What Comprises a Forensic Telecommunications Audit?

Large or small, public or private, enterprises are reliant upon telecommunications to conduct administration, operations, and commerce. There are varied types of communications services, such as POTS lines (a normal analog telephone line), PRI ISDN (Primary Rate Integrated Services Digital Network), BRI ISDN (Basic Rate Integrated Services Digital Network), DSL (Digital Subscriber Line), VoIP (Voice over Internet Protocol), long distance and data services. Each of these services requires physical and programming facilities, which generate associated monthly costs to the service provider's end-users.

Choosing the Appropriate Services

Unless you have extensive telecommunications experience, the decision-making process, used to determine the service most suited to your enterprise, commences with the telecommunications provider's sales process. Upon determining the most suitable services, the sales agent enters one or multiple orders for service installation into their ordering and provisioning system.

The next section explains provisioning procedures, but the sales process often creates potential errors prior to service installation. If you are fortunate, the services selected install exactly as intended. However, time changes the enterprise environment and how these services are valued, as well as their long-term relevance to your enterprise. We cover this in a later section called "Time Changes All the Rules of Engagement."

How Your Services are Created

Programming telecommunications services occurs at a Network Operations Center (NOC). Strategically and geographically located near service telecommunications providers' "central offices" (COs), or "Points of Presence" (POPs), these centers are further distributed throughout markets in which the service providers operate. From the central offices and POPs, copper and fiber optic cables radiate to end-user locations (this is a very simplistic explanation).

Uniform Service Order Codes (USOCs) and Field Identifiers (FIDs), represent the "language" that tells the central office or POP what services you have purchased, how they will function, and the cost you must pay to use the services.Telecommunications service provider NOC staff need to understand these language elements in order to provision your services accurately.

There are over 50,000 USOCs and 20,000 FIDs associated with telecommunications service programming in the United States. This number increases regularly as vendors offer new services in their markets. The number of permutations (number of combinations) is therefore astronomically high, making provisioning of end-user services extremely susceptible to programming errors. NOC programmers, or "provisioners," generally utilize a favored "form overlay" from an existing account (another end-user with similar or identical services), overtyping changes to create new end-user accounts. The number of USOCs and FIDs often require programmers to utilize FID and USOC search databases to ensure the accuracy of their provisioning (Billing & OSS World, 1999). As with service order installation (sales), the programming stage offers an additional level of error creation.

How Provisioning Generates Your Monthly Invoice

Once the telecommunications provider "creates" your services, the programming information is transferred to the Invoicing Database. The Invoicing Database generates the invoice you receive monthly.

In the previous sections, we identified the basic process used to create a typical or basic telecommunications account. To review: The programmer often utilizes an existing, active telecommunications account and generates the new account by over-typing values in an overlay. The first problem that arises potentially from this process is the "retention" of another end user's ancillary central office features. These ancillary features could be "call waiting," "call forwarding," or a multitude of other optional services you may not have ordered, but potentially received on some or all of the lines.

These value-added "features" have associated costs; resulting in inflated line charges on your account. Most telecommunications service provider invoices rarely, if ever, itemize charges associated with telephone lines. One line may show a much higher price than other lines on the invoice. This is due to the procedure of grouping many account features and surcharges to the main number of the account or, the BTN (Billing Telephone Number). The BTN is your unique client identifier to the vendor.

Example of Provisioning and Contract Issues

A business unit had 15 Centrex lines provisioned by the local service provider. It was part of a 7,500 unit national chain. After the initial invoice generated, subsequent invoices reflected a stable monthly cost of approximately $1,200.00. The headquarters used WinBill as their TEM software to monitor the expenses of all locations. The amount of $1,200.00 was the stable monthly value entered into the software.

For a Centrex account, we recognized that the monthly expense was too high for 15 station lines. Upon scrutiny of the programming, we realized that each Centrex line included features that were never part of the original order, consisting of Caller ID Number, Caller ID Name, Anonymous Call Rejection, and Inside Wire Maintenance charges (a type of service plan, charged per line). Moreover, the client had a pre-existing contract, with Centrex rates significantly lower yet, being not enable on the account.

The audit reduced the account to a base rate of $427.50 per month, a future annual savings of $9,270.00, while also generating a credit amount, for overcharges, exceeding $4,320.00 (excluding taxes collected). The analysis concluded that the programmer used a similar client configuration as an overlay, including some of their White Pages details; transferring their features and some White Pages information to the new client account.

Time Changes All Rules of Engagement

In this section, we show how time can affect the long-term stability of your telecommunications services and their costs.

After the service provider installs new services, the invoicing component commences. The initial shock you will receive is a high invoice. The initial invoice includes order writing and installation charges. By the second month, the invoice will look much less expensive, with subsequent invoices looking very similar. At this point, it is safe to assume the invoices (from month two and on) are stable, while they invoice nearly similar amounts each month. If you have services that charge for usage (per minute, or per call), you will find it more challenging to stabilize your monthly telecommunications expense, because the more you use the service, the higher the usage charges will be on the next invoice. This makes is more difficult to use telecommunications expense management (TEM) software, due to the potentially wide variability of the monthly invoices.

