your company receives on the corporate liable lines. Some wireless suppliers will also offer annual rebates to the company of a nominal percentage of the employee purchase spend. Another windfall. Employees love these programs as they can save them and their families 15+% each month on their wireless bills. And with the rapid expansion of wireless devices to all aspects of our life, every family budget needs some savings. If a family spends $75/month on their personal wireless phone bills and saves 15%, that translates into $11.25/month or $135/year. But remember: If you have significant employee liable lines under your corporate contract, you are further bound to this supplier, making it more difficult to move corporate business to another supplier, which diminishes your negotiating leverage. Make sure you understand the double-edged sword here. No one is going to be able to force employees to change their personal wireless supplier. But if you do manage to convince them to sign up, and then for your own corporate reasons you decide to change carriers, those employees will definitely voice outrage if they lose a discount that they were previously enjoying. And that will leave you in a cumbersome situation with any of your suppliers that have any sizable employee spend. They'll know that it will be difficult for you to ever completely get rid of them, regardless of how poorly they treat you in terms of providing competitive pricing, services and terms. So how do you make this employee benefit a net winner rather than a net loser for your competitive procurement position? The answer is to leverage the ratio of large volumes of employee lines/spend to smaller volumes of corporate lines/spend and, where possible and practical, select discount tiers than can largely be met purely by the employee volume, regardless of what the corporate volume is. That way, your negotiations on the corporate pricing and terms -- and remember, carrier account teams do care more about the corporate volumes than the employee volumes -- don't need to be distracted by worrying about the implications on the employee discount. Employee volumes don't tend to undergo significant change over the course of a contract -- individual users are relatively stable and don't tend to change carriers very often. So you shouldn't lose sleep over your discounts being predicated on maintaining an employee volume that you can't directly control. Instead, take advantage of that employee volume stability (and more often continual growth), and use it to minimize your lock-in on the corporate volume. Being able to move your corporate volume around between carriers will maximize your negotiating leverage. It will keep all your wireless suppliers on their toes for both the corporate and individual-liable lines, and keep them always working towards winning more business by providing better pricing and terms for you.

AT&T's smartphone ETF hike raises the stakes on wireless procurements

Mon, 24 May 2010 16:40:00 -0400

Wireless carriers want each of your users to spend more money. Sounds obvious, right? Well, in the escalating wars over consumer wireless terms and conditions -- with the latest flashpoint AT&T's coming June 1 imposition of a $325 early termination fee on smartphones -- it's easy to lose sight of this simple fact. On the surface, AT&T's new consumer ETF policy appears designed to lock in iPhone customers while AT&T still has exclusivity. But it's also still related to the drive by all of the carriers for higher Average Revenue Per User (ARPU). This key ARPU metric dramatically rises whenever users opt for smartphones. And AT&T's nearly equalizing its smartphone ETF with Verizon's already notorious $350 fee indicates a level of confidence that consumers will upgrade to smartphones no matter what. Already that's caused ARPU to zoom past the average $60 a month level that AT&T worked so hard to surpass over the last couple of years, and that AT&T clearly wants to keep moving higher. So you have to be aware of this reality when negotiating for corporate-liable devices, even if officially the policy is not directly aimed at corporate-responsible units (CRUs). If anything, merely the threat of higher ETFs across the board makes any waiver pool you negotiate that much more valuable. And this dovetails with the carriers' ostensibly "generous" push for unlimited voice plans at lower prices, which are really a stalking horse for unlimited data plans. By now many corporate telecom managers are feeling the often uncomfortable linkage between the consumer and corporate wireless market, which resides in the fact that device preferences are bubbling up from the user base, which in turn can enable carriers to gain the upper hand in negotiations. But effective modeling of the total cost of ownership of plans, features and devices tips the balance back in your direction. Watch as we explore all of these factors as the wireless procurement stakes grow ever higher.

Finding the billing error is the easy part ...

