1. By C. Douglas Jarrett, Partner, Keller and Heckman LLP Jarrett@khlaw.com www.khlaw.com and Rick Sigel, CEO and Founder Silver Lining Telecom RickSigel@silverliningtelecom.com www.silverliningtelecom.com BEST PRACTICES FOR ACQUIRING TELECOMMUNICATIONS SERVICES

2. PROCUREMENT CYCLE DATA COLLECTION CURRENT / FUTURE REQUIREMENTS CARRIER DUE DILLIGENCE SOURCING EVENT NEGOTIATIONS FINAL CONTRACTS IMPLEMENTATION MONITOR MILESTONES & COMMITMENTS

3. Part I -- Scope of Services Part II -- Procurement Cycle Part III -- Developing RFPs Part IV – Decision Making and Validation Part V -- Terms and Conditions -- Whats Really Important TOPICS

4. Wireless Services Generally Available Voice and Data & Data-Only Services Plans Wireless voice and data services offered to businesses and consumers on carriers authorized frequencies operating on carrier-determined transmission technologies (GSM, CDMA, LTE) Subsidized handsets, smartphones, tablets, and air cards In-building repeaters for customers high-traffic locations (negotiable) Principally domestic with international roaming options SCOPE OF SERVICES

5. Wireless Services (contd) Business-Only Wireless Services Push-to-Talk-Services Includes subsidized handsets M2M Services Wireless data service for which application restrictions apply Offered over 3G or 4G networks Interconnects to customers MPLS service, not the public Internet Carrier-approved devices/modems, not subsidized by carrier SCOPE OF SERVICES

6. Wireline Services Local Exchange Services Special Construction Arrangements Enterprise Services 1.Basic Transport Services 2.Dedicated High Speed Internet Access Service 3.Layered Services 4.Rest-of-World Services SCOPE OF SERVICES

7. Wireline Services (contd) Local Exchange Services Regulated intrastate voice services–PRIs, PBX Trunks, FB 1s Straight volume discounts and term commitments Typically acquired under state-specific tariffs/contracts Special Construction Arrangements Examples Dark fiber ring Physical extension of carriers network to a customer facility Offered by local telcos or IXCs pursuant to contracts sometimes tariffed SCOPE OF SERVICES

8. Wireline Services (contd) Enterprise Services Agreements Almost always interstate and international services Commercial agreements, not tariffed in USA 1. Basic Transport Services Circuit switched interexchange voice and VoIP inbound and outbound Dedicated access servicesDS-1, DS-3 and Ethernet Private Line Service-- DS-1, DS-3 and Ethernet Multiprotocol Label Switching (MPLS) Service* Virtual Private LAN Service (VPLS) Satellite service 2. Dedicated Internet Access Services* SCOPE OF SERVICES

9. Wireline Services (Contd) Enterprise Services Agreements 3. Layered Services Hosting CPE/Network Management Firewall Data Center (Collocation) Many network-based conferencing services Content delivery services Cloud computing 4. Rest-of-World Services Typically MPLS and Private Line Some Layered ServicesCPE/Network Management SCOPE OF SERVICES

10. Part I -- Scope of Services Part II -- Procurement Cycle Part III -- Developing RFPs Part IV – Decision Making and Validation Part V -- Terms and Conditions -- Whats Really Important TOPICS

11. WHEN TO START? Timing and leverage is always keyDont wait to renegotiate ! Uncommitted spend New business or technology upgrades – know what the account teams want to sell Term Extensions Know current detailed demand set/inventory and contract milestones Maintain credible threat of loss or migration – minimum 6 - 9 month lead time for data collection, sourcing strategy, negotiations and possible migrations WHY DO IT? Drive savings /cost reductions, obtain market leading rates, terms and conditions Typically 20% - 25% gap to market on contracts over 12 months old No linear relationship between spend, commitment and price among customers Knowledge, preparation, benchmarks and leverage are the keys to any negotiation Remain open to options and alternatives Carriers usually hold the cards on benchmarking and Ts & Cs Drive to more level playing field Timing+Flexibility+Knowledge >>>> Uncertainty for carriers = Better overall result PROCUREMENT CYCLE

12. WHATS INVOLVED? First understand different carrier perspectives and current environment Wireless gets attention; wireline accounts for 50% - 75% of typical enterprise spend Local services = low profits. Traditional Voice services less attractive to carriers Carriers highly value data services – stickier with higher margins and more viable choices Power of incumbency Less staff on customer side creates major bias in favor of incumbent - Carriers know this! Carriers trying to increase contractual commitments both in Term and Spend (in addition to individual circuit/SOA Terms) Pricing continues to go down – not as fast, but still declining Competition continues in the form of technology choices (Ethernet, VoIP/SIP, Wireless) Account Team Realities PROCUREMENT CYCLE

