Finding the best telecom for your business

(FORTUNE Small Business) -- Dear FSB: We are a small business in the Philadelphia area. How should I select a telecom company? Is there an independent evaluation anywhere of these companies by region?

- Meg P., Plymouth Meeting, Pa.

Dear Meg: Small businesses are lucrative customers for telecom companies, especially in urban areas, so you will have plenty of choices. Carriers that may operate in your area include Qwest (Q, Fortune 500), Verizon (VZ, Fortune 500), AT&T (T, Fortune 500) or XO Communications (OTC: XOHO).

But getting a completely independent evaluation is probably not possible; you have to do legwork, too.

Start by contacting a handful of providers directly for quotes and information. Alternatively, you can contact an independent sales agent trained in packaging the services of multiple carriers, says Jeff Keane of Atco, N.J.-based KeaneTel. By the way, you should never pay a commission to such an agent - they are compensated by the carrier who gets your account, Keane says.

Alone or with outside help, you'll need to evaluate multiple solutions from multiple carriers, to get the best combination of voice, data, Internet, and/or VoIP services at the best price for your company's needs.

Some carriers have great networks, while others have better customer service, but most small businesses find that the place to start their evaluation is by looking for low monthly charges. For example, a client can get a package of up to 24 lines, a T1 Internet connection, unlimited local calling and 2,000 minutes of long distance for as little as $480 a month, Keane says.

Monthly cost is an important consideration when choosing a provider, says Sonal Gandhi, a small-business analyst at Jupiter Research, but you should also look at the bundle of options being offered, as well as the service provider's reliability and disaster recovery track record: be sure ask for service uptime and performance guarantees, Gandhi says.

Use Internet resources for research, too: Some websites evaluate telecom service providers by region. Cnet.com posts some reviews of VoIP and Web hosting providers, and Bridgevine.com has a listing of all telecom providers by region. BuyerZone.com will provide bids from telecom providers in your region via e-mail.

Price your equipment, too

If you also have to buy telecom equipment, be prepared for more research - and expense.

Start by talking with other business owners in your area who run similar types of companies, says John Harahan, president of Wayne, Penn.-based Telegard Find out which system providers they looked at, and what they liked. Ask how easy the system they chose was to install, and if there were extra costs.

The three largest providers of phone systems for companies today are Avaya (NSE), Nortel (NT) and Cisco (CSCO, Fortune 500). They have certified resellers in every city who will give you a custom quote. Harahan suggests getting at least five quotes and says you should encounter no surprises if you make sure to get estimates in writing, with detailed descriptions of every line item in your bid. Remember to ask about installation and maintenance.

The cost of a purchasing and installing a new phone system will run roughly $800 to $1,000 per station, Harahan says. This includes voicemail as well as VoIP (voice-over-Internet) services. Maintenance for the first year is typically included in the initial cost. Then, for years two through five, it might run about $140 per month for the average small office.

But that's not the whole story. You'll also need to consider installation.

Set-up costs may be waived if you're willing to sign a two- or three-year contract, rather than a month-to-month or one-year term, Keane says.

Be aware that additional wiring charges are almost never quoted, and come directly from the company's wiring vendor. For example, phone companies usually only bring wires from outside the building to your phone box or demarcation point inside. Should you need to "extend the demarc," say, to an office suite at a distance from the box, you'll likely incur an additional charge from the wiring vendor. Make "extended demarc" requests when you order your phone service to avoid delays. These charges - primarily for labor - are almost never waived, according to Keane.

Keep in mind these are rough estimates, and could swing higher or lower depending on what bells and whistles you want.

"Similar to purchasing a new car, people often over-buy on extras they never use," Harahan says.