Mon, 17 May 2010 14:32:00 -0400

The following is a guest post by TC2 Senior Consultant Julie Gardner, TC2's senior Contract Compliance and Optimization practice expert. If there's one thing that users universally complain about, it's the prevalence of billing errors. Telecom managers around the country routinely tear their hair out from the frustration of trying to wade through the pile of impenetrable bills and spreadsheets delivered each month by their telecom suppliers. Just trying to match the bills to the underlying contracts can be a nightmare all by itself. Even when a Telecom Expense Management (TEM) company is supporting a customer in processing its telecom bills, or when a thorough internal invoice review and approval process is in place, the task of processing bills for payment typically takes priority over validation of the charges on the invoice. Most companies understand this tendency and will periodically engage a third party billing review specialist to check whether supplier invoices comply with their contracts. But even putting aside the horror stories of clumsy auditors who inadvertently alert suppliers to significant under-billings (it happens -- really), the success of a billing review project depends on more than just selecting experts skilled at finding the errors. First, you have to make sure from the start that everyone is on the same team. The internal customer resources responsible for reviewing and approving telecom invoices often regard a third party billing review as a threat -- any billing errors that the third party identifies are ones that were overlooked by the internal team. Thus, there can be an inherent conflict of interest whereby the internal team is not necessarily strongly motivated to cooperate and support the outside experts. Obviously such conflicts do not maximize the results from a billing review project, so it's crucial to ensure that the project begins with all internal stakeholders positioned appropriately. The internal team needs to be an integral part of the process and to be assured that the project complements their role. Its success will be seen as their success too. Second, claims for billing errors are not always black and white. Errors are rarely as simple as "the carrier is billing $0.03 per minute even though the contract says $0.02 per minute." The root cause of errors is almost always more complex -- for instance, whether certain waivers apply; whether custom pricing is being correctly applied; or whether a particular discount applies in conjunction with another discount. If there's room for doubt, or the contract is less than crystal clear (and let's face it, supplier-drafted telecom contracts are rarely crystal clear), suppliers will push back on your recovery claim. So it's important to be ready to present billing recovery claims with as much supporting information as possible and to be prepared for the counter-arguments that will inevitably be made. Ultimately, and especially when claims reach the six and seven figure range, the billing recovery process becomes as much a negotiation as a billing review. Being prepared for that and what it entails, including having the right resources on your team (i.e., negotiators, not just billing analysts), is key to the success of the project. Of course once the process becomes a negotiation, as is frequently discussed on this blog, it becomes as much about your leverage as about the merits of your claim. Suppliers routinely leverage all kinds of issues against your billing claims. That unrelated contract extension you are negotiating? Suddenly, the pricing concessions that had been offered "include" release of your billing claims, perhaps for pennies on the dollar. Those accounts receivable issues you've been working through with the supplier? Suddenly, the supplier will only address your billing errors if you pay up on all open amounts. It may seem unreasonable for a supplier to tie the resolution of billing errors to unrelated issues. But that's often what happens. You need to anticipate that and be ready for it. A final piece of advice: Don't make the mistake of bringing counsel into the negotiations either too early or too late. Bringing the lawyers in too early will just lead the supplier to bring its lawyers to the table, slowing down the claims recovery process. Bringing them in too late or not bringing them in at all, even when the supplier is dragging its feet unconscionably or hiding behind obviously inapplicable contract language, risks compromising or waiving your claims. We'll be sharing further experiences and best practices from our Contract Compliance and Optimization (CCO) work in future posts. Topics we've been asked about include what terms your contract should include to facilitate a successful CCO project, and combining audit and optimization efforts to save time and effort. If there are other subjects in the area you would like us to address, please ask.

