Contract Negotiations Should Define Your Operating Model (and Your Risk)

Contract negotiations and operational strategy go hand in hand. The rates you negotiate don't just determine your monthly invoice - they shape the day-to-day work required to manage usage, prevent surprises, and control risk.

A "good deal" on paper can become a costly operational burden if the rate structure pushes risk onto the customer. To show what I mean, here's an IoT example comparing two real-world pricing designs: AT&T vs. T-Mobile.

The Key Point: Rate Design Drives Behavior

Even when two carriers support the same IoT use case, their contract structures can force completely different management strategies.

In this example:

• AT&T has more attractive monthly recurring charges (MRC), but a very high overage: $15 per GB.

• T-Mobile has higher MRC (sometimes double), but very low overage: under $2 per GB across plans.

Those two design choices create two very different operating environments.

T-Mobile: Low Overage = "Hands-Off" Operations

With T-Mobile, the overage risk is small. That changes the operational strategy immediately.

For example, if a 100GB plan is $175 and overage is roughly $1.75/GB, there's often no reason to light up new SIMs just to avoid overage because overage is cheaper than the operational (and cost) impact of activating additional lines.

It also reduces the incentive to "upgrade" plans.

If 50GB is $90 and 100GB is $175, but overage on the 50GB plan is only around $1.80/GB, you can often keep the base plan lower and tolerate some overage. In many real environments, usage isn't a perfect 100% every month so paying a lower fixed MRC and letting usage float can be cheaper overall.

Bottom line: T-Mobile's structure supports a lighter operational model - less monitoring urgency, fewer plan changes, and less pressure to constantly optimize pools.

AT&T: Cheap MRC + Expensive Overage = High-Control Operations

AT&T looks more attractive at first glance:

• 20GB plan: $35

• 50GB plan: $50

• Overage: $15 per GB

But that overage rate changes everything. At $15/GB, the financial penalty for being wrong is massive. The risk sits heavily on the customer meaning the operational team has to manage much more aggressively.

AT&T's per -GB economics also push behavior. The cost per GB is much better on the 50GB plan than the 20GB plan (roughly $1.00/GB vs. $1.75/GB), so the likely strategy becomes:

• Move more lines to the 50GB plan to reduce risk

• Carefully manage pooled groups (because pools are separate)

• If allowance still isn't enough, activate additional SIMs proactively

• Do everything possible to avoid overage, because overage is dramatically higher than the base per-GB cost

This is where "cheaper MRC" can create a bigger downstream cost: you may need tighter governance, more frequent reviews, faster actions, and stronger control just to prevent runaway charges.

Bottom line: AT&T's structure demands a high-touch operational model - more monitoring, more plan management, and a bigger emphasis on preventing spikes.

What You Should Do During Negotiation

When negotiating IoT (or any mobility contract), don't just ask "What's the MRC?" Ask:

• Where does the risk sit - carrier or customer?

• How painful is the penalty for being wrong (overage)?

• Will this structure force constant operational intervention?

• Does the contract design encourage pooling optimization or punish it?

• What operational workload are we signing up for?

Final Takeaway

Rate negotiations don't end a price. They define your operating model, your workload, and your risk exposure. If you negotiate a structure that pushes risk onto the customer (especially through high overage), you must be prepare to build the operational discipline to manage it or you'll face a painful surprise later.

Not aligning contract rates with operational strategy is one of the fastest ways to create a major headache down the road.