Five things to consider when choosing a telco

Anthony Caruana
10 November, 2014
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Telco, business, enterprise, macworld australiaScott Adams, the writer of the famous Dilbert cartoon strip, coined the term “confusopoly” to describe certain markets.

Confusopoly: A group of companies with similar products who intentionally confuse customers instead of competing on price.

Sound familiar? If you’re trying to find a service provider for your phones, mobile communications and internet connection then sifting your way through different plans and services can seem close to impossible – like you’re trapped in a confusopoly.

But, like all complex tasks, the best way to attack the problem is by breaking it up into smaller, manageable chunks.

Step 1 – Start with requirements

When you buy a piece of furniture or a car or a house, you probably start with a set of requirements in mind. If you’re buying a car, you’ll know whether you are looking for a sports coupe or a people mover. You’ll know whether you want petrol, LPG or diesel, the number of doors – you might even be brand loyal.

Choosing a telco is not that different.

Make a list of all the different services you’ll need. Don’t limit it to the obvious things like phone lines, mobiles and internet. For example, do you want to receive a single bill for everything each month? Is it important that you can visit a store for support or are you happy with phone support.

As a business customer, will you get prioritised service for services such as handset replacements or new SIM cards? Will the service provider give you your own account manager.

Make your list and prioritise the items into three groups: items you MUST have, items that are nice to have and items that are bonuses. That way, when the salespeople start telling you about the options you can make a decision based on your needs rather than extras that are, ultimately, of lower value to you.

Perhaps the most complex requirement to quantify is the amount of data you’ll need. Fortunately, it’s now law that service providers notify you when you reach particular thresholds in your data use.

If you’re not sure how much data you’ll need, go on a plan with a lower data plan and track your usage. If you receive a usage alert that you’ve hit 50 percent of your available bandwidth five days into the billing period, you can adjust your plan upwards to avoid expensive over-use charges.

Most service providers will allow you to upgrade plans without penalty. But downgrading, if you’ve over-estimated your use will probably cost you.

Step 2 – Don’t overspend

How much money do you want to set aside each month or year for these services? Set a figure and stick to it. If you have a budget of $150 per month for all the services you can decide where to best allocate your money if you have to choose between your prioritised list.

Step 3 – Shop around

Most telcos offer very similar services. But the way they package and combine them can make them difficult to compare. Like any major purchase, it’s important to look at more than one option before deciding which is best.

With mobile phones, look at the plans in some detail. What you’ll find is that the monthly contracts, which typically require a two-year commitment, are made up of two components. There will be a payment for the handset and a payment for the mobile network access.

It may be better value for you to buy your handset outright and then buy the call and data plan separately.

While bundled plans often look good, it may be the case that you can make things cheaper buy purchasing or contracting different services with different providers. For example, we managed a better deal by having mobile phones with one company and office broadband with another even though there was some discounting if we’d chosen to keep everything with one provider.

Step 4 – Get your calculator out

Calculating the charges and fee structures with some telcos can be complex. For example, working out the cost of mobile phone calls and how caps work can be challenging.

Two telcos might offer a business plan that includes $500 of calls for the same monthly fee. However, they will most likely have different flagfall rates and charge different amounts in different time increments. So, a 60-second phone call with one telco might have a significantly different cost to another.

Look at the fee structures and make the best possible estimate of what you need before and what you can afford before signing on the dotted line.

Step 5 – Don’t over contract

Most services require at least a 12-month commitment and more likely two years. The trouble with this is that most service providers offer new plans every few months.

If possible, look at month by month arrangements or look at contract conditions that allow you to stay with the same service provider and switch to better value plans without penalty.

Committing yourself to a two-year deal only to see a new, cheaper option a few months later is very frustrating.

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