The Changing Landscape of Damage Prevention for Telecommunications
Written by: Jim Plasynski, Chief Revenue Officer, KorTerra
The past several years has brought about significant change in the telecommunications industry. With the $1.3 trillion Infrastructure Bill and the many other government funding projects focused on the buildout of fiber to the home across the U.S., there has been great opportunity for many organizations. If you are a telecommunications company, there has likely NEVER been a time in your history with such an opportunity for growth. With this growth however, there have been major implications on the locating and damage prevention efforts that are a critical pre-requisite for ensuring successful growth. There are many macro-market factors at play that are forcing telecommunications companies to start thinking differently about how they manage and approach locating and the damage prevention process.
There are some major reasons to pay better attention and rethink your strategy.
Historically, many telecommunications providers viewed damage prevention and locating as an out of sight, out of mind activity for their organizations. For years, many organizations have outsourced their locating to third-party locating companies such as USIC. Those third parties would perform their locating work and send them a monthly bill for the performance of those services. Telecommunications companies often paid those bills and paid very little attention to them as this was viewed as a cost of doing business. The bill itself has often been the deepest line of sight into the status of their locates and the performance of the third parties that are servicing them. Best case scenario, your third party is offering you a small handful of reports you can view, or you are spending time digging through One Call Center websites (if you have time). In the last several years however, a few key variables have started to shift in ways that are making telecommunications companies realize that the same historical approach and limited visibility can prove to be both financially and reputationally challenging, and changes need to be considered. So, what is happening?
- Ticket volume is increasing: Locate volumes have been increasing between 5-30% annually depending on the geographies you are in. Even if you aren’t building a lot of new infrastructure, or advancing your current infrastructure, your competitors likely are, and your third-party locating bills are likely going up because of it.
- Labor, supplies, and gas are all getting more expensive due to inflation: With inflation at a 40-year high, the cost of labor, supplies, and gas is driving the pricing of third-party locating services up significantly. It is not uncommon to hear that locating bills have surged by between 10-30% and your finance and senior management teams may be starting to ask questions about what can be done to control these costs in an area that had previously been an afterthought on the balance sheet.
- Project tickets are increasing tremendously, and they are the most expensive work type: With all the long-range fiber installations, project work has been increasing significantly. These ticket types are regularly billed at a much higher hourly rate than a traditional ticket. Recently, our team at KorTerra spent time with an organization that saw their number of project tickets jump from 1,500 four years ago, to over 15,000 today (a 10X increase). This shocking number was something they were blind to prior to their conversations with us.
- Fiber damages are more expensive and have greater negative consequences: Damages to fiber lines are much different than damages to copper lines. According to an article titled “Cutting is Costly”, “the average drops to homes are about 200 feet and cost about $600 to replace. However, large fiberoptic cables could costs $15,000 to $20,000 to repair.” Not only are these types of damages more expensive, they have a larger/broader negative impact on your customer. In the increasingly competitive environment where people have more options and are more reliant on home internet, you can’t afford to let bad service experiences negatively impact your reputation, resulting in potential lost customers and lost revenues.
- Regulatory pressures are growing: In a recent conversation, one of the U.S.’s largest telecommunications provider shared that “Locates just came out of the woodwork for us. We started getting fines, and people began to realize just how much locating costs us.” Don’t let this be how your firm realizes there might be a better way to manage this! More and more, some state regulators are starting to increase enforcement and as these actions are proven out,, other states will notice and quickly follow. With the criticality of internet in the modern world, this focal point will predominantly increase as customers continue to expect more and regulators are paying attention to those expectations.
- Customers expect more: Post-pandemic, the number of people working from home daily has increased tremendously. Reliance on and expectations related to your service has never been greater or had more scrutiny. Outages can have a huge adverse impact on customer satisfaction and in the modern world, negative news spreads quickly on social media. Reputational damage and lost customers can have a hugely negative impact on revenues and in an increasingly competitive environment, negative events are making it easier for customers to make a change if you give them a reason to.
The financial equations and implications here can get large very quickly.
