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You may be able to save a healthy percentage on your phone bill without even changing the rate your carrier charges. All it takes is to tighten up the accounting. To find this savings, you must first determine the following:
- The minimum duration your carrier charges per call
- The number of digits in the rounding
- Whether you're on a flat or tiered rate plan
The more you pay for your phone service, the more important it is for your carrier to be exact when tabulating charges in these three areas. They may seem like trivial details, but they make a huge difference on what you pay per month.
Understanding call duration and incremental billing
Telecom uses two main call durations: whole-minute increments, or six-second increments. The whole-minute increments are simple and make reconciling your invoice simple. Every call is be rounded up to the next full minute and charged at the rate you agreed to. Because there are no fractions of a minute, there is no rounding, and all of your calls divide out to your exact contracted rate. The downside of whole-minute increments is that most calls do not end at exactly a full minute. For example, a call lasting a minute and three seconds is billed out as a two-minute call. If you're happy paying for 57 seconds of a call you didn't make, then whole-minute increments are for you. If you work for a telemarketing company and most of your calls are 30 seconds long, with each call being rounded up to one minute, you're paying twice the amount that you should.
The best option is negotiating with your carrier for six-second billing increments. This option breaks every call down to tenths of a minute and prevents you from paying for an excessive amount of time that you didn't use. You still have a few seconds on each call that are added, but the net effect is minimal.
 | Beware of the lure of billing units. Some carriers do not charge you in increments of seconds or minutes, but in billing units that do not correlate easily into reality. If your salesman cannot explain the rates of your calls in one sentence, avoid it. |
 | One-second billing units aren't necessarily better than six-second units. It does seem logical that the more accurate your duration is recorded, the more accurate your invoice will be. That is, unfortunately, only half of the equation. In the end, your rate also depends on your decimal rounding. |
Dealing with decimal rounding
If, as in the previous section, "Understanding call duration and incremental billing," you run a telemarketing business that makes many short phone calls, you may want to negotiate a six-second billing plan so that your invoice is more manageable.
But wait — there's more. You need four-decimal rounding. Many companies in America have two-decimal rounding — every call is individually rated to the nearest penny. If you have a dedicated circuit with a rate of three cents per minute on calls and you make a six-second call, you should legitimately be charged $0.003 — three-tenths of a cent — for the call. If you have only two-digit rounding, you're going to be charged a penny for the call. This does not seem like much, but $0.01 for a 0.1-minute duration call gives you a per-minute rate of 10 cents.
| If most of your calls are of short duration, two-digit rounding can easily raise the average rate you pay. Consider three- or four-digit rounding if you have the option. If your calls are rounded to three decimals in a six-second call at three cents a minute, you're charged the correct cost at three-tenths of a penny. Sounds good? The only problem with that is that most long-distance rates are not in full-penny increments. Competition has pushed rates down so that your contract for dedicated circuits may have a rate of 2.9 or 2.2 cents per minute. When you're dealing with 300,000 minutes per month, the difference in your phone bill between the two rates is $2,100. The only way to effectively capture your rate of 2.9 cents per minute is to have every call rated to the fourth decimal point. In this case, a 12-second call (0.2 minutes) costs $0.0058, and your per-minute rate is intact. If this amount is rounded to two decimal points, you pay about double for the same call. If you have a small number of calls per month, and they are all of long duration, the digits in rounding don't affect your bill too much. But if you have a high volume of calls under a minute, the cost savings through this one change could be 50 percent. |
| The savings you see don't increase if you secure five- or six-digit rounding. At that level, the amount of money is so small that it would take hundreds of thousands of calls to add up to a dime of savings. If a carrier sales rep claims that the carrier's billing plan will save you money because it has five-digit rounding, have the rep crunch the numbers to prove it to you. |
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