The goal of this paper is to provide a quick guide to assist any business with the basic choices regarding phone and internet services. Today’s business owner has the benefit of many providers and a wide selection of technology options to choose from. Communications will be an ongoing expense, but doesn’t have to be expensive. Please do not simply call “the phone company” and place an order. Know your options, and have a long term plan in place for your telecommunications and internet solution.
Starting a business forces many entrepreneurs to quickly become educated in telecommunications and internet technology. Retail businesses from beauty salons to restaurants need phone lines, fax lines, data connections for credit card processing and internet access. You may have the best BBQ Sauce on the market but your clients have to be able to reach you, and a good communications package is a vital key to your success. How will your company be listed in the phone directory? How many phone lines will you need, and how much internet bandwidth is needed, are just two of the questions you may face.
If you are not sure how important the communications and technology issues are to your new, or growing business, just ask yourself one question. “How long could I be in business without phone and internet service?” Price is important, but if you phone service goes down for a week and your loose all your clients, the low cost provider might not have been that inexpensive.
Who’s my phone company?
From the late 1880’s through 1982 you phone company was almost certainly AT&T or “Ma Bell” per its common nickname. After the 1982 antitrust issues forced the breakup of AT&T into 7 regional companies called ROBC (Regional Bell Companies) or commonly known as the “Baby Bells”. On February 8, 1996 the Telecommunications Act of 1996 was signed into law. The result is today’s competitive marketplace for your phone and internet services. The simple answer is your phone company today is almost anyone you choose, the choice is yours.
Where do I start?
Each state has a governing body that regulates the utilities companies. These state agencies can provide you with a list of carriers for local phone service. The internet can also be a valuable tool listing your choices for phone and data providers. Many business consultants can point you in the right direction as well as the chamber of commerce, or BBB online. Ask other local businesses who they use, and how the service has been. It is always best when you have a relationship with a technology expert you trust who can guide you through your options.
Business or Residential Line?
If you are starting a “Home Based Business” you may be able to save money by using a “Residential” phone line. The key with most carriers will be how you want the phone to be listed. If you need it listed as a Business Name, you will most likely have to pay the higher business rates. If the listing with your local directory isn’t important you may be able to save a considerable amount on the installation and monthly fee. If you new phone service will be located in a business location, you will almost always have to pay the Business Rate. Know how many lines you will need and where you want them to be installed. Multiple visits to install one line at a time can be more expensive than multiple lines all installed on the initial visit.
What is the Cost?
To understand the budge for your new business phone and internet first look at the one time or initial expenses then forecast your monthly cost. Your initial cost will include set up fees, activation fees, implementation fees, and any other fee your carrier can think of. These one time fees are called NRC (Non-Reoccurring Charges). You monthly service plan is often referred to as your MRC (Monthly Reoccurring Charges). You are responsible for the inside wiring of your business from the “demark” (see terms) unless you pay for inside wire maintenance insurance from your phone carrier. When you hire your Uncle Earl to wire your phone jacks, don’t expect the phone carrier to repair them for you without charging you for it. If your business is going to have more than 5 phone lines you should consider a relationship with a local technician, or telecom installer. Your hard cost will be the installation, monthly fee, and monthly usage plan if any. Your provider will probably offer a package with voice mail, caller ID, and more. Review the cost of a local provider’s phone package with the “virtual” office voice mail options.
Can I negotiate price?
In the past the prices were fixed for everyone and without competition the prices were regulated by the state and local utilizes commissions. Today many of the same core rates are fixed by state regulators, but “incentives” or special offers can make the difference. If you simply call the phone company they may or may not advise you about discounts and promotions that you’re qualify for. Most of these agents are commissioned sales reps and are paid more when you buy more. You can not negotiate some items like your local 911 taxes or many FCC mandated charges, but many of the fees can be waived, or at minimum spread over several months.
How much Bandwidth do I need?
For most businesses the answer to how much bandwidth is needed is “as much as you can get”. This does not mandate every small business to install a T1 or DS3 (see terms) but trying to save money on the backbone to many small businesses is unwise. If you are starting a car wash, you may not need a massive amount of bandwidth. But if you have an office at the car wash, an alarm system, any online computers, you will soon see the need for more bandwidth. Review your DSL, and Cable options, and look to see if packaging your internet with phone is the best overall solution or not. The price of a typical T1 has dropped dramatically in the past 5 years, and most businesses are paying less for internet today, than they did just 3 years ago. If you will be hosting a server or growing an e-commerce business, you should consult and expert to ensure scalability and prepare to understand the exact current and future equipment cost.
The decision to buy, or lease equipment may be a decision that needs counsel with your tax consultant. You can spend a small fortune on the phone system with or without the latest software embedded. Equipment sales reps will often show you a chart of the eventual savings by eliminating many of the MRC from your phone provider. Rarely are these savings obtained, and the high end phone systems are loosing market share to the more sturdy less feature rich commodity type phone system. Small start ups on a budge can even obtain refurbished or used equipment that can suffice until revenues are generated. Internet hardware prices have been in a free fall since 2006. Cisco Systems supplies about ¾ of the hardware that runs the internet world wide, but they a much smaller market share of the small business space.
Voip or not to Voip
Voice over IP (Internet Protocol) is the future of telecommunications. But for every one satisfied client I meet today, I see twenty who urgently want off the VOIP bandwagon. Over the next 12 to 36 months the market and the technology should mature, but as of the date of this writing I would not recommend this option for most new businesses. Oversees calls can be worth the delay, and the instability due to the huge cost savings, but for local or national calling, the trade of is simply not worth it at this time.