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January 9, 2003

New international phone rates expected to save some money, but faculty contend some rates still too high

The University saved $1.3 million in telecommunications services costs over the last 18 months and expects additional savings on certain international phone rates beginning this month. But some members of a University Senate committee say it isn’t enough.

While budget policies committee (BPC) members alleged Dec. 5 that the international phone rates for University personnel are “extraordinarily high,” University administrators countered that committee members should look at the bigger picture.

According to Jinx Walton, director of Computing Services and Systems Development (CSSD), Pitt has seen significant savings recently as a result of streamlining the CSSD Telecommunications unit and renegotiating certain standing vendor contracts, including a contract with AT&T for long-distance service.

CSSD Telecommunications oversees billing, port installations, telephone repair, phone directory preparation, the audix voice mail system and other services and works with Pitt’s General Counsel office to negotiate related outside vendor contracts.

Walton said that by making telecommunications services more efficient, including shifting some responsibilities from external vendors to in-house technicians, Pitt saved $990,579 in 2002.

During the same period, Pitt saved an additional $350,000 by negotiating 50 percent lower domestic long-distance rates with AT&T, under terms of a three-year contract that went into effect January 2002. Long-distance calls within Pennsylvania are 7 cents per minute; for other states, calls are 9 cents per minute, she said.

More savings on international phone rates for high-volume countries are expected to kick in beginning this month, she said.

“International calling represents 3.5 percent of our total calls at the University,” Walton said. “For international rates, we evaluated traffic and found out that 65 percent of our traffic went to 11 countries; 35 percent went for the other 198 countries.”

The heavy volume countries are Canada, Mexico, Brazil, People’s Republic of China, France, Germany, Italy, Japan, Switzerland, Taiwan and the United Kingdom, she said.

“What we did was to negotiate special rates for those 11 countries, and the others are at the standard AT&T commercial rate,” Walton continued. “As of Jan. 1 [2003], we’ll begin to implement about 30 percent lower rates for those 11 high-volume countries. For the other countries, the rate may drop slightly or stay the same.”

The overall cost of calls at Pitt is about $3 million annually, she said.

“I will not argue that these are the lowest rates available anywhere, because they are not,” Walton acknowledged, but she said that the University felt it needed a full-service provider such as AT&T to ensure quality of service.

But some BPC members remained unconvinced that the University was as successful as it could be in obtaining lower international rates.

Richard Pratt said, “You’ve done relatively well on national rates from what I can tell, but it doesn’t seem you’re doing too well with international; your rates are still way out of line. People say we can do better with other commercial vendors” by as much as a factor of 8 or 10, depending on the country, he said.

“Most people who deal with international rates probably have abandoned the University system” in favor of using other vendors, Pratt suggested.

Walton agreed that individuals may have gone outside the University system to make international calls, but said that Pitt as an institution was obligated not to use other providers for the life of the AT&T contract, which runs through December 2004. “Beginning next January, we’ll start to look at all providers,” she said. “We could fragment our services and get more than one vendor. We have to look at the quality and administrative overhead costs. We expect to do a thorough job of looking at all our options,” including consulting a telecommunications industry external expert before signing a new deal.

Requests for proposals for a new contract are expected to go out in March 2004, she added.

In preparation for negotiating future phone service contracts, BPC recommended:

• Forming a committee or task force that includes representatives of units with heavy international phone service needs, such as the University Center for International Studies;

• Making long-distance rates schedules widely available to the University community, particularly for international calls;

• Considering the length of future contracts to accommodate the rapidly changing telecommunications industry;

• Surveying users on service reliability needs versus costs;

• Gathering comparative data on international phone use at Pitt from the pre-Internet and pre-e-mail era to study the decline of use among University employees.

Robert Pack, who serves as the administration’s liaison to BPC, said, “There is always a trade-off in contract negotiations: If we get positive rates on Internet access or internal access, that may be balanced in other areas. Part of the problem is when special interests want a certain part lower, they focus on that.”

He added that in the near-term, long-distance rates are expected to go up.

“The companies that were driving down the rates like WorldCom led [them into] bankruptcy. Even AT&T is still losing significant money in long-distance business and they’re looking for other areas to get into,” said Pack, who is vice provost for Academic Planning and Resources Management.

“From the institutional point of view the overall savings are significant. Departments have had real savings of $1.3 million. And that’s not money the University takes back, it’s money still available [to the departments],” he pointed out.

—Peter Hart

Filed under: Feature,Volume 35 Issue 9

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