View
970
Download
0
Category
Preview:
DESCRIPTION
The major carriers (including AT&T and Verizon) include contract terms in their network service agreements designed to put enterprise customers on the defensive and to reduce their leverage in contract negotiations and when disputes arise (as they inevitably do).Even second-tier carriers like CenturyLink, Level 3, XO and Windstream salt their contracts with unreasonable, one-sided terms that cause headaches for unwary enterprise customers. This presentation discusses how enterprise customers carriers can maximize their ability to prevent and resolve disputes with telecom carriers.
Citation preview
© 2012 Levine, Blaszak, Block & Boothby, LLP. All rights reserved.
hlevine@lb3law.com
Hank Levine jcastillo@lb3law.com
Justin Castillo
Prevent [and Resolve]
Telecom Disputes
March 7, 2012
Organized by
Who We Are and What We Do
Levine, Blaszak, Block & Boothby, LLP (LB3) is
dedicated to representing enterprise customers in
communications and information technology
matters, including disputes with providers.
US News and World Report ranks LB3 as one of
only ten Tier 1 telecom law firms in the nation.
The other nine all work with/for major carriers.
Detailed descriptions of the firm, its practice and
its lawyers can be found at www.lb3law.com.
2 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
LB3’s Telecom Disputes Practice
Since 1993 LB3 has represented enterprises and
employees/agents in scores of disputes with carriers. We
also help small carriers at odds with the large telcos.
Most of the time, we are able to negotiate workouts or
settlements without the need for formal proceedings.
But we have been involved in many mediations, arbitrations,
regulatory complaint proceedings, and state and federal
lawsuits.
The most prominent public example of our dispute work is the
FET litigation, which led to $10 billion in tax refunds to
individuals and businesses.
3 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Telecom Disputes are Different
Tariffs are (mostly) history, but this remains a
regulated industry; that has a huge impact on
disputes and their resolution
Telecom is mission critical – service problems can
halt key operations
Switching vendors is difficult and time-consuming
The regulatory overlay is complicated by divided
jurisdiction and regimes – state/federal,
regulated/unregulated, domestic/international
4 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
So What Are We Fighting About?
Most disputes in 2012 grow out of • Shortfall and Early Termination Charges
• Billing issues – wrong rates, bills for services never
ordered/installed, charges billed years after they were
incurred, charges for discontinued services, large rate
increases when a contract expires, bills for fraudulent calls
• Service/technical problems – failure to install or migrate
services in a timely manner, SLA issues, services that “meet
spec” but can’t be used for their intended purpose
Other areas of contention involve poor account support, contract “gotchas”, and merging acquired contracts
5 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Causes of Disputes
Poorly drafted / negotiated agreements
The customer’s failure to do due diligence (e.g., to know its traffic and network requirements)
The customer’s failure to plan for seismic business changes and/or transitions
Incorporation of one-sided documents that the carriers can (and do) change without the customer’s consent
6 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
“Gotcha” Clauses
Lengthy minimum terms with hefty early termination charges
attached to each individual circuit
Multiple, overlapping, ratcheting commitments
One-sided dispute resolution clauses – the carrier gets to be
judge and jury
Long time to bill; short time to dispute a bill
Attachments trump negotiated contracts; carrier order forms
trump attachments
Automatic renewal clauses
Complex procedures for terminating/disconnecting circuits
Weird, low limits on a carrier’s liability
7 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Carrier Leverage
Denial, suspension, or restriction of service
The filed tariff doctrine was a trump card, and still is for some intrastate services
Statute of Limitations – 2 years under the Communications Act, longer in most states. But the parties may shorten it by agreement – and the carriers make sure you agree
A bad contract – e.g., semi-hidden commitments
Reciprocal business relationships
Difficulty in switching to another carrier
8 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Customer Leverage
(Most) carriers hate to alienate customers
Carrier practices must be “just and reasonable” under the Communications Act. But this is not a silver bullet
New business or future business
A good contract – especially one with a big cushion
Willingness to move some/all traffic
Pressure from regulators (if appropriate)
9 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Avoiding Disputes
Say it in writing, and keep notes
Save reports and emails
Pay undisputed amounts
Escalate strategically
Prepare for the worst (minimize the impact of suspension with a second-carrier relationship. If you are leaving, leave)
Be willing to give and take – if you’re facing substantial liability to the carrier, something is much better than nothing
10 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Contract Clauses that Can Help
Prevent or Ameliorate Disputes
Dispute procedures (including escalation)
Performance pending outcome of disputes
Reasonable billing and payment provisions
Governance/stewardship
Transition/migration
Limitations on AUP and related provisions
governing suspension/termination of
services.
11 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Dealing with a Dispute
Early stages – Write it down. Document everything
The role and limitations of your account team
Escalation – start on the business side
When to bring in counsel – the Goldilocks rule
• If the customer brings in counsel, the carrier has to
reciprocate (carrier account teams often work hard to avoid
their counsel)
• Bringing in the lawyers too early can harden positions,
hindering settlement
But if the account team is useless or hostile or crazy,
getting carrier counsel involved can help
12 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Resolving Disputes – Work Outs
Shortfall and other penalties usually go away
Carrier gets new revenue via a term extension and new business
Contributing services are broadened.
Customer leverage tends to be low, so rates and terms are usually not “at market.” But you’d be surprised …
Some carriers are more amenable to “work-outs” than others
13 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
When Negotiations Fail
Mediation
Arbitration – compelled by many carrier contracts on unfavorable terms, but often makes sense
The regulators: FCC/State PUCs
• Informal complaints
• Formal complaints
• Regulators as mediators
Litigation
• State or Federal Court
• Referrals to the FCC
14 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Carrier Hot Buttons
AT&T
• Likes circuit-specific terms and tying up customers 12 ways
Verizon
• Wants to own reports and control CPNI
• Cooperation with third-party vendors
Second-tier carriers
• Used to dealing with smaller customers and don’t have
sophisticated large deal capability, so
• Lots more “sole discretion” language
• Lots of hair-trigger termination/suspension rights
• Low limitations of liability/carve-outs
15 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Conclusion
It’s not all in your head – telecom disputes
really are weird and different
It’s a hard but not impossible world
Questions?
16 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Telecom Negotiation Conference
Join CCMI and the LB3/TC2 team for 2 full days of
telecom contract negotiation training
20th Annual Telecom Negotiation Conference
May 3 – 4 | Washington, D.C.
See the complete agenda at
http://www.TelecomNegotiationConf.com
17 © 2012 Levine, Blaszak, Block & Boothby, LLP. All Rights Reserved.
Recommended