• Do you get the feeling that your Cellular expenses are spiraling out of control with little or no management of users and expense?

• Do you get surprised when you review your corporate bill and its much higher than expected and includes items that you were lead to believe were not chargeable?

Well, welcome to the world of Cellular communications in the corporate environment.  It’s not unusual for companies to be unaware of the total annual expense of Cellular communications and know who all the employees are that generate this cost.  In fact, this is common problem.  It’s not that companies lack quality management, it’s just that Cellular use has slowly crept into the corporate scene with a large portion of this expense buried in employee monthly billed-back expenses.  What used to be a minor expense is now sometimes almost as high as a company’s Long Distance expense.  However, while Long Distance expenses are decreasing, Cellular expenses are increasing.

Typically, Cellular bills / expenses only get a brief review, if at all, and then are paid carte-blanch.  Only when an employee’s monthly expenditure is excessive, or significantly out of the norm, does it get scrutiny.  Compounding the problem is that Cellular services being used by the employees are spread among several Providers and multiple term plans.

What is most troubling to management is that there typically is no centralized control of this expense and, therefore, such things as volume discounts and user satisfaction are severely lacking.  For example, is each user on the right minute-usage plan?  Does a user have National coverage instead of Regional coverage when that person never leaves their local area on business?  Are there a significant amount of personal calls being made at the corporate expense?  If a cell phone has a bad battery, is there any easy method for the user to replace that battery in a timely manner?  When someone is fired, is there a quick & easy method to turn-off his or her corporate cellular phone?  Could there be volume discounts lost because of multiple Providers?  All these issues result in increased costs and decreased user satisfaction.  When these expenses are audited, along with senior management support, it is quite typical that the actual annual expense ends up significantly higher than perceived (many unknown cellular users).  And, after consolidating this expense with under the right corporate plan with the appropriate Provider, they can be reduced 25% to 35%.

To best understand the Cellular environment it is first necessary to understand the basics of how Cellular service and Cellular companies operate.  For purposes of this document, the technology explanations are over-simplified.

Providers & Transmission Standards

     There are two primary modes of digital transmission used by most of the Providers in the United States, TDMA and CDMA.  AT&T, Verizon and several others use the TDMA standard while Sprint and others use CDMA.  In addition to these transmissions technologies, there are several lesser-used and/or proprietary technologies such as iDEN, a proprietary technology used by NexTel.

§         Each of these Providers has erected, and is in the process of erecting more transmission towers in populated geographic areas and heavily traveled routes throughout the US, basically those areas where they can generate profitable revenue.  However, none of the current Cellular Providers has towers in all these areas.  Therefore, most of the Providers share through “Affiliate” arrangements their Cellular coverage (transmission towers) with others in their own transmission group.  The exception to this coverage sharing is those that use proprietary technologies such as NexTel (“Independent” Provider) since their mode of transmission is not compatible with the others.  Because of no Affiliate arrangements, these proprietary Providers have limited coverage areas.

Marketing Hypes & Billing Issues:

1)      “With our service there are no long distance charges”  While this sounds great on the surface, and may be good for personal use, it usually is not as good as it seams in a business environment.  Typically, Provider offers “free long distance” as long as the calls originate in a geographic area that is serviced by one of their own Cellular towers (a.k.a. Direct Service).  Sometimes they offer this benefit when calls originate in an “Affiliate” area, but rarely.  They never offer it when calls originate in areas only serviced by “Independents” in which usage can be at exorbitant rates.

2)      “With our service there are no “Roaming” charges”  While this also sounds great on the surface, it is very similar to the hype stated above.  It usually is only their own Cellular towers service true when calls originate in a geographic area that.  Otherwise, Roaming fees are charged.

3)      “We provide service in all 50 States”  Again, this also sounds great.  However, as noted above, no Provider has total coverage in the United States.  Furthermore, this coverage may be limited to only the very largest cities in that state or, worse yet, may only be provided through Affiliates.  Therefore, when originating calls in the non-Direct areas of those states via Affiliates or Independents, the cost of those calls could be quite expensive and may include Long Distance charges and Roaming charges.

4)      Fraudulent Billing / Scams  There are many scams in which fraudulent individuals try to bilk companies out of significant dollars with no services / products provided in return.  One such scam involves billing statements being sent to a company in which they resemble ones normally provided by actual Cellular Providers, however, no Cellular services have been provided.  Frequently, due to lack cellular knowledge, these bills are assumed to be legitimate and are paid, month after month.

5)      Fraudulent Billing / Number UseModern Technology is great: except when it is used to steal your money.  What can occur is that unethical individuals using sophisticated software programs and special technology can scan the airwaves and pick off a cellular user’s own phone number and corresponding identification code that is always being sent by cell phones in the “on” mode.  With this cell phone information, these individuals can then sell or make calls to anywhere in the world.  This fraudulent billing appears on the user’s billing statement.  In a corporate environment, this can frequently go undetected.

6)      Fraudulent Billing / Past Employees  When conducting audits of cellular expenses, it is somewhat common that expenses are discovered for past employees.  While the phone can be turned-in by a departing employee, they can still have their phone number transferred to another cellular phone.   

7)      “All Cellular Bills are sent to a central Account Payable department and, therefore, we are aware of all Cellular expenses”  This is a fairly common statement that is heard with medium / large corporations.  While it may be true that all corporate-billed cellular expenses are known, it is quite common that other cellular expenses are buried in individual expense accounts (e.g., sales reps, independent agents, etc.).  On average, when corporations have cellular expenses billed to a central point, an additional 20% to 30% is uncovered, typically in employees’ monthly bill-back expense accounts.