Some things haven't changed in telecom contracting over the course of a century

Fri, 19 Mar 2010 11:34:00 -0400

The following is a guest post by LB3's Hank Levine. Readers of this blog know that LB3 and TechCaliber specialize in helping enterprise customers negotiate agreements for telecom services. They may not know that my [hopelessly nerdy] hobby is collecting books and other material from the dawn of the telephone era -- the years immediately after Alexander Graham Bell famously fetched Watson with a few shouted syllables in 1875. Last weekend vocation and avocation came together when I happened upon a contract for telephone equipment and service between New England Telephone and the Town of Milton, Massachusetts. It was a three-year deal for four metallic circuits and 12 "suitable iron boxes," each equipped with a magneto transmitter and hand telephone and connected to one of the circuits. NET agreed to furnish and set up the required central office switches, and operate the gear for the town to use as a Police Signal System. Nothing out of the ordinary here, unless you count the fact that the contract was executed on May 1, 1890, almost exactly 120 years ago. Cool, of course. But also depressing in a way, because a surprising number of the agreement's terms and conditions are both tilted in favor of New England Telephone and sound familiar today. For example, under the Milton-NET contract, the customer agreed "to hold harmless the [telephone company] from any and all claims for loss, cost, damage or expense in any way due to or caused by the lines and other apparatus herein leased to" the customer -- even if the claim grew out of something NET did, not an action or failure of the customer. For over a century the courts have been ruling that carriers cannot try to exempt themselves from the consequences of their own willful misconduct or gross negligence, but carriers still routinely try to shift the expense and risk of their own misconduct to their customers. Another parallel: "No business is to be transacted by or through [the lines or instruments] for any consideration or toll to be paid by other persons than the [customer] or other parties named, nor shall business messages, market quotations, or news for sale or publication, or messages in respect of the transmission ... of which any consideration or toll is to be paid by any other person be transmitted over such line." In other words, no resale or shared use. In the intervening century the FCC ruled that this was anticompetitive, but with deregulation such provisions have reappeared in carrier agreements. The news is not all bad. The Milton-NET contract included a separate agreement with American Bell Telephone Company to cover the instruments. It provided that "upon nonpayment of any sum due, or any use of the instruments ... improper or contrary hereto, or any removal therefrom, the [telco] may terminate the subscriber's rights by written notice served on him or any occupant of the premises, and sever his wires and connections and remove the instruments..." We've progressed in the last century -- today, you get a 10-day disco notice before the line goes dead. And lest you think that people just started negotiating deals in the last 20 years, or just started using credits as a way to close a deal, letters accompanying the contract reveal that NET's initial offer was $480 per year on a three-year contract (paid annually, one year in advance) and $380 for a five-year contract. But the town balked, and NET sweetened the deal: if Milton entered into a three-year deal and then renewed it for two more years, "the Telephone Company will make the rate for the whole time as if the contract was originally made for the term of five years; giving the Town credit for the amount over-paid during the first three years." The contract doesn't say that in the event of a dispute the town will be responsible for the telco's attorney's fees plus interest, or that force majeure events like hurricanes, fires or crimes will excuse the performance of the telco but not the town. Those terms came later, proving (I guess) that 'progress' does indeed come with time ...

Negotiating around corporate mandates ... your own as well as your vendor's

Thu, 25 Feb 2010 09:24:00 -0400

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.

Think like a bondholder to assess contract term risk with carriers

Wed, 24 Feb 2010 10:43:00 -0400

One of the shocks that people often get with their first stock market investment is finding out what a stockholder really is. People often buy stocks thinking they're getting a "piece of the pie" along with the other stockholders. But that's only true if the company doesn't owe anybody any money. Debt holders go to the front of the line, way ahead of stockholders. If there's no pie left after the debt holders finish eating, then the stockholders are out of luck, no matter how good the company's story is or how innovative its products appear to be. When you a sign a term contract with a carrier, you should think like a bondholder. Do you deserve service ahead of the stockholders? Of course you do. In fact, your term contract with a vendor creates one of the many layers of obligations that it holds ahead of the need to pay off stockholders. But if it can't pay off the bondholders, your carrier's performance is bound to suffer. In recent months we've begun to see a gratifying upsurge in the number and quality of proposals from telecom carriers other than the AT&Ts and Verizons of the world for specific enterprise-class services. Many are getting their bearings around new services like SIP trunking and related, fully integrated voice/data networks over very high-capacity lines. But more often than not, these carriers have sorry-looking stock charts that seem never to have recovered from the tech/telecom bust of almost a decade ago. Or they have strange financial histories littered with bankruptcies and buyouts by unfamiliar entities that seem to come out of a dark corner of Wall Street and have nothing else to do with telecom. That naturally makes these carriers a difficult sell within your organization. You and your management have a right to be suspicious of carriers that look bad in the stock market, but this suspicion should lead to further investigation. Instead of tossing out a carrier because of its stock chart, a bond-like analysis is often a better idea. But it's tricky. Once you know how much debt a carrier has, what does it really mean? What do you compare it to -- the carrier's revenues, operating margins, profits, or what? For enterprises, the key is the connection to the term of the contract you're being asked to consider. In a way, signing a three-year contract with a carrier is like issuing a three-year bond to the carrier. Just as the bondholder must be paid back in three years, you must receive service for three years. In fact, whatever the length of contract is before you, it's probably best to add one year to the deal for the purpose of this analysis, in order to account for ramping down the old service after awarding a replacement service to a new carrier. At the upcoming Telecom Negotiation Conference in Washington, I'll be presenting some bond-maturity charts for carriers. Instead of showing the gross level of overall debt, these charts show on a year-by-year basis the amount of debt maturing in given years like 2012, 2013, 2014 and beyond. Making sure your contract expiration comes before a year with a large "balloon" in your carrier's debt is a good idea. It may even be a good negotiation tactic to have this specific information in hand. But year-by-year debt maturities often have to be calculated from individual bond disclosures by companies in their SEC filings. It's not as easy as going to one of the popular financial websites and looking up a chart, as it would be if you were just looking at their stocks! Be aware that actually having debt is not necessarily worse than the situation that some other carriers are in -- having no debt because of a past bankruptcy, but also having very concentrated ownership because of the way they were brought out of bankruptcy. That's another trade-off I'll be discussing in my breakout session, called "The Status and Prospects of the Telecom Providers." See the full Telecom Negotiation agenda for details. Along with the rest of the TC2 and LB3 presenters, I look forward to the opportunity to meet you in Washington!

