EXCLUSIVE: Carriers Slap Surcharges on Call Centers’ Short Calls
Phone billing logic would suggest the shorter the duration of the call, the less it costs.
But a battle has shaped up between collection call centers and telecommunication carriers over the shortest of calls. It turns out short-duration calls costs the carriers too much, so they are levying penalty charges for such calls – and agencies are not happy.
The rising number of short-duration calls is a product of auto-dialers. As call centers become more prevalent, the high volume of short calls translates to problems for carriers’ traffic and the ability for them to least cost route calls, says Stephen G. Florczak, executive vice president of information technology at collection agency Capital Management Services, L.P. and communication provider Custom Tel, LLC.
“The problem is these short calls add up,” says Florczak. “These short calls congest their networks.”
In an attempt to kick call centers off their lines and relieve this burden, some carriers are enforcing existing language in contracts that add surcharges to “excessive” short-duration calls. Telecom insiders say the tighter enforcement is creating financial stress for carrier wholesalers and their call center clients, like collection agencies where short calls generally abound. Short calls are generally defined as lasting six seconds or less.
These surcharges “could more than double [the] telecom bill,” says Todd Regan from TelecomMonthy.com, noting that carriers might unwittingly put some of their clients out of business that could serve them well later.
Although this short call fee enforcement only hurts high-volume call centers, the impact could be great -- Regan says these surcharges will change how the call center functions in the future.
CARRIERS FOCUS ON PROFITS
Many carriers are not profitable on short-duration calls, so instead of building out their networks, carriers are focusing on securing the types of traffic that generate the greatest revenue, Florczak says.
Chris Barton, president and chief executive at telecom company Wholesale Carrier Services Inc., says the surcharges are here “simply because revenue to network operational expenses doesn’t make sense.” This revenue issue was exasperated by the abundance of auto-dialers during the Obama campaign, he says, adding that all carriers are enforcing these surcharges.
“Nobody wants this traffic,” Barton says, noting these surcharges on short calls help to avoid harming public infrastructure. “It makes perfect financial sense,” Barton says. However, there is a setback. “The fallout is what a call center does with added expenses.”
Daniel Longstein, chief operating officer at Airespring Inc., a telecommunications company, says the surcharges on short calls originated with Qwest Communications last August. Qwest charges a penny on each short-duration call that exceeds 10% of total calls placed, and other carriers followed suit, Longstein says. Qwest declined to comment for this story. Although a penny may not seem like much, Longstein says it adds up: A six second call is 1/10 of a minute, which could cost a call center 10 cents per minute. “This is a pretty high [rate] for long distance,” he says.
Essentially, the enforcement stems from a bombardment of call traffic. Carriers are cracking down on short call surcharges because they no longer have room on their telecom networks and must also keep calling capacity available to their local consumers. The telecom companies are taking the mindset, “If it is not profitable, why augment?” he says.
BLAME POLITICS
Beside the explosion in auto-dialed political calls this past election, the recession has also led to an eruption of collection calls and business marketing calls that adhere to the theory, “when business does not come to me, I will make a greater effort to get more business.”
“I think these surcharges will be here to stay,” Longstein says. “There is no such thing as a temporary tax.”
Although actions call center agencies can take are nominal, one existing tactic includes ensuring agents document call accounts properly. Florczak, for one, recommends that an agency compare its phone reports to the call records. Meanwhile, Longstein advises call centers to adjust dialing programs to mitigate short duration calls.
For now, short calls must be put on hold if possible, it seems.
But a battle has shaped up between collection call centers and telecommunication carriers over the shortest of calls. It turns out short-duration calls costs the carriers too much, so they are levying penalty charges for such calls – and agencies are not happy.
The rising number of short-duration calls is a product of auto-dialers. As call centers become more prevalent, the high volume of short calls translates to problems for carriers’ traffic and the ability for them to least cost route calls, says Stephen G. Florczak, executive vice president of information technology at collection agency Capital Management Services, L.P. and communication provider Custom Tel, LLC.
“The problem is these short calls add up,” says Florczak. “These short calls congest their networks.”
In an attempt to kick call centers off their lines and relieve this burden, some carriers are enforcing existing language in contracts that add surcharges to “excessive” short-duration calls. Telecom insiders say the tighter enforcement is creating financial stress for carrier wholesalers and their call center clients, like collection agencies where short calls generally abound. Short calls are generally defined as lasting six seconds or less.
These surcharges “could more than double [the] telecom bill,” says Todd Regan from TelecomMonthy.com, noting that carriers might unwittingly put some of their clients out of business that could serve them well later.
Although this short call fee enforcement only hurts high-volume call centers, the impact could be great -- Regan says these surcharges will change how the call center functions in the future.
CARRIERS FOCUS ON PROFITS
Many carriers are not profitable on short-duration calls, so instead of building out their networks, carriers are focusing on securing the types of traffic that generate the greatest revenue, Florczak says.