13. Part I -- Scope of Services Part II -- Procurement Cycle Part III -- Developing RFPs Part IV – Decision Making and Validation Part V -- Terms and Conditions -- Whats Really Important TOPICS

14. Determine which vendors to invite Due diligence based on current/future requirements Develop clear outline of process steps and timetable Schedule (in-person) Bidders Conference Recognize that carriers always want more time Provide detailed demand setBook of Business Usage profiles / details for voice and wireless Geographic info i.e. sites, addresses, CPE, # of users etc. Required Terms and Conditions Term – 3 Years Wireline / 2 Years Wireless Commitment level and structure for each Periodic Rate Review with remedies Implementation and other SLAs with remedies Customized rate plans for wireless Business Change/Downturn/Divestiture with specific remedies Billing Issues – resolution timing, remedies Account Team performance obligations DEVELOPING RFP S

15. Develop and require standardized format for responses Carrier worksheets for side-by-side comparison analysis Scorecards helpful for Ts & Cs i.e. relative importance Require Senior Exec direct contact information for escalations Include non-recurring pricing aspects such as implementation/migration costs and assistance, equipment, demos and tests Encourage creative/alternative solutions or technologies Determine finalists Negotiate to Best and Final offers Ensure implementation, migration, and billing are correct Execute new agreements DEVELOPING RFP S

16. Part I -- Scope of Services Part II -- Procurement Cycle Part III -- Developing RFPs Part IV – Decision Making and Validation Part V -- Terms and Conditions -- Whats Really Important TOPICS

17. AnalyticsModel Potential Award Scenarios Financial Impact and Trade-Offs Savings, Increased Bandwidth, Equipment Upgrades etc. Geographic Coverage Wireless and Wireline Technology Roadmap Internal Resource Requirements Hard and Soft Implementation/Migration costs Number of Vendor Relationships or Applications to Manage Require Formal Tracking and Review Process 1 st Bill Review with Account Team(s) Quarterly Reviews with Vendor – Billing, SLAs, Optimizations, Implementations, Outages etc. DECISION MAKING AND VALIDATION

18. Part I -- Scope of Services Part II -- Procurement Cycle Part III -- Developing RFPs Part IV – Decision Making and Validation Part V -- Terms and Conditions -- Whats Really Important TOPICS

19. Services agreements are drafted by and for the carriers Separate Wireline and Wireless agreements Major components Master Agreement Schedules and Attachments On-line pricing, terms and conditionsAuthorized User Policies TERMS AND CONDITIONS WHATS REALLY IMPORTANT

20. Make sure the good stuff you negotiated is in the agreement Pricing expressed as fixed rates All agreed upon credits Pricing Review, Business Downturn and Technology Migration Clauses Account team support Low minimum revenue commitment; no service-specific minimums Line minimums-only in Wireless deals Accelerated handset refresh periods In-Building repeaters for major locations TERMS AND CONDITIONS WHATS REALLY IMPORTANT

21. Key Issues to Overcome in Carriers Agreements (directly or indirectly) Limited damages for carrier Limited termination rights for customer Service Level Agreements Wireline SLAs dont address chronic issues Not an issue with Wireless ServiceNo SLAs Address M2M differences 2-year term impractical M2M services requires service levels/right to terminate Understand application/operational limitations Customer indemnity obligations minimized Carrier-preferred dispute resolution provisions for billing & other issues TERMS AND CONDITIONS WHATS REALLY IMPORTANT

22. Key Subjects to Consider, Include or Address Value of a low minimum revenue commitment Reasonable (extended) transition period upon expiration or any early termination Customers standard vendor insurance obligations, and workplace safety and access rulesparticularly if carrier accesses customer premises or equipment Account Team support commitments Cybersecurity Considerations Carriers disclaim responsibility for unauthorized access to customer data Obligation to assist in troubleshooting a cyber attack Different principles must apply if layered services are part of deal TERMS AND CONDITIONS WHATS REALLY IMPORTANT

23. PROCUREMENT CYCLE DATA COLLECTION CURRENT / FUTURE REQUIREMENTS CARRIER DUE DILLIGENCE SOURCING EVENT NEGOTIATIONS FINAL CONTRACTS IMPLEMENTATION MONITOR MILESTONES & COMMITMENTS

24. C. Douglas Jarrett, Partner, Keller and Heckman LLP Jarrett@khlaw.com www.khlaw.com and Rick Sigel, CEO and Founder Silver Lining Telecom RickSigel@silverliningtelecom.com www.silverliningtelecom.com THANK YOU!