What Happens on the Expiration Date Was Decided on the Notice Date
By Bill Henrichs
Founder & President, Bearstone LLC | Former Head of Telecommunications, Simon Property Group
Most reviews of a carrier invoice end at the subtotal. Everything above it gets questioned, because somebody in the building negotiated those circuits and rates and remembers what they should be. Everything below it is headed taxes, surcharges and fees, and it gets paid, because nobody argues with a tax. I understand the habit. Early on, the small fees I turned up in the invoice detail were ones I mostly let go, because they were small.
Ninety days before December 31 is October 2. Sixty days before it is November 1. Thirty days before it is December 1. Somewhere in that stretch, every carrier agreement in your estate that expires at year-end gets decided, and the first of those days has already gone by. The expiration date is on the agreement. The notice date is not. It is a number of days in a sentence somewhere after the rates, counted back from the printed date, and it exists only once someone does the counting.
A carrier agreement spends its pages on rates. What it does on the day the rates expire takes a sentence or two, and in public master agreements that sentence generally does one of two things. In some, the term renews itself for another year unless written notice not to renew reached the carrier in time; one national provider’s published terms set that window at thirty days. In others, nothing renews and nothing ends: the service continues month to month, at the prices in effect on the last day of the term or at the carrier’s then-current rates, and either way the carrier may change them on thirty days’ notice. One of those agreements gives the buyer two choices at the end of the term: take every step the carrier requires to terminate, or continue month to month. Doing nothing is the second.
Month to month is a price, and the carrier sets it. For the length of the term the rates were protected; one master agreement’s word for it is stabilized, and stabilization ends with the term. From the first day of month to month the invoice reads as it did on the last day of the term, until the carrier gives thirty days’ notice of a new rate. Nothing in that sequence needs the buyer’s signature. The agreement that was going to be dealt with at expiration has, by then, dealt with itself.
The notice date can cost the buyer a right as easily as a rate. One national carrier’s pricing schedules carry an option to extend the term for another year at the stabilized prices, exercisable by written notice at least forty-five days before the term ends; for a December 31 expiration, that is November 16. Mark only December 31 and the right is gone by the middle of November, on a day the schedule never printed.
An estate does not have a notice date. It has dozens. A master agreement carries pricing schedules that started on different days and run for different terms, and a service added late in a term can carry its own minimum period past it. Each expiration date anchors its own count, and no one is assigned to the counting. The carrier has no reason to count; its standard terms already say what happens when nobody does.
For years the carrier relationships I ran were renewed by amendment to the agreements already in force: a rate changed here, MPLS or VoIP added there, on paper that was still running. The renewal was made while the agreement was in force, on the buyer’s timing, the one timing under which no default runs. That is where I think the notice date belongs: on the inventory, in the same row as the circuit, the site and the rate, so that when it comes up the renewal is decided with the inventory open. The questions are which of these services are still at these addresses, at the contracted terms, and which of them we should be renewing at all. A TEM platform can hold an expiration date and remind you of it, and that is processing, worth having. What you would be renewing is validation, and it is read from the inventory, line by item.
BearGuard, our managed governance process, manages contracts through their transitions, and a renewal is one, like an opening or a closing: the term and its notice date go onto the inventory alongside the services the agreement governs, each invoice, as it comes in, is validated against that inventory line by item, and the renewal comes up from the inventory before the default in the paper can run. The portfolio behind our case study runs to more than 700 locations under agreements with two national carriers; across 31 months, the inventory is what has tied each charge to the service and the agreement it belongs to, through openings, relocations and closings.
One master agreement reduces the carrier’s side of a renewal to a single sentence: a renewal order is accepted by the carrier’s continuation of service. The carrier renews by continuing. Everything that has to be in writing is written by you, by a date you have to count out. On that date the renewal gets decided, by someone with the inventory open or by the paper, because the date passed unmarked. Either way the service continues, and so does the invoice. The difference is whether the buyer was there when it was decided.