Beware NDAs that Could Halt TEM, Benchmarking Published June 5, 2008 (Vol. 29, No. 12) Don’t sign on to any agreement that lets your carrier claim control of your telecom data. Nondisclosure agreements, letters of agency and amendments aiming to impose those restrictions are showing up with increasing frequency, warns telecom attorney Justin Castillo. Signing these confidentiality measures binds your enterprise to requiring carrier permission before disclosing information to third-party vendors. Don’t agree to the deal, the Telecom Expense Management Industry Association (TEMIA) advises enterprises and TEM firms in a newly released position paper. Otherwise, you grant your carrier the power to monitor or even veto which third parties can access your enterprise’s telecom data and what they can do with it, explains Castillo, a partner at Levine, Blaszak, Block & Boothby, in Washington, D.C. AT&T Mobility has been pushing such agreements since at least 2006 (when it did business as Cingular) [VR 8/6/07]. Verizon has adopted nearly identical language, telecom expense management industry members told attendees at Voice Report’s 4th Annual National Summit on Telecom Expense Management, held June 2-3, in San Francisco. (www.TEMNationalSummit.com) TEMIA members also reported in a recent online seminar that they’ve seen similar clauses from Qwest, Granite Telecom and others. NDA Restricts TEM Activities Historically, enterprises have protected their call data and other customer proprietary network information (CPNI) via separate nondisclosure agreements with carriers and TEM vendors. But the new clauses seek to create a direct contractual relationship between the TEM vendor and the carrier, Castillo explains. “The carriers seem to be trying to essentially fence in the use of confidential information in ways that could potentially make it impossible to use information for benchmarking or other types of projects outside the scope of the existing agreement,” he says. By signing these confidentiality agreements, you risk signing away your enterprise’s right to third-party help, which could hurt price benchmarking projects. Such agreements could even give carriers the right to prohibit the sending of billing information to a third party. “That would really hamper the effectiveness of the TEM solution,” adds David Spofford, CEO of Manassas, Va.-based Invoice Insight and president of TEMIA, which has more than 25 member firms. The confidentiality clauses prohibit TEM companies from ordering and activating voice and data services; ordering equipment; adding or deleting users; requesting rate plan, feature and account changes; receiving billing information; and making billing inquiries, TEMIA notes. Penalties for breaking these agreements can include injunctions. Here’s how Verizon Wireless’ NDA words it: “It is agreed that a violation of any of the provisions of this Agreement will cause irreparable harm and injury to the non-violating party and that party shall be entitled, in addition to other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining the violating party from doing or continuing to do any such act and any other violations or threatened violations of this Agreement.” Are Clauses Backlash against Third-Party Help? The aggressive confidentiality terms are a sign that carriers are feeling threatened by TEM vendors and other third-party firms offering to help manage telecom, Spofford contends. “They are concerned that people who are in business to help end user clients – like TEM vendors – actually get between the client and the carrier and create a more difficult relationship for them and also keep them honest when it comes to pricing and billing,” he says. “This is just a power play, an attempt to keep their direct relationships with their clients and to keep their clients somewhat in the dark,” Spofford says. Carriers might also be trying to lay the groundwork to provide TEM services themselves, Castillo adds. Representatives from Verizon did not provide comment by Voice Report’s publication deadline. Mark Siegel, executive director of media relations for AT&T Mobility said only, “Sorry, but we are not going to comment on this.” Avoid the ‘Wolf in Sheep’s Clothing’ Be on the lookout for any language that would bind you to getting your carrier’s permission before disclosing information to a third-party vendor, Castillo and Spofford urge. Scour all the fine print, even in documents other than nondisclosure agreements. “[We’re] seeing this language crop up in almost every conceivable place in an agreement,” Castillo says. “It’s really a wolf in sheep’s clothing here,” he adds. Expect to hear your carrier rep say, “‘We have an amendment, we have an LOA [letter of agency] for your TEM that you need to sign, and it’s just a matter of routine, don’t worry about it,’” Castillo warns. Carriers are also telling enterprises that some TEM vendors are signing the agreements, and arguing that theirs shouldn’t be any different, Castillo says. Here’s some fodder for rebuttal: No TEMIA member has signed the AT&T NDA. TEMIA’s position paper, published this week, instructs its members and enterprises to “vigorously resist carriers’ attempts to thwart client cost savings initiatives.” (You can view the paper here) Threaten to Move Business Unless Carrier Relents Once you sign a clause giving carriers the right to monitor or veto third-party use of your enterprise’s data, it’s very difficult to undo, Castillo warns. Verizon Wireless’ NDA, for example, stipulates: “The obligations with respect to Confidential Information shall extend for a period of two (2) years following the date of termination or expiration of the Agreement, except, however, that Verizon Wireless customer information shall remain confidential forever.” The good news: Enterprises have successfully turned down these agreements with every carrier, Spofford reports. One effective strategy he’s witnessed: Be firm and tell the carrier that your enterprise has separate confidentiality agreements with its TEM provider and with the carrier. Therefore, everybody’s covered and there’s no need for the carrier to impose an NDA directly on the TEM provider. “We’ve seen others that simply say that if the carrier insists on attempting this power play, they will lose all business from that customer, and that usually gets them to back down as well,” Spofford says. Consider alternatives like Sprint, Level 3 and Global Crossing, Castillo advises. These aggressive confidentiality clauses have not been weighed yet by courts or the FCC, Castillo reports. But they could be soon. “I think it’s clear there are some serious defects and questions about this,” he says. Aggregated pricing information plays a big role in establishing benchmarks and driving competitive deals, and “to the extent that the carriers are trying to put blinders on this process, it raises serious competitive concerns that could be struck down by a court or administrative agency,” Castillo says. ( | 