As stated in a previous section, providers do not generally itemize all the services you are paying for each month. Without the knowledge of what specifically is on the account, you have little ability to check the service provider's work. You can call customer service, wait a very long time to be served, and go over the initial invoice with the customer service representative, but you have to understand what they are explaining, and whether the items they are charging are correct. In other words, you eventually rely on the provider to invoice you correctly, and this is not an advantageous position to occupy.

Over time, your telecommunications expenses will increase in cost. There is a plethora of reasons for this, but often the primary reason is that your service provider has increased their monthly service fees. For some vendors, of late, this can occur two to three times annually.

Examples of Time-effect Issues

Example 1

A small business had agreed to a solicited contract option offered by the local telecommunications carrier in 2005. Three years from the inception date of the agreement, the manager resigned at the business. A few months later, the owner found a new manager for the business.

The new manager asked that we look at their telecommunications invoice, because he did not understand why the service cost was so high. Upon scrutiny of the programming, it was evident that the previous three-year contract included seven add-on services, cost-free, per line. These additional features were on all of the business lines, whether they made logical sense or not. The business had four active lines. When the initial contract expired, the additional "package" add-on services remained active, billing at the un-contracted tariff rates, as did the four telephone lines.

After determining which lines required some add-on services, with the remainder removed, the account was placed under an obscure, rarely offered, twenty-four month contract with the local vendor. As a result, the account expense reduction was over sixty percent per month.

Example 2

Over a timespan of years, large corporations make many changes to their telecommunications infrastructure. Some of these changes are the result of direct and indirect activities, this includes the opening and closing of locations, as well as the implementation of technology upgrades (e.g. better services, newer hardware, etc.).

One of the most common problems we encounter with "large footprint" clients, having many locations spread over large geographic areas, is the retention of services that are no longer used. Cursory review of a client's active database of services (when available) often shows an incomplete or outdated inventory system. It is very common to find existing services still active at old, closed locations.

While auditing a Fortune 500 national chain, we conducted an asset discovery effort with all of the main national service providers. This is part of a normal auditing process. After several months' of data mining efforts, we compiled an inventory of assets the company's Accounts Payable Department had been paying regularly.

Using a combination of the company's own real estate list and company website, we were able to identify a large number of accounts that were active at addresses that no longer existed.

Additionally, client profiling determined the expected number and types of services each location would possess and use. Once the inventory of services was complete, we identified that a large number of locations did not conform to the expected configuration. Upon further analysis, it was determined that the locations, with the anomalous configurations, were locations less than ten years old. The list of "potentially extraneous services" was delivered to the Telecommunications Department liaison sorted by address, account number and service types. Over one hundred locations possessed the same identical anomaly. This was more than coincidental.

Upon further scrutiny by the client liaison, it became evident that the additional services originally served the construction companies' trailers during the build out of new locations. When the construction of the new locations was finished, the Real Estate Department never communicated to the Telecommunications Department that the services for the trailers were no longer necessary. Hence, the services remained in place (metaphorically, under eight inches of asphalt) for years after the locations were constructed and operating.

For this error, the client was paying nearly $180,000 per month for services that were no longer in use. The problem had been growing for many years.

Enter The Telecommunications Auditor

In previous sections, we have given readers some examples of conditions that generate increased telecommunications anomalies. The potential issues can be endless in number.

Many clients ask us what we expect to find. The potential number of issues is too extensive to list, while each client has unique processes, unique service requirements, and unique configurations. We have freely listed real-world examples throughout this website, because the client problems are not merely experience related, but attributable to a lack of adequate internal labor resources, time, and finances. These main focal points compound the problem of telecommunications expense management over time.

An experienced telecommunications auditor "rationalizes" the inventory and programming of all accounts individually, while also creating the "big picture" by site and on a macro level. If you are a small business, with a single telecommunications account, this is a relatively quick process. The auditor checks for pricing and configuration issues, while also checking for better options that will "potentially" lower your monthly telecommunications expense with your current vendor.

An auditing project, for large corporations with many locations, starts with a thorough inventorying effort. Companies having more than a few hundred locations require a more extensive "discovery" process. In all cases, we have the Accounts Payable Department collect telecommunications invoices they pay for two months. These are sent to us at the completion of the collection process. These are gathered to ensure we have all of the "paper invoices" they see on a regular basis. Additionally, we will ask your vendors to conduct a "parent tie code" or "parent-child" account search in their databases, as well as a "variable name configuration" search (searching by multiple variations of the client name). This identifies other potential accounts your Accounts Payable Department is probably paying each month, without the knowledge of the Telecommunications Department. This also identifies accounts that are on "auto-pay," those accounts charged monthly to corporate credit accounts. Generally, "auto-pay" accounts do not generate a paper invoice, making them difficult to track over time. For twenty years, we have found that it is easy for information disconnects to form between the Accounts Payable process and the Telecommunications Department's inventory and management processes.