Great prices, lousy terms? How not to let your carrier sabotage the deal

Mon, 15 Feb 2010 17:07:00 -0400

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!

How accurate is your commitment tracking report?

Thu, 11 Feb 2010 11:03:00 -0400

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.

Keep a variety of tools in your ETF offset toolbag

Mon, 01 Feb 2010 10:02:00 -0400

It's earnings season on Wall Street, and the financial media flash revenues and earnings-per-share numbers on each reporting company. But most of the alerts I get from Wall Street telecom analysts instead highlight the internal figures for each major carrier, especially on the wireless side -- ARPU (average revenue per user per month), and churn (percentage of customers cancelling or leaving during the period). Now that wireless is considered the main profit generator, the carriers have pretty much gotten the analysts used to rising ARPU and falling churn. The problem is that the drive toward constantly falling churn, while certainly admirable, has potentially negative side-effects. That's one of the sources of the scare toward the end of last year over Verizon Wireless' hike in consumer early termination fees (ETFs) to as high as $350. In theory, there's nothing wrong with a certain base level of churn if it's caused by something other than dropped calls or bad customer service. Rollouts of new devices and next-generation networks obviously cause customers to look around for new options at a faster rate than before. So naturally, that occasionally leads them to change carriers. But that activity threatens Verizon's industry-leading 1.06% churn and, perhaps goaded by Wall Street, they want to stop it. In business wireless contracts, Verizon's outsize ETFs don't apply to corporate-liable devices. But many companies rely on an overwhelming number of personal-liable devices to make their negotiated discount tiers with a carrier, in effect leaving their pricing at the mercy of independent users' reactions to carrier marketing. Other business users are frustrated by lower but still onerous ETFs on a big pool of corporate-liable devices, and find negotiated offsets to be insufficient. One classic headache: "Pro-rated" ETFs that aren't truly pro rata -- say, a $5-per-month reduction in a $175 ETF on a 24-month contract (it would take 35 months to make such a concession a straight-line proration). Effective ETF management reminds me of the problem of rate reviews in wireline contracts. While some carriers are trying to cut out rate reviews, some customers are trying out better alternatives such as term rather than annual commitments. Similarly, while a complete waiver of all ETFs was sometimes available to very large customers and is now more difficult to achieve, many companies are turning to waiver pools to get the right to end a set percentage of their corporate-liable lines every year without charge. Still other companies with high turnover in certain business units implement policies that require re-use of individual lines, often combined with "suspend" or "seasonal" plans for the period between two employees' use of the line. There's a real continuum of techniques here. That's why I like an 18-minute podcast that's available free in the "Telecom Junkies" series run by the folks at The Voice Report, because it describes a whole gamut of these tools. The podcast, recorded in November and called "Savings Tips in Wake of VZW Termination Fee Hike," features among others LB3 partner Kevin DiLallo. Kevin is an occasional contributor on this blog, including recent notes about the IRS rules on personal cell phone usage and the text-message donation dilemma for corporate-billed devices. Kevin's advice is always practical and tuned to the needs of business users in particular situations. I encourage you to check out the podcast.

