Adapting Network Services Agreements to the Digital Age

No self-respecting network manager is trying to buy 20 year old technology - it's been a long time since I worked on an RFP for Frame Relay or ATM Services. And everyone knows that SIP trunking, Ethernet Access, and Hybrid WANs require different specs and pricing structures than the TDM services they are replacing.  

But even though it stands to reason that new services will also require some new contract terms, or at least a change in emphasis, I'm continually surprised by how often enterprise procurement managers - and their lawyers -- insist on obsolete clauses even as they de-emphasize or skip terms that are crucial in a digital world. 

I'm going to spend the next few weeks looking at this subject, and in particular on terms that (a) you can drop or de-emphasize; (b) you need to strengthen or add; and (c) were and are important, but need to change to keep doing what they are supposed to do.

We'll start with two provisions that are "poster children" what I'm talking about. 

For something to drop or trim, look at training.  For a quarter of a century large enterprise deals have included provisions to the effect that the vendor will provide in-person training for the buyer employees who will be administering the services --placing orders, dealing with troubles, reviewing reports, etc.  But in 2016 we do that through webinars and other forms of online education, so most of what used to be covered in a training section can be handled with a reference to adequate on-line tools and access to them by authorized user personnel.

Training in this connection is not the same as account support.  Unless you are spending tens of millions of dollars annually with a carrier, you can no longer expect to have a full time account manager supported by other full time personnel, all dedicated to making sure your services are running smoothly (and that you are buying more of them).  But it's still possible to get dedicated support, as long as you understand that "dedicated" doesn't mean devoted solely to you.  Having a dedicated billing manager, for example, means having the name and number of someone in the billing department who knows your account (and several others) and will usually be the first person you (and several other enterprise customers) deal with when you call with a billing problem.  Not perfect, but a lot better than a toll free number that you call, only to get a different person every time with whom you have to start over.

For something to add or strengthen, consider banning "click wrap" agreements. The emergence of on-line portals as the primary customer interface for network services has fueled the rise of truly awful terms that users agree to each time they one of their employees clicks "I agree" to access website content or functionality. The way this stuff is written, when a clerk or low level administrator clicks the button to place an order or report a problem they are agreeing to wholesale revisions to the master service agreement ("MSA") the parties spent weeks or months negotiating, including major changes to indemnification provisions and expansion of the right of the carrier to change the agreement unilaterally in the future.  

The way to combat this is through language in the MSA that says that click wraps cannot operate to amend the agreement, and language in the 'integration clause' that no amendment to the agreement will be effective unless physically signed by individuals expressly authorized to do so.  This has been a good idea for a decade, but in 2016 it's essential.

Next time we'll tackle remedies for non-performance, another area in which 2016 doesn't look much like 2006.  Stay tuned.