Mind the details in VoIP agreements

While SLA usually stands for Service Level Agreement, it could just as well mean “Slippery Little Anomalies,” judging by the words of two lawyers who specialize in communication equipment and service contracts.

Marc Lindsey and Laura McDonald of Washington, D.C.-based Levine Blaszak Block & Boothby LLP presented their take on how to negotiate network agreements at IPComm 2004, a voice over IP (VoIP) conference held here in Las Vegas from Nov. 14 to 17.

According to the lawyers, SLAs can be tricky. It’s important for enterprises to pay close attention to these critical aspects of IP service contracts.

McDonald said she’s seen vendors use “objectives” instead of “requirements” in their SLAs. Rather than stipulate what must happen in terms of jitter management, echo cancellation and other things that affect VoIP quality of service, the seller outlines what it aims for, but provides no guarantees that it will meet those expectations.

One vendor McDonald dealt with had an awfully narrow view of a service outage. She said the company defined an outage as something that prohibits customers from making any calls in a two-hour period.

“In retail, in financial services, that’s just not going to fly,” she said. Even five minutes of phone downtime for a stockbroker is expensive.

SLAs and narrow definitions are just a couple of contract elements that enterprises should keep in mind when sourcing VoIP equipment or service. Lindsey and McDonald outlined some of the other pitfalls in their IPComm presentation.

For instance, McDonald said businesses should pay attention to the regulations that govern VoIP. “Any time there are regulatory hurdles, that affects the price,” she said, pointing out that government decisions can impact how much money a carrier charges for its VoIP service.

Consider the ways in which a move to VoIP could affect your existing contracts as well. For example, an enterprise might be obliged to spend a certain amount of minutes making calls on a carrier’s traditional phone network to qualify for price discounts. If the business moves to VoIP, will it continue to use the carrier’s network enough to receive the lower price? McDonald said corporations should scrutinize their installed agreements to ensure VoIP doesn’t spell higher costs elsewhere.

Lindsey said businesses should always conduct a request-for-proposals (RFP) exercise when considering new technology, and VoIP is no different. He suggested that RFPs give companies a better understanding of the market from which they mean to buy than they would have if they skipped the formal procurement process.

Lindsey said companies should try to negotiate the right to create the contract’s first draft, rather than let the vendor do it. First draft rights help businesses maintain the upper hand. “You shape the table,” he said of firms that write the preliminary document.

If the vendor wins the opportunity to pen the first draft, the enterprise should watch for certain things: Is the pricing in line with pricing proposed in the RFP? Does the contract include a statement of work? Does it spell out an implementation plan? Lindsey suggested companies should also work out a payment schedule with the vendor that would see the seller paid only as it reached particular milestones in the implementation process.

McDonald said there are two ways to procure VoIP equipment or services. The customer could spend six months performing the RFP, a few weeks on the contract, and multiple years explaining away the problems that will ensue; or spend six months on the RFP, three months on the contract and multiple years reaping the benefits.

She suggested the latter option.

“Make sure you build in adequate time for the contract process,” McDonald said. “That’s where all your hard work pays off.”

Related Articles:

Alberta Cancer Board counting on VoIP, (Nov. 4, 2004)

University of Guelph completes IP migration, (Nov. 3, 2004)

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