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July 1989

A telecommunication primer.

by Gordon, Cheryl L.

    Abstract- Firms that are interested in purchasing new telecommunication equipment should be advised to consider a variety of issues. It is often best to select a simple telecommunication system that may have a number of features including speed dialing, intercoms, or call timers. Additionally, firms may want to look into acquiring network services, voice mail systems, or facsimile machines. However, firms should remember to find a reliable dealer who can offer equipment at attractive prices.

A Telecommunications Primer

Since November 1983 confusion has reigned regarding telephone equipment and services. When Judge Greene mandated divestiture of AT&T, consumers were left with an extremely competitive marketplace which works both for and against them.

If a company is interested in purchasing new telecommunications equipment, it will be besieged by salespeople, each attempting to sell the most technologically advanced system that is available. Although the type of equipment needed varies with the size of the company, the confusion which arises due to the wide variety of systems and features is consistent regardless of size. The simpler the system is, in most cases, the better.


You will rarely use more than 10 of the available features. Thus, the bottom line is the ability of the company you purchase from to understand your business and to program the system in such a manner that it enhances your operations. What you should be interested in is purchasing a reliable system from a vendor who can provide you with good service.

If you are presently renting equipment, you may be paying much more than you need to. Renting is normally more costly than ownership and most older equipment does not provide features such as Speed Dialing, Station Message Detail Reporting, Hands Free Intercom, Call Timers, Monitor Dialing, Speaker Phones, Hot Lines, etc., which can save time and money for your firm. However, renting from a high quality provider is much better than buying from an incompetent seller. Some of the available features deserve further explanation.

Speed Dialing. Most telephone equipment has a system-wide list available to all authorized extension users as well as individual lists per extension. This could be useful if your client and vendor numbers were included in the system list.

The only problem created by this feature is that people using it tend to forget the phone numbers and outside the office they must carry a phone book! (There are small, electronic, hand-held phone books available for this purpose.)

Station Message Detail Reporting. Provides the ability to determine which extension made and received calls, the length of each call and, if it was an outgoing call, the cost of the call. This feature can be used to simplify billing to clients and to reduce employee abuse of telephone privileges.

Class of Service Restrictions. Telephone extensions can be programmed to restrict certain types of calls. For example, an unrestricted phone can call anywhere, a second may be restricted to calls within the office, a third restricted to calls within the continental U.S., and a fourth restricted to local area codes. This can eliminate calls to the "fun" lines. Have the vendor program out calls to those numbers (999, 950, 976, 550, etc.).

Intercom. The ability to intercom with the entire office or designated extensions can enhance communications.

Speaker Phones and/or Monitor Dialing. Monitor dialing allows you to place calls without picking up the handset. A speaker phone will allow for hands-free operation of the telephone.

Call Timers. Some display telephone sets have the ability to time calls. Such information will be useful when completing time sheets.

Some vendors of telecommunications equipment have different reputations for service, depending on the location of the individual offices. Therefore, a company may provide excellent service in one locality and have a terrible reputation in another. The key to this issue is to contact users of the equipment in your area. Do not stop at one reference--contact at least three! Also, go to watch an actual installation. Have the vendor show you the equipment room where the lines are cross-connected and make sure that the job was done in a clean, neat, professional manner. Test the phones to ascertain the availability and ease of accessing needed features. For example, some systems have hands-free intercoms whether or not your extension is in use. Other systems offer intercoms which operate only when the extension is idle. Is this an important feature for you? If it is, make sure that it works the way that you want it to. If each important feature is checked out in this manner you will not be disappointed later on. Also, it is very important to get everything in writing.

Have the vendor detail the system components and features along with a per unit cost to add or delete items both before the changeover to the new equipment and for one year after installation. The other cost you may want to include in the contract is that of maintenance service after the first year (first year service should always be included in the purchase price). One last bit of information which can be included in the contract is the response time guaranteed for various kinds of service calls.

Network Services

If your firm places many calls in one particular calling area, there may be a way to reduce expenses. Call the local telephone company and ask your representative about the plans that are available. If members of your firm place many long distance calls, it may be cost effective to utilize one of the many alternative calling programs available with companies such as AT&T, US Sprint, MCI, RCI, etc. To evaluate the comparative cost of these services, you should submit a typical month's bill to various carriers and allow them to price out the calls with their service. Make sure that you add in any monthly access charges that may be incurred and do not overlook the savings that may be available with the use of the carrier's credit card service.

Call Accounting (Stand Alone Systems)

A call accounting system tracks telephone calls and prices them to simplify client bill-back and eliminate, or greatly reduce, employee abuse. The cost to a company is not only the call costs incurred, but the time spent on matters other than business. These are small systems which are reasonably priced for the small- and medium-sized business.

Automated Attendant Voice Mail Systems

Many companies today are using automation to work for them. Automated systems can receive incoming calls, answer the calls, transfer the caller and allow for a message to be left. This is accomplished by a combination of computer electronics, specialized software and telephone lines. While some people find them impersonal and/or intimidating, others find them invaluable. Use of this type of system can eliminate "telephone tag," reduce call-backs, lower labor costs and improve messaging.

The caller no longer is dependent upon the availability of a receptionist or secretary as the auto-attendant/voice mail system operates 24 hours, every day. Statistics have shown that 50% of all business calls require a message, 30% are never completed and 65% only require the one-way transfer of information.

Systems range in price from $3,000 to $500,000 depending on the capacity required. However, like all telecommunications equipment, these systems are only as effective as the company that installs, programs and maintains them.

FAX Machines

When purchasing a FAX machine, as most businesses are doing, there are several points to consider. Be careful not to buy a Group I or II machine as these are passe technologically. A Group III machine is the type you should be looking at -- they are digital and very automated. Features include document feeders, voice requests and activity reports and transmission of one page takes between 20 and 60 seconds. If you have a PC there are expansion boards available to allow your computer to operate as a FAX. These cards permit computers to exchange FAX files with other PCs as well as with stand-alone faxes.

Cellular Telephones

Cellular telephones have eliminated one of the last refuges known to the executive on the go. The telephones are fairly standard, with features that are invaluable, like hands-free speakers and speed dialing. However, do not attempt to use the speaker phone to carry on a conversation, because if you think that regular speaker phones are poor quality, these are terrible! And, no matter what telephone you use, the service you subscribe to makes the operation of the phone a gamble at best. You will experience dropped calls, interruptions in calls, interference, etc. Due to the construction of the "cells" (transmission facilities), there are areas in which the telephones will just not work, no matter which service you use. For example, I was recently trying to place a call to my office and was faced with a situation where I was in between "cells" and there was no service at all. A short distance later, I was able to complete the call. One other point that should be considered is the expense. The purchase and installation of the phone is the least of the cost. You will be charged, depending on the service and the plan you select, either 55 cents per minute for air time plus land charges, or 60 cents per minute for both, and these minutes add up very quickly. These are the negatives.

As for the positive, if you are in your car often and need to be in touch with the office, then the car phone is an invaluable but occasionally frustrating piece of equipment. It is much better to have the phone available than to have to leave the road to find a payphone. And as long as you do not place any really important calls from the car you should not become too enraged by the use of this phone.


This article provides useful information to aid small companies with the task of replacing, upgrading or purchasing new equipment. You may get very caught up in the rhetoric used by the salespeople when they attempt to convince you that their system is differentiated in the marketplace. Remember that there are only a few features that you will find useful--so simply find the most reliable dealer at the best possible price.

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