Why isn’t it to your advantage to sign a long-term contract with your service provider?

In the world of telecommunications, many providers offer their service in exchange of signing a long and expensive contract. Over the years, we have witnessed a number of questionable corporate practices that offer this kind of deal in digital signage, background music and on hold messages. Here are some reasons why it is not in your interest to bind yourself by contract to your supplier.

Evolution of technologies

The telecommunications market is changing very rapidly. Your initial needs, when signing a contract, can change in the blink of an eye! Think about it ... you risk having an obsolete solution as soon as it is signed which, in turn, could affect your competitiveness. Companies offering these contracts  do not see the need to offer new products during the length of your contract simultaneously to new generations of technologies emerging in the market. However, they will make sure to offer them at the expiration of your contract as an incentive to renew it. This is called having a fixed horizon.

Notion of power

You probably know the saying: the customer is king? A company that is free from its choices should be able to decide at any time whether it wants to work with a supplier or not. When you sign up for a multi-year telecommunications contract, your provider holds the power leverage. You have no choice but to follow their advice or suffer the consequences (penalty, cancellation fees, legal proceedings, etc.).

Few legal protection

A contract is almost always written in favour of the party who writes it. In the telecommunications world , it is very rare to negotiate clauses. These contracts are often filled with legal clauses that minimize the financial and legal risks of your supplier, leaving you in return without any protection.

Little incentives

With any contract, the dynamics of the customer-supplier relationship is put to the test. In a 3 or even 5 year service agreement, there is very little flexibility on the part of a service provider. A supplier offering this kind of contract will have every advantage to invest in its sales force in order to sign several agreements seemingly advantageous for its customers. Once the document is signed , there may be less interest in providing best customer service.

Questionable behaviour

Since service contracts are written in complex legal jargon, it provides companies with the opportunity to include cunning clauses among general ones. These agreements often contain hidden fees and costly penalties. Some contracts are even renewed automatically if you do not take care to send a termination notice. Imagine then having to endure a contract for a service you are not happy with! This is what can be called a bad marriage!

In conclusion

Before signing your next agreement in telephony, background music, digital display or even your on hold messages, have these considerations in mind. Be smart and minimize your business risk by choosing a “contract free" provider!