Telecommunications for Small and Medium Business

Voice Services Overview:

The telecommunications industry employs some of the most complex technologies in the world and has its own bewildering terminology to describe those technologies and the services they provide. We will purposefully avoid as much of that complexity as possible and focus on the services and how they are used to support businesses. The industry divides the services it provides into two broad categories: voice and data. We will begin with an overview of voice services.

Local Services: Local services, in their most basic form, provide a connection between your business and the public telephone network. When you pick up your single line business phone or dial nine from your PBX for an outside line the dial tone you hear is the local central office indicating it is ready to accept instructions from you in the form of a phone number. Local service allows you use seven digits to call other numbers within your city and surrounding area and for them to call you.

Local service also provides access to a long list of custom calling features that can provide many PBX-like features for the small business or home office. The following is a brief summary of some of those features:

   • Anonymous Call Rejection – Works with Caller ID to stop incoming calls from anonymous callers who have blocked their numbers.
   • Auto Redial – Continually redials a busy number for up to 30 minutes. A distinctive ring alerts you when the number being redialed becomes available.
   • Call Blocker – Automatically rejects calls from numbers you specify or the last number that called you. You will never hear a ring when a blocked number calls you – the calling party will hear a recording: “ We’re sorry, the party you are calling is not accepting calls at this time.”
  • Call Forwarding – Basic Call Forwarding automatically forwards calls to any number you choose. There are a variety of options and enhancements available with Call Forwarding that forward calls on busy, don’t answer, and both busy and don’t answer. Selective Call Forwarding forwards selected calling numbers to numbers that you choose and Remote Access Call Forwarding lets you direct calls to another number when you’re away from your phone.
   • Call return – Automatically dials your last incoming call.
   • Call Waiting – Lets you put one call on hold while you answer a second one, then alternate between the two. If a third caller attempts to reach you they will receive a busy signal. Call Waiting ID works with Caller ID to let you see the number of the incoming call so you can decide if you want to switch to it.
   • Caller ID – Shows the name and number calling before you pick up the phone. This service requires a phone or adjunct unit equipped for Caller ID.
   • Call Trace – This is an expensive service that traces an offending call immediately after it comes in and provides the necessary documentation to take legal action.
   • Centrex – A business oriented local service that provides Custom Calling features in addition to PBX like features.
   • Distinctive Ring / Priority Call – Makes your phone ring distinctively for calls from up to ten selected numbers.
   • Speed Calling – Lets you assign your most frequently dialed numbers to one digit numbers.
  • Three-Way Calling – Allows three people in three different places to talk on the same line at the same time – a simple version of conference calling.
  • Voice Mail – Provides answering machine like services. This service may not be available from all competitive local exchange carriers.

Local service form business is generally more expensive than its residential counterpart is and has additional fees associated with it. Typical single line charges range from $25 - $35 or more with no custom calling features. Second lines are the same or slightly less and are subject to additional regulatory fees. Custom calling features are available for additional charges individually or as “bundles” or “packages” of services. Charges range from $2.00 to $15.00 per month depending upon the feature. A few of these features also have usage charges e.g. auto-redial is $0.50 per use, call return is $0.95 per use, three way calling is $0.95 per use, and call trace is $7.00 per use. Competitive Local Exchange Carriers (CLECs) and Long Distance Carriers with local offers (AT&T, MCI, Sprint, Z-Tel, Talk America, and others) provide local service at a 10% to 30% discount to local phone companies such as Verizon, SBC, Bell South, etc. Many companies, both CLECS and local phone companies, offer “bundles” of services that include local service, custom calling features, and long distance service. Prices for these bundles range from significant bargains to the most expensive way to purchase service. The Business Communications Consultants at Business Telecom Specialists can help you sort through these issues and make an informed decision regarding a service provider.

Long Distance services: The most basic type of long distance services are called “switched” and are accessed when you dial one and then the number you are calling. You choose a long distance carrier when you establish local service (it may be different from your local service provider) or you may change your carrier by working with your newly selected carrier and “PIC over” to the new long distance carrier with your local telephone company. PIC stands for Primary Inter-exchange Carrier – it is a numerical code your local phone company uses to point calls to the correct long distance provider. When switching to a new long distance carrier, you may be told your telephone number is “PIC frozen”. This means your account records at your local phone company indicate that you do not wish your PIC to be changed without your express permission – you can have the change made by calling your local telephone company and asking them to make the change.

As your business grows, and your use of long distance service increases, a dedicated connection ( T1, DS1, T3, DS3 ) may offer you financial benefits. Dedicated service means you connect directly to the long distance company’s network without using the local telephone company’s switches e.g. there is no need to dial one. Per minute rates for dedicated service may be 50% or more less than switched rates. This savings is offset somewhat by the cost of the “loop” – the connection to the long distance company’s network.

Toll free numbers (8xx) allow you customers to call you with no long distance charge to them. If you do any business outside your local area, your customers will expect you to have a toll free number. This service is easy to set up with your long distance provider and the incoming toll free calls will be “pointed” toward one of your existing phone numbers. As your business becomes larger and more complex, you may be able to use some of the many features available with toll free service. These include time-of-day and day-of-week routing, Web based routing control, access codes, multiple toll free numbers, and various tracking reports.

Charges for long distance fall into four major categories: local toll (the area outside your immediate local calling area), intrastate, interstate, and international. Local toll rates vary widely depending on the local telephone company and service area – they are generally in the ballpark of the intrastate rates. Intrastate rates vary by carrier and service area and range from around $0.039 per minute to $0.25 per minute. Interstate rates are generally lower than intra state rates because they do not require the use of local telephone company facilities. They range from around $0.035 per minute to $0.10 per minute or more. International rates have a very wide variance with near interstate prices to first world countries and $1.00 per minute or more to some third world destinations.

Several additional factors affect long distance pricing. Some pricing plans have monthly recurring charges (MRCs), minimums, or minimums with penalties. A minimum means you will always pay at least the minimum price regardless of how much service you use. A minimum with a penalty means if you fail to use the minimum amount of service, you will be assessed the penalty which can range from $2.00 to $20.00 or more.

Billing increments also have a significant impact upon actual rates and consist of two components: initial increment and follow-on increment. A typical billing increment is 18 seconds initial and 6 second follow-on increment (this is displayed as 18/6 in plan documentation). This means if a rate is $0.10 per minute, a call will cost at least three cents and after the initial increment, the call will be billed in six second increments costing a penny.

A rate analysis showing the lowest, highest, and average rate for all categories of long distance (except local toll) recently posted on the SmartPrice.com site is attached as an appendix. Please note that telecom pricing is volatile and the most recent updates are posted on the SmartPrice.com Learning Center site.