I have been a part of the telecom industry for more than a decade and, as can be expected, the industry is significantly different than it was when I first started.
One of the biggest differences between then and now is the number of telecom companies (including the one I work for) that insist on contracts from their commercial accounts. When I first started out, companies were much more open to signing customers up on a month-to-month basis. Today, mostly because of an increase in competition, most telecom companies look for a multi-year commitment.
The part of this that never ceases to amaze me is the number of business owners who don’t take the time to read the contracts before signing them. This is something that, for a number of reasons, could be a big mistake for many businesses.
First, telecom contracts don’t always guarantee rates. One of the first companies I worked for was a small, family-owned phone company. They were strictly a reseller and, because their prices were dictated by what the local exchange carrier did, their contracts had a clause in them that gave them the right to raise a customer’s rate at any time without releasing the customer from their obligation.
You won’t see this on most telecom contracts today. However, most companies do have a separate list of terms and conditions (usually located on their web site) that they require customers to agree to as part of their contract. And, there’s a good chance those terms and conditions include price increases.
Second, watch out for auto-renew clauses. Simply put, if you don’t contact your telecom company to cancel your service prior to your contract expiring, there’s a good chance you’ll be locked in to a brand new contract. Sometimes it is 12 months. Sometimes it is another three years. And, it is much more common than you would think. I’ve seen a couple of the larger, well-known telecom companies still sneak this in on occasion, especially if it is a large account. The best way to avoid that happening is to read the contract and have any reference to auto renewal removed before you sign it.
Last, not all contracts are in writing. This doesn’t seem to be as common as it was a few years ago, but I do still come across the occasional account that signed up for service over the phone believing it was a month-to-month agreement only to find out later they committed to a verbal contract. Whether this is legal or not is up for debate. But, with many states no longer regulating telecom companies, it’s much harder to fight it than it was a few years ago.
What I usually tell customers is not to agree to anything over the phone. Instead, I recommend asking for something they can sign. It’s much harder to hide contracts that way.
Telecom companies, in general, aren’t trying to trick customers when it comes to contracts. But, the nature of the industry sometimes puts them in a position where they feel the need to add clauses to protect their revenue. If a telecom company offers you a contract, it’s best to take the time to read it (and any separate terms and conditions it might refer to) closely before signing it.