Chris Barton, president and chief executive at telecom company Wholesale Carrier Services Inc., says the surcharges are here “simply because revenue to network operational expenses doesn’t make sense.” This revenue issue was exasperated by the abundance of auto-dialers during the Obama campaign, he says, adding that all carriers are enforcing these surcharges.
“Nobody wants this traffic,” Barton says, noting these surcharges on short calls help to avoid harming public infrastructure. “It makes perfect financial sense,” Barton says. However, there is a setback. “The fallout is what a call center does with added expenses.”
Daniel Longstein, chief operating officer at Airespring Inc., a telecommunications company, says the surcharges on short calls originated with Qwest Communications last August. Qwest charges a penny on each short-duration call that exceeds 10% of total calls placed, and other carriers followed suit, Longstein says. Qwest declined to comment for this story. Although a penny may not seem like much, Longstein says it adds up: A six second call is 1/10 of a minute, which could cost a call center 10 cents per minute. “This is a pretty high [rate] for long distance,” he says.
Essentially, the enforcement stems from a bombardment of call traffic. Carriers are cracking down on short call surcharges because they no longer have room on their telecom networks and must also keep calling capacity available to their local consumers. The telecom companies are taking the mindset, “If it is not profitable, why augment?” he says.
BLAME POLITICS
Beside the explosion in auto-dialed political calls this past election, the recession has also led to an eruption of collection calls and business marketing calls that adhere to the theory, “when business does not come to me, I will make a greater effort to get more business.”
“I think these surcharges will be here to stay,” Longstein says. “There is no such thing as a temporary tax.”
Although actions call center agencies can take are nominal, one existing tactic includes ensuring agents document call accounts properly. Florczak, for one, recommends that an agency compare its phone reports to the call records. Meanwhile, Longstein advises call centers to adjust dialing programs to mitigate short duration calls.
For now, short calls must be put on hold if possible, it seems.
Tags: calls, exclusive, providers, short, surcharges, telecommunication
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Comment by Shawn McGinness on July 1, 2009 at 12:58pm - Mary - Excellent article. Thanks. Does anyone know if any carriers courting agencies, or have all of them gone to these surcharges? Also, does anyone have a good solution with regard to dialing strategies?
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Comment by Mark LaBoyteaux on July 1, 2009 at 2:05pm -
Hi Shawn,
I can assist with questions in regards to dilang strategies. Give me a call at your convenience. 317-493-4105.
Thanks..
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Comment by John McNamara on July 1, 2009 at 2:59pm -
Mary, you are doing a service to the industry by revealing these charges. Many users only become aware when they sit down and dissect their phone bill. To get a better idea of the total real variable cost is to take total minutes divided by the sum of phone charges and T-1/DS-3 charges.
LiveVox offers a solution. Feel free to call me at 770-715-9540, email me at jmcnamara@livevox.com.
Please check out the following link:
http://livevox.com/news_article_50.asp
It should not be so difficult to calculate cost and ROI of telephony and premised dialers. If determining cost is as hard as understanding the footnotes from an Enron annual report, seek solutions elsewhere.
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Comment by Stephen G. Florczak on July 8, 2009 at 10:51am -
Mary, excellent article. I am glad I was able to offer insight into an aspect of Telecom that very few agencies are aware of, but some agencies could be already paying for. I have been educating peers and customers for almost 2 years. Thanks for taking time to listen to me and publish my concerns to the Collection Community!
John has an excellent article on this topic. Chris Barton, quoted in the article, is correct. Carriers do not want this traffic. If they do, they will charge you for it. Most agencies do not know they are being charged.
The best way to offset short calls is monitoring usage of AMD, the main reason for short duration calls. All carriers, resellers or providers allow a threshold of short calls, usually 10%-15%. Once you exceeded that threshold, you pay the penalty. AMD is the largest factor exceeding the threshold. I have analyzed all our internal traffic and that of our customers. It's clear as can be AMD is the reason.
What we have done and recommend to agencies - Control your AMD! AMD + Message is an obvious route to offset the short calls. Similiarly, you can change your dialer or hosted solution to use AMD with additional seconds if not leaving a message. Instead of hanging the call up at 1 second, settings can be changed to 7 seconds. What you have done is changed from disconnecting the call at a 1 second connect to likely disconnecting while a message is being played! Far cheaper to have a 7 second call in volume then 1 second calls. Now, AMD is not perfect, but this solution does work, saves money and does avoid the penalties. In doing so, we dropped our short calls and that of our customers over 40%.
Feel free to contact me if there are any questions. We have these strategies in place at CMS and as an owner of Custom Tel, we provide such recommendations/solutions for our current customers and any new customers. We have that unparalled experience with call centers and telecom knowledge to assist you where carriers/resellers are taking advantage of your agencies.
Thanks
Stephen G. Florczak
716-566-2617
stephen.florczak@cms-collect.com
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Comment by Mary Wisniewski on August 18, 2009 at 9:06am - Not related to the short call issue, but interesting nonetheless: Qwest Communications International Inc. will no longer provide wireless service as of Oct.31, reports The Wall Street Journal. Read the news here.
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