How to Terminate Your MPLS Contract Early

In the era of digital transformation, your organization might be looking for a more agile and cloud-friendly alternative to MPLS. But while getting off your MPLS contract might seem daunting due to hefty early termination fees, it’s actually easier and less expensive than you might think. Let’s look at the four steps required for terminating your MPLS contract, so you can find more flexible solutions (like SASE). 

This blog post is based on the e-book “How to Terminate Your MPLS Contract Early”, which you can view here.

4 Steps for Your Get-Off-MPLS Strategy

Here are the four steps we recommend to help you make a smooth transition from MPLS to the solution of your choice, like SASE:

1. Understand the scope and terms of your MPLS contract
2. Identify the MPLS circuits that can (and should) be replaced
3. Involve your internal finance partners
4. Use these negotiating tactics with your MPLS provider

Now let’s dive into each one of them.

1. Understand the Scope and Terms of your MPLS Contract

MPLS contracts are long legal documents, but it’s important to understand which terms and conditions you’re obliged to. Here are some important things to look out for:

• Does your termination date refer to the entire agreement, or to single MPLS circuits? In most contracts, the latter is the case. This means that your organization might have a number of separate terms for various circuits with different start and end dates. In such cases, it’s recommended to identify circuits that are about to expire the soonest to start the migration with them.
• Is there a Minimum Annual Revenue Commitment (MARC)? Many MPLS contracts require a minimal monthly or annual spend. If you retire one of your circuits, and your spending diminishes to below that minimum. you might be subject to a financial penalty.

• What is your liability for terminating an MPLS circuit before the termination date? Do you have to pay the entire sum of the fees, or maybe some of them? Discontinuing might still be worth it, despite the fees.

• What’s your notice of termination period? Check how early you have to notify the carrier about discontinuing services.

• Are you subject to automatic renewal? Are you locked into the contract unless you notify the carrier otherwise?

By understanding what your contract requires, you can now proceed to the next steps of determining your termination and transition plan.

2. Identify the MPLS Circuits that Can (and Should) Be Replaced

To get a better picture of your available termination options, we recommend preparing a spreadsheet that will help you determine which circuits to target first:

• Create a row for each circuit
• Detail the liabilities and termination dates for each one.
• Order the circuits according to termination dates to see which ones can be migrated the soonest.
• Identify circuits that can be terminated without violating MARC and incurring penalties
• Check the monthly rate for circuits, in case you want to overlap through the migration

Now that you have your circuit status laid out, identify additional factors that will influence your migration options and negotiation:

• How much are you spending with your carrier overall? Even if you have early MPLS termination fees, you may be able to negotiate and leverage additional services to help waive them.
• What’s the ROI of your services after switching to SASE? The numbers will help you decide which penalties are worth paying.

Now that you’ve identified different action plans, it’s time to get the finance department involved.

Migrating from MPLS to SASE with Cato Networks

Cato is the world’s first SASE platform, converging SD-WAN and network security into a global cloud-native service. Cato optimizes and secures application access for all users and locations. Using Cato SASE Cloud, customers easily migrate from