Tony

Hello, I’m Tony Mangino from TC2, and this is Staying Connected—the podcast where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

Joining us again today on Staying Connected is my colleague Larry York from TC2 and we’re talking about rate reviews in network services—and why enterprise customers should treat them as leverage events, not routine supplier meetings.

A lot of network agreements include some kind of annual or mid-term rate review. On paper, that sounds useful. The customer gets a chance to revisit pricing before the full renewal. Maybe capture market movement and optimize rates that have become uncompetitive or address situations where the contract hasn’t stayed aligned with the needs of the business.

But here’s the thing: rate reviews often don’t deliver what customers expect – particularly in today’s market.

Guest

That’s right. Too often, the supplier comes in with a modest reduction, frames it as a strong concession, and then asks for something in return.

More term. More commitment. Less flexibility. Maybe a broader scope commitment. Maybe some renewal language that helps the supplier later.

Tony

So the invoice goes down, but the customer’s position may actually get weaker.

Guest

Exactly. And that’s the trap. A rate review can look like a cost savings win while quietly reducing leverage for the next negotiation.

Why Network Rate Reviews Matter

Tony

Let’s start with why rate reviews matter in network services.

These environments are constantly changing. You’ve got  a lot of network circuitry and services out there, DIA, and broadband, maybe some legacy MPLS, wireless backup, SD-WAN underlay, managed network services, maybe some remaining voice or transport services, and a lot of site-level complexity.

Guest

And pricing doesn’t move evenly across all of those categories.

Some services may be falling quickly in the market while others are more stable. Some may be more constrained because of geography, access provider limitations, or service availability. And some legacy services may remain expensive, or get more expensive, because the customer hasn’t had the time or a strategy to move away from them.

Tony

So a rate review gives the customer a chance to test the deal against the current market and adjust to the shifting needs of the business before the renewal deadline arrives.

Guest

Yes. But only if the customer comes prepared. If you just ask the supplier, “Can you do better?” you’ve already given them too much control.

Tony

And the answer is usually, “Sure, but…”

Guest

Exactly. “Sure, but we need a longer term.” “Sure, but we need more commitment.” “Sure, but only if you include this scope.” That’s where the customer needs to slow down and understand the tradeoffs.

Turning the Review into a Negotiation

Tony

So how does an enterprise customer turn a rate review into a real negotiation?

Guest

Start with the baseline. What services are in scope? What is the inventory and current cost? What term and commitments remain? What pricing rights or review rights actually exist?

Tony

That sounds basic, but in network environments it’s often hard.

Guest

Very hard. The inventory may not line up with the invoice. The contract may have multiple amendments. Sites may have changed. Bandwidths may have been upgraded. Some services may be active but no longer strategic. Others may be candidates for migration in the next twelve to twenty-four months.

If the customer doesn’t understand that current state, the rate review becomes a supplier-led pricing conversation.

Tony

And that’s not where you want to be.

Guest

No. The customer needs its own view of the facts.

Tony

The next piece is market evidence.

Guest

Exactly. Benchmarking is what gives the customer a target. Not just, “We want savings,” but, “Here’s where our current pricing is out of line, here are the services that matter most, and here’s what we believe the market supports.”

Tony

That’s a very different conversation.

Guest

It is. Suppliers respond differently when the customer brings a specific, evidence-backed position. They may still push back. Of course they will. But the discussion becomes much more grounded.

Watch the Tradeoffs

Tony

Let’s talk about the supplier ask. Because the supplier almost always wants something.

Guest

That’s right. And not every tradeoff is bad. Sometimes the customer may be willing to offer something like additional contract term. But the customer needs to understand the value of what it is giving up.

Tony

Think about a customer planning a broader network transformation.  If they extend too much term or overcommit to the incumbent during a rate review, they may make that future transformation harder.

Guest

Exactly. Short-term savings can interfere with long-term strategy.

Tony

That’s the key. A rate review shouldn’t constrain the next deal.

Guest

Right. The customer should define guardrails before the supplier puts savings on the table. For example: no excessive term extension, no inflated minimum commitments, no loss of transition rights, no restrictions that limit future sourcing, and no changes that interfere with the network roadmap.  Remember, rate reviews are a contractually available benefit to the customer, not an opportunity for the supplier to change the deal.

Tony

Because once the supplier offers a savings number, internal pressure can build fast.

Guest

Very fast. Everyone likes a lower run rate. But someone has to ask, “What are we giving up to get it?”

Network Services Are Not One Category

Tony

One mistake customers can make is treating network services as one big spend bucket.

Guest

Yes. And that can blur the opportunity.

DIA, cloud services, UCaaS and CCaaS, managed services and SD-WAN all move differently in the market. They may also have different suppliers, contract terms, installation realities, and operational risk.

Tony

So the customer should not approach the rate review with one generic savings request.

Guest

Exactly. The better approach is to segment the estate. Which services are most out of market? Which are strategic? Which are declining? Which are being migrated? Which are constrained? Which should be renegotiated now, and which should be held for a larger sourcing event?

Tony

That segmentation helps avoid over-negotiating the wrong thing.

Guest

Yes. You don’t want to trade away flexibility across the whole network just to fix pricing on a subset of services.

Practical Questions for Enterprise Customers

Tony

For listeners heading into a rate review, what questions should they ask before engaging the supplier?

Guest

Start with the contract. Are there restrictions on what is in scope?  What does the rate review clause actually require or allow? Are there escalation procedures and what is the available remedy if the parties can’t agree?

Tony

Then the baseline: do we trust the inventory, the billing, the bandwidths, the locations, and the current run rate?

Guest

Yes. And then the market: where are we out of line? Which services matter most? What would we reasonably expect to achieve in an RFP?

Tony

I’d also ask: what is changing in the strategic network roadmap?

Are we moving away from legacy services? Are we adding SD-WAN? Are we changing access strategy? Are sites opening or closing? Are we planning a larger sourcing event later?

Guest

Exactly. The rate review should support that roadmap, not undermine it.

Tony

And what should customers avoid?

Guest

Avoid treating the supplier’s first offer as the market. Avoid accepting a discount without understanding the tradeoff. Avoid extending the term or increasing the commitment in exchange for a modest rate adjustment. Avoid making broad commitments when the opportunity is really limited to specific service groups.

Tony

And avoid confusing movement with competitiveness.

Guest

That’s a big one. A supplier can move and still leave the customer out of market, sometimes significantly.

Closing Remarks

Tony

The key takeaway is that a rate review can be a real leverage event, but only if the enterprise properly treats it like a negotiation.

That means coming prepared with a solid baseline, current market intel, a segmented view of the network estate, and clear guardrails around what the customer is and is not willing to trade.

Larry, any final thoughts?

Guest

A good rate review should improve economics without weakening future options. The customer should come out with better pricing, better alignment to the market, and a stronger position for whatever comes next—whether that’s a renewal, a transformation, or a full sourcing event.

If the customer gets a small reduction but gives up flexibility, the supplier may have won the bigger negotiation.

Tony

That is a great place to leave it.

To our listeners, if you would like to discuss how to leverage rate reviews, directed negotiation or benchmarking to improve supplier economics, or if you’d like to discuss other technology strategy, sourcing and cost reduction needs with Larry, me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email.

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