With per ticket locate prices ranging from $10-$50/ticket depending on geography and ticket volumes, telecommunications companies that are leveraging third parties have large budgets attached to the completion of this work. The pressures outlined above have all been combining at the same time and in the past few years are commonly resulting in budgets for these locating services increasing year over year in ranges between 20-30%. Depending on the size of your organization, your budgets in this area are easily in the six, seven, eight, or even nine figure zone, and a 20-30% increase at these dollar levels is likely getting the finance and senior management team’s attention.
As a telecommunications company, what can you do?
Good news! There are things you can do to take back control and manage this. There are three main things that telecommunications companies should be looking at to counteract these new realities. The essence of each of these is about getting smarter in the way you are leveraging data to better control and manage these budgets moving forward while ensuring you are providing a better experience for your customers.
- Increase vendor management visibility: Focus on increasing visibility into the status and performance of your third-party locating companies to better understand the work being performed. If you are relying on your third-party locating company’s reports, or logging into One Call Center websites, it is likely very challenging to find the analytics you need. Modern ticket management systems like KorTerra can provide a single pane of glass view into the status of tickets so you can confidently confirm that work being done is as you would expect, and you can begin identifying areas where work can perhaps be managed differently to reduce costs. Dashboards can provide an understanding of on-time percentage (OTP), completed on-time percentage (COTP), third-party locator individual performance, cleared in office, cleared in field, late tickets based on geography, ticket cycle time, damages heat maps, etc. This information can help inform other strategies you may want to lean into such as how you can reduce damages, how you can ensure you are being billed appropriately for work performed, and how you can better control your locating budgets based on work performed data.
- Implement ticket screening: What the data from the ticket completion process typically points to is an opportunity for tickets to potentially be screened prior to them going to your third-party locators. For every ticket screened, as we mentioned above, there could be savings anywhere from $10-$50 per ticket. Most organizations we work with at KorTerra in the telecommunications arena are seeing ticket screening rates ranging between 30%-67%. Take that ratio, multiply it by your number of tickets, and multiply by your per ticket rate to estimate your savings potential. The number is likely very large and attractive to consider.
- Invest in damage prevention: With the costs of damages rising and the implications of major line strikes growing, particularly with major assets like transport fibers, ring fibers, and heads ends, it’s time to start taking this seriously. As you see what’s possible with basic math problems in the first and second areas mentioned above, take some of those monies saved and allocate them to damage prevention. Whether that means hiring staff to screen tickets in a more dynamic way, oversee your third parties and the outcomes they are delivering for you, or creating your own locating or damage investigation teams, you’ll be amazed at the progress you can make in ensuring a better customer experience while protecting your reputation and saving money. The ROI on these investments has proven to be incredibly successful with some of KorTerra’s largest telecommunications clients with organizations regularly saving anywhere from tens of thousands to tens of millions depending on their size and scale.
Recap
The telecommunications industry is faced with a great opportunity and great challenge in the future. With the incredible investment that is occurring across the sector, now is the time to assess “Are we really doing damage prevention correctly, and what are the implications if we don’t?” Whether it be the rising costs of locating, the increasing ticket volumes, the rapid acceleration of project tickets, the increasing costs of damages, competitive pressures, customer expectations, and regulatory scrutiny, one thing is clear: there are a myriad of reasons to begin getting serious about damage prevention at your organization. At KorTerra, we are always happy to talk with you about your approaches and provide guidance on how some of your peers have achieved outcomes that are likely worth your consideration. Reach out to our teams to learn more, as we’d be interested in consulting with you and your firm on these topics.
About KorTerra, Inc.
KorTerra is the leading provider of damage prevention software, protecting billions of dollars in underground infrastructure. For over 30 years, the leading stakeholders in gas distribution, pipeline operation, telecommunications, electric distribution, contract locating, and city, county, and state governments have trusted KorTerra as their damage prevention solution. KorTerra helps mitigate risk and ensure the safety of field personnel by providing secure software platforms for processing 811 locate tickets, tracking and reporting asset damages, meeting regulatory compliance, and more. Explore additional solutions at korterra.com and follow KorTerra on LinkedIn.
Media Contact:
Paige Nygaard – KorTerra, Inc.
952.368.1911
marketing@korterra.com