Archive for October, 2009

The ugly face of telecommunications contracts…

Monday, October 19th, 2009

When you are in the business of providing data center and telco services, you will undoubtedly encounter many clients who are leaving a provider that is providing less them stellar performance.

We here stories all the time of shady tactics that some companies employ in order to try and force a person to stay. The biggest tactic we see these days is contract auto-renewal with excessive requirements that make opting out of renewal confusing and complicated.

I personally went into business to service customers in a respectful fashion, not strong-arm them into contract renewals. I came across an interesting case the other days. Potential customer was at a data center that had a 12 hour outage; an outage caused by the provider failing to acquire more then one ISP feed even though they advertised redundant bandwidth. Customer knew their contract ended in November, so in early October they called to notify the provider of their intention to terminate at the end of the contract.

Well, there was a surprise waiting for them. The contract had an auto-renewal clause that stated if you dont terminate at least 90 days prior to contract end-date, then the contract auto-renews for another year. Now some people actually believe that anything written in a signed contract is enforceable, but this is not the case. Requirements for termination are unreasonable and in most states are invalid or a violation of the states business practices code.

Whenever you are trying to get out of a contract that has either auto-renewed prior to end-date, or service is so bad that it is impacting your business, the first thing you need to do is read your states business practices code. Most of the time, the aut0-renewal clause is in violation. Even if its not, most courts will rarely agree in the enforcement. The provider has to have a legitimate reason as to why the termination requirement is necessary. For example, is it reasonable that a datacenter provider needs 90 days to cancel your service. NO. It takes them 2 minutes to unplug a cable, and it takes you a few hours to move your equipment out. There is absolutely no reason why they need extended notice of your departure.

So all my future clients out there, dont be scared of auto-renewal entrapment.