The true impact of Verizon and AT&T's new unlimited plan pricing

Sun, 17 Jan 2010 13:26:00 -0400

The following is a guest post by TC2 managing director Ben Fox, who is based in London. On Friday Verizon Wireless announced that, starting tomorrow, it will be offering its suite of unlimited usage plans at $30 per month less than before. For example, Verizon's Nationwide Unlimited voice plan will now be available for $69.99 instead of $99.99, and its Nationwide Unlimited voice and text plan will now be available for $89.99 instead of $119.99. Just hours later, AT&T Mobility reduced its equivalent plans by the same amount in order to retain its pricing parity with Verizon Wireless' unlimited plans. Such unlimited plans have made some limited penetration into large enterprise users, so this price reduction will have a small impact on the bottom line of big companies. But the more interesting question for now is what does this move from Verizon Wireless tell us about its broader pricing strategy? And what does this mean for enterprise customers rather than individual consumers? The answer is that Verizon Wireless apparently intends to use the new, lower-priced plans to upsell customers to unlimited data plans. In fact, Verizon Wireless CEO Lowell McAdam has been quoted as saying that "this is about data in my view" and Verizon's pricing moves "will drive penetration of data services." Of course, wireless carriers the world over have been presenting data usage revenues as their priority for many years, but it is interesting that Verizon Wireless appears to be publicly acknowledging that it is willing to cut its voice pricing in order to win more data business. And this is particularly important for enterprise customers to take note of -- for many large companies over half of their wireless lines are now voice and data converged devices, whether BlackBerry, Windows Mobile, iPhones or some other smartphone. Hence a strategy from Verizon Wireless of reducing its voice plan pricing in return for data revenue growth is particularly relevant for enterprise buyers who typically have high spend on wireless data services. We certainly intend to leverage this in negotiations we are currently involved in with our clients. Over the past twelve months Verizon Wireless has been lagging behind its competition in enterprise deals, not least because of an unwillingness to be competitive on voice plans. We hope that Friday's announcement signals a change of heart from Verizon Wireless that will lead to increasingly competitive offers for enterprise customers, which would ultimately achieve Verizon Wireless' objective of increased data revenues because so many enterprise users have converged devices. Despite Verizon Wireless' statements that "this is about data", it is notable that Verizon Wireless did not reduce any of the incremental costs of adding unlimited messaging and data to users' voice plans. In business settings, usage of messaging and data services is growing much faster than voice usage, but Friday's announcements from both Verizon Wireless and AT&T Mobility offered no changes to standard pricing for messaging and data add-ons. There is also the question of whether or not the $30 reductions to the unlimited plans brings them down to a price point where it makes sense for enterprise customers to roll them out to a large proportion of end users. For now, except for companies with exceptionally high average usage levels, the answer would appear to be no. The lower price point does reduce the breakeven point between unlimited plans on the one hand and pooling and flat rate plans on the other, such that the unlimited plans will make sense for a somewhat larger number of end users. But most companies' average usage will still be considerably lower than this breakpoint. One of the reasons for this is that the unlimited plans, from both Verizon Wireless and AT&T Mobility, do not benefit from the overall discount levels that enterprise customers negotiate, but pooling/shared plans do receive such discounts -- hence the discount raises the breakeven usage level at which unlimited plans cost in. So fundamentally, this price decrease to unlimited plans does not yet get close to the holy grail of being able to put all users on a single unlimited plan and never again needing to think about which rate plan is most cost effective for which user. That means that rate plan optimization remains as important as ever. Kathy Buffalow, a wireless rate plan optimization specialist at eOnTheGo, notes that even where voice usage is reasonably well understood, there are huge cost optimization opportunities from examining messaging and data costs. "Taking the costs of plans that bundle messaging and/or data usage and comparing them to messaging and data bolt-ons, plus determining which users should be provided with unlimited data and messaging features versus which users only need a lower cost limited usage messaging/data add-on, is no mean feat," Kathy points out. "Since none of Friday's announcements reduced the incremental cost of data and messaging bundles and add-ons, coupled with business users' continued growth in data and messaging usage, optimizing these costs remains as important as ever." Friday's announcements may herald a new level of competitive aggression from Verizon Wireless, but only if the cuts we've detailed to the unlimited plans also filter through into Verizon Wireless being more competitive in other areas too. We'll be keeping you posted on what we see over the course of the next few months.

