Contracts & Commitments

To remain competitive, IOT service providers recognize that when managing customer relationships, one size does not fit all. Each customer is different with different needs and growth trajectories. IOT service providers increasingly need to offer flexibility and customization when setting up contractual relationships on a per customer basis. Multiple contracts can be set up on an account. Overlapping contracts are processed independently. For instance, if two contracts were set up on an account with Contract 1 imposing a commitment of 100 instances of SIM A and Contract 2 imposing a commitment of 100 instances of SIM A, the commitment logic would process contract 1 and ensure the 100 SIM commitment is met and then process contract 2 independently and ensure the 100 SIM commitment is met. The net effect in this scenario is that a commitment volume of 100 SIM's is imposed for both contracts (not an additive commitment of 200). Associated with each contract are Terms, Commitments and Termination Rules.

Contract Terms and Renewals

Every contract has a term. A term specifies the length of the contract. Contract Terms can be specified in Days, Weeks, Months and Years. The start date of the contract is configurable and can be set to the present date or a future date. Past dates are allowed as long as they are not set to a date prior to the last "invoiced" period. The end date is a read only field and is derived from the start date. The end date is calculated as "Start Date + Term". It is also possible to set up floating end dates to handle scenarios where the contract term is based on the last connected SIM.

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A contract can be set up with the following renewal options:

  • Expires at End of Term: The contract will expire once the term ends and the account is no longer under that contract.
  • New Contract: The contract will renew to a new contract. The administrator will be able to specify the renewal contract as part of this option. For instance, the administrator can use this option to set up a 36-month contract with volume commitments and then renew to a 1-year contract with no commitments.
  • Auto renew: The contract auto renews to a contract automatically created to reflect the same term and conditions as the original. For instance, a 36-month contract would auto renew to another 36-month term with identical commitments.

Commitments and Ramp Up Periods

Commitments can be set up on contracts and defined based on the commitment types listed in the table below.

Commitment TypeDescription
ServiceCommitment based on service volume. This service can be in any package. (e.g. Volume commitment on SIM A, where Sim A can be in any product offering on that account)
Usage ClassCommitment based on a usage class (e.g. Commitment on 100 MB of monthly SMS MO data)
Package ServiceCommitment based on a service within a specific package and package frequency (e.g. Volume Commitment on SIM A where SIM A is in a monthly instantiation of Package A)
PackageCommitment based on package volume (e.g. Volume commitment on Package A)
Invoice AmountA commitment based on how much was billed on that invoice (e.g. Invoiced level commitment where total invoiced amount must be X pounds.)
Average Usage ChargeAverage usage per service connection (e.g. An average usage SIM connection commitment of 10 GB per SIM)

For each commitment, it will be possible to setup a Commitment Period, the Committed amount and Commit Frequency. The commitment period indicates the length of the commitment (for instance a 3-month commitment), the commit amount indicates the amount that is being committed per Commit Frequency.

Ramp up schedules can be set up on commitments. Ramp up schedules are based on product volumes, invoiced amounts or on usage. As an example, a customer might enforce a minimum commitment of £10,000 per month for 4 months, followed by a ramp up to £20,000 per month for the next 4 months followed by £30,000 per month for the remainder of the term.

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A usage based schedule enforces commitments based on usage; 1 TB monthly for months 1-3 followed by 2 TB monthly for months 4-6 and 3 TB per month thereafter.

Penalties can be imposed if the commitment terms were not reached. Two types of penalties can be configured:

  • Charge: This is a minimum commit charge (in pounds, dollars ...) that will be imposed. For instance, a $5000 charge can be set - the minimum amount charged to that contract will always be 5000 or greater.
  • Count: A per unit charge imposed on under commitments. A minimum commit is specified and amounts lower than the minimum charge are subject to this penalty.

Tiered penalties can also be charged to handle thresholds on commitment underuse. There is no limit to the number of tiers that can be set up.

Early Termination

Early termination penalties can be applied if the contract is terminated early. The types of penalties imposed include:

  • Remainder: The contract remainder will be charged.
  • Flat fee: charge a flat fee penalty.
  • % of Remaining Commitments: Charge a % of the commitment remainder.

When imposing an early termination penalty, you can specify the service to which the penalty charge will be applied. All applicable commitment penalties will be charged to that service.

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