Most people have limited experience in negotiating carrier contracts whether for traditional MPLS service or for SD-WAN services.  I have seen the best contract lawyers and attorneys from big-name law firms totally botch their review of a carrier contract since they didn’t have the first-hand experience on what really matters.  They’re fine with the basic terms and conditions, but there are other items that are equally important.

Installation Times

Your Service Level Agreement or SLA should contain provisions to specify the installation time frame to assure that all circuits are installed during a relatively narrow window (a month, depending on network size) to avoid double charges with the legacy and new carrier.  Some carriers will place all orders at the same time, resulting in 30-day circuit installations and Ethernet installations as long as 120 days.  You don’t want to be forced to pay for circuits before you have a working network, so make sure it is addressed in your carrier contract.

Transition Costs

Transition costs can sometimes be negotiated in your carrier contract to avoid paying for two networks during a migration.  You should understand that the carrier has its margin goals.  If they will provide a free month of service, it will increase the Monthly Reoccurring Cost (MRC) for your network.  But this could be a sensible maneuver depending on your company’s finances.

Force Majeure

One carrier contract catch-all to be aware of is Force Majeure, which is used to relieve the carrier of any responsibility for liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term act of God (such as a hurricane, flooding, earthquake, etc.)  You want to be very specific on what is covered under this language since the carrier will take the broadest approach possible and your goal is to narrow that down.

Term Length

What is the carrier contract term length?  A big mistake that many customers make is adding new circuits or upgrading circuit size, with each new order priced with a 36-month term, since it has the lowest price.  If you have twenty locations installed at the start of a contract and then add ten more over two years, each with a 36-month term, when does your contract end?  You will be forced to pay termination charges if you are not happy with the service.  One way to address this is to codify in the carrier agreement that all new circuits will be co-terminus with the term of the master service agreement.  In addition, you need language specifying that this language supersedes any circuit term length listed on the new service orders.  By the same token, understand that shorter term periods will be priced higher so you will need to weigh the cost vs benefit of taking this approach.

NNIs

If your network depends on E-NNIs with other carrier networks, those E-NNIs have a finite bandwidth limit.  If you are a substantial enough customer for the carrier, it is reasonable to ask to see monthly reports of E-NNI bandwidth utilization in the event that you experience increased latency or packet loss, tell-tale clues of over-utilization.  This is a very difficult problem to troubleshoot since it is typically an intermittent problem. Negotiating your service level agreement is a whole different subject. You can see a blog I wrote about MPLS SLAs a while back that might help.

Exit Language

Every contract comes to an end at some point. Therefore, you want to contractually provide exit language that will make the transition to another carrier as smooth as possible.  You don’t want to see your prices sky-rocket after your carrier contract expires, as is the case with some global carriers that discount their list prices.  But you will want protection for a finite number of months to transition.

There are plenty of other subjects to address in your carrier master service agreement.  SD-WAN-Experts recommends that you use legal counsel that specializes in this field to protect your company’s interests the next time you negotiate a carrier contract.

 

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