Do you know how to avoid costly telco traps?

Yep, it’s true. Telco companies use an array of cheeky tricks to trap organisations into long contracts that extract more cash from them. 

When it comes to business mobile phone plans, most SMEs don’t do the required research (telco contracts can seem very overwhelming, we know) to find out if they’re getting a good deal.  

They’re often also too trusting, assuming what they’re being sold is most likely the best deal for their business. Rarely, however, is that the case! 

At Aria Telco Management, we’ve seen it all. Having worked for the telcos on the inside, we know all the ways they upsell companies. Even if a business has an inkling it’s being upsold, it often doesn’t know how to get to the bottom of what’s really going on. 

So, what IS going on? 

Well, it’s simple. Telco companies want what’s best for their business, not yours. If a sales rep can sell you a more expensive plan or lock you into a 5-year contract, they make more money. 

With our remit to work for businesses (not the telcos), we’re putting the spotlight on 3 top telco tricks, so you know to avoid them. 

#1 Top Telco Trick: Tech Fund or Hardware Fund

Heard the terms tech fund, technology fund or hardware fund when dealing with telcos?

This term should ring an alarm bell for businesses looking at mobile plans. If your telco suggests one of these funds, it’s essential you consider if it will be of benefit to your company – or if it will potentially have a negative impact.

In telecommunications agreements, a tech fund involves putting specific funds aside to use over time to ensure technology-related upgrades can be rolled out to your business as new solutions become available. This may include software upgrades, hardware upgrades, cloud-based services, security upgrades, transitioning to VoIP, etc.

What businesses need to know

A contract that includes a tech fund will generally not be the best option for businesses.

Here’s why:

  • The cost of your business mobile plans themselves can increase.
  • Your data allowances can decrease. Yep, that means you may need to increase your service to cover your data needs!
  • Usually, businesses are forced to buy hardware from the telco carrier at full price.
  • If there are unused funds at the end of the contract, the telco gets to keep them.

The take-home

Occasionally, tech funds do work for companies and help them stay competitive.

The key message is, though, that if a telco offers you solutions that only involve a tech fund, it’s time to shop around.

If you do agree to one, ensure you have a clear understanding of how it will be used to help grow your business.

#2 Top Telco Trick: 24-Month Sim-Only Plans

Sim-only plans that run for 24 months sound good to most business owners because they generally offer a much higher amount of data than shorter plans.

This telco ‘sweetener’ is trying to trap people into longer plans that are more lucrative for the carrier but often don’t do much for their client.

What businesses need to know

The key question when it comes to these plans is this: “Is the extra data worth locking myself in for 2 years on a highly inflexible plan?”

Most business owners assume they need more data (often they don’t) and sign up for the longer plan without doing any research. We suggest people invest a small amount of time into finding out how much data their team has historically used before diving into this type of deal.

As well, shorter sim-only plans (usually a non-contracted plan) tend to allow businesses the freedom to upgrade – without penalty – to a so-called ‘handset plan’.

The 24-month sim-only contract options usually don’t offer this. If you do want to upgrade, you’ll generally have to pay early termination charges on your old plan.

The take-home

At Aria Telco Management, we find clients often overestimate how much data is needed to run their business, which means they are often paying for data they don’t use – money they could be saving or investing.

So, don’t simply take the higher data offer. It’s crucial you only pay for it if you’re really going to use it.

#3 Top telco trick: Long Fixed Service Contract Terms

It may be surprising, but 60-month telco contracts are indeed a thing!

These long contracts (3 to 5 years) typically relate to fixed voice and data service business plans.

The telco ‘sell’ here is that the longer the contract term, the cheaper the price they can offer.

What businesses need to know

The truth is that these longer contracts are way more valuable to the telco than shorter ones.

Usually, however, they are not the best option for businesses. A company’s telco needs can shift quickly, and most will want more freedom to change carriers and plans.

Let’s face it, 5 years is a long time and who wants to be locked into an outdated plan for all those months! So, if you’re not being given any other options, shopping around for more reasonable terms is essential.

In most instances, businesses will find a similar or better priced option on another network where they only need to sign a 36-month contract. You can’t lose with looking around, just ensure you’re comparing ‘like for like’ plans.

A great tip is to get clear on what your business needs from a telco provider in terms of allowances before you go searching for a new plan.

The take-home

When it comes to 5-year contracts, our advice is clear: “Proceed with extreme caution.”