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How One CIO Fixed Problems With Telecommunications Providers' Bills

How I fixed my telco billing problems.

To quote Howard Beale (played by the actor Peter Finch) in the 1976 movie Network, "I'm as mad as hell and I'm not going to take this anymore!" What am I mad about? Invoices from telecommunications providers (voice, data, cellular).

It seems to be standard industry practice for their invoices to be wrong. Not marginally wrong, but very wrong. As evidence, I provide two exhibits. First, my staff averages 20 hours per week reviewing and scrutinizing our telco bills to make sure that we are not being billed rates above our contract, charged for unauthorized services, phantom locations, etc. Second, at least once a month I am contacted by a new vendor that offers the service of verifying our telco invoices to make sure we are not being billed rates above our contract, charged for unauthorized services, phantom locations, etc. Would this cottage industry exist if telco providers were sending out accurate invoices? Not a chance. This cottage industry exists because it knows it will find errors in provider invoices.

We do business with every major telco provider and several small ones. There does not seem to be a single one that can generate an accurate invoice. Why does this happen? I think there are several reasons.

First, most current providers grew up as a monopoly, and accurate invoicing just did not matter to them. If they could not provide an accurate invoice, what was a customer going to do, switch to another provider?

Second, their billing systems were built years ago (in their monopoly days) and were not designed to handle the diversity and agility of services we require today. Are the providers ready to invest in the overhaul of their billing systems? Not as long as we are willing to allocate our resources (or hire someone from the cottage industry) to find and fix their mistakes.

Third, the fairly recent and rapid consolidation of telco providers means that inaccurate billing systems are now being cobbled together with other inaccurate billing systems. As telco customers, we don't have a chance.

Since I have decided that I am not going to take it anymore, I am changing the relationship (and my contracts) with my telco providers. A few weeks ago I started the process with one of my major providers. Instead of having someone on my staff scrutinize their bills to ensure they are accurate, I told this provider that it is their responsibility to send me an accurate invoice. If this requires them to hire additional staff to replicate what my staff is doing (or even to hire one of the cottage industry vendors), so be it. Rather than scrutinize their bills for accuracy, I will do some sampling. The first time we find an error, I require the provider to give me a 10% credit, recalculate the invoice, and try again. If the rebill still contains errors, the provider gives me another 10% credit and tries again. Perhaps this will give the providers a financial incentive to get things right the first time.

From now on, each time I do any negotiations with my providers, I am requiring a contract clause that includes their paying for their invoice mistakes. If they decide this clause is unacceptable, I now have provider choices. I think I am on to something.

My negotiations with the first provider were successful. They agreed to make the change.

Niel Nickolaisen is CIO and vice president of strategic planning at Headwaters Inc. in South Jordan, Utah. Write to him at

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