Carrier complacency vs. carrier fear: The SIP trunking example

Wed, 04 Nov 2009 21:43:00 -0400

I'm in San Francisco for the fall version of the VoiceCon conference, which I regularly attend and speak at. Over the past two years, one topic in particular has ballooned in interest at the spring and fall VoiceCon meetings: SIP trunking. That's a service you can purchase from carriers that takes the Session Initiation Protocol now used for VoIP call set-up and other signaling functions, and rides it over specific data networking links such as MPLS or dedicated Internet. The ultimate hope of SIP trunking is that by purchasing a certain number of ports for concurrent calls based on a study of your peak voice traffic, and having the bandwidth for your VoIP dynamically allocated across your network, you can eliminate many if not all of the elements of traditional telephony that have remained in place under more rudimentary VoIP implementations. Among these are some of the stickiest in price in an otherwise deflationary industry: local telephone trunks and PRIs. You may still have to pay what is in effect a toll for the switched end of a call (often the origination of a call to a contact center) as part of the SIP trunking package. But other pricing parts of the separate voice-network equation drop away, typically in favor of a voice-grade class of service on the MPLS network you may have installed anyway, and the potentially very scalable concurrent-call rate element. While the interest in the service is real -- and justified, because SIP trunking is being sold and installed by a number of carriers -- it's fascinating to note the different perception of the broad user base and the carriers as to its practical availability. I shared a panel today with Alla Reznik, Verizon's director of Global Advanced Voice Services, in which we discussed SIP Trunking and other services with moderator Eric Krapf, editor of NoJitter.com and long-time organizer of VoiceCon. Alla has served on my own VoiceCon panels in the past on the same subject, and she is one of the most conversant people on the subject. There's no question from her presentations that Verizon sees SIP trunking as a core offering in both national and, ultimately, international rollouts of integrated voice and data networks. But in general discussion at VoiceCon, including in other sessions, it's clear that many users feel that the major carriers are holding back on them on SIP trunking. Account teams seem reluctant to bring it up, we repeatedly hear, and the first pass at asking about availability and pricing can be rocky. Some of this is undoubtedly because many carrier reps really don't know much about the product. But the user perception is that as the main national enterprise carriers have merged back into combined local and long distance behemoths, they've become loath to present a product that may cannibalize the local telephony trunks from the old "RBOC" sides of their business. Our experience at TC2 on this issue of re-monopolization is that there are two very different sides of the same coin. In the case of SIP trunking, the very fact that the two largest carriers have a huge installed base of local telephony to protect can actually be turned against them, if you play your cards right. Sure, if you talk to a single carrier, and you ask in isolation to get a service that will wind up earning that carrier less money, you are likely to get the foot-dragging type of response that has bedeviled telecom users, in one way or the other, for decades. But we are beginning to find that SIP trunking as an additional service is one of those tools that carriers in a competitive situation can positively employ to try to win your business. Say two carriers are bidding on a national data network that also prospectively can be used for voice and video. Now add the fact that if the user does go forward with convergence using the service, the losing bidder will not only lose the "long distance" business of that company, but also the local telephony part of that company's business in their native territory. Now the need to protect an installed base is being leveraged against both carriers. So at least one of them may have to respond -- either with a competitive VoIP service that makes the other carrier lose their "POTS" business with no compensating new business, or with a better bid on the national network itself. Clearly, many variables go into this kind of situation. In the real world, many enterprises are not willing to give up their local trunks because of issues surrounding E911 and diversity. But for some large enterprises, the greater number and uses of local trunks, T-1 access lines to long distance POPs, and high-capacity virtual LANs and WANs from SONET to Ethernet at numerous locations gives them a lot to play with. That means that even a partial elimination of local infrastructure that used to have to go to the incumbent carrier in each territory can have a big payoff. This keen interest in SIP trunking provides a notable example of the "Jekyll and Hyde" carrier behavior that my colleague Ben Fox has discussed in his own NoJitter article, There Is Only One Sure Way To Get The Lowest Possible Telecom Prices. In fact, it's a multiplier effect: in this case, the tension between a legacy base and a next-generation service can swing in completely different directions depending on how competitively you are presenting yourself to the carriers. We'll be watching to see how quickly the SIP trunking trend accelerates, and how well enterprises are effectively using competitive leverage to make it go. Even though many people in the big carriers don't want to acknowledge it, the carriers' businesses is changing, and if you're in a position to force them to realize it, you're probably doing something right. Getting yourself into that kind of position is what much of telecom procurement for the long run is all about.

Do devices matter when buying enterprise wireless services?

Thu, 29 Oct 2009 07:28:00 -0400

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.