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A serious look at telecom costs can help state and local governments save a good chunk of money.


Three Ways to Save on Your Government Telecom Bills

  • 2/25/2014

Cutbacks and reductions. These dreaded terms have become all too familiar to state and local governments in recent years. Some have had no option but to slash spending across the board, often to the detriment of vital government services and employees. But there is one stone that is often left unturned as administrators look for ways to reduce costs — telecommunications. A serious look at what your government unit is paying for telecom services can eliminate waste and reduce costs without negatively impacting the level of service that your constituents expect.

Three paths to savings

There are three primary ways that governments may be able to realize savings.

  1. Taxes and fees — Certain taxes, surcharges, and fees get added to some state and local government phone bills even though governments are exempt from paying them. Many agencies are incurring some form of taxes, such as communications services taxes and sales taxes, that should be waived. These fees are sometimes buried deep in the billing and can be difficult to identify. Past errors are often eligible for refunds for a limited period (depending on the laws of the state).
  2. Special government rates — Governments qualify for special rates in most local/long distance, wireless, and data plans, but that doesn’t mean they are being fully utilized. There are situations in which governments may have been partially enrolled in a low cost plan, but certain phone lines at certain locations (for reasons unexplained) are being assessed inflated rates. In other instances, local governments may have been awarded low rates in the service provider agreement, but inexplicably, the billed rates are higher than the contractual rates. Phone companies are obviously not incentivized to point out these billing discrepancies. Their internal policies dictate that it is incumbent upon the customer to discover anomalies and ensure that billing adjustments are made.
  3. Optimization — While low cost plans are available to state and local governments, they are rarely a “one size fits all” proposition; it’s more akin to ordering from a menu a la carte. Without effectively managing the offerings, governments can end up paying for services they are not fully utilizing. Optimization helps your local government pay for the right level of services based on your usage patterns. It means eliminating unnecessary features, removing lines that have zero usage, and implementing pay-as-you-go alternatives rather than unlimited usage options in situations with historical evidence of low usage.

Potential savings vary

Most state and local governments can whittle down their monthly telecom costs; the question is, how much? The answer depends on how much time and effort have been devoted to this endeavor to date. If the answer is little to none, then savings in the 20 to 50 percent range may be possible.

For some smaller to mid-size local governments, annual telecom spending can range in the hundreds of thousands of dollars. For larger governmental entities, especially those with multiple locations, those costs can easily rise into the millions of dollars annually. For a local government that spends $5 million annually in total telecommunication-related expenses (local and long distance plans, voice over internet protocol (VOIP), cellular services, internet, data, videoconferencing), a 20 percent reduction in costs would generate $1 million in savings with no reduction in communication or information-sharing capabilities or resources.

State and local governments continue to struggle mightily with the mandate to reduce costs and (somehow) maintain the same level of service. Pinpointing the potential cost savings in your telecom bill requires two significant resources: time and expertise. Specially trained and experienced consultants can dissect your phone bills to identify billing discrepancies and optimization strategies, leaving your personnel to perform their usual duties. Cutting government spending in this way is relatively painless compared to some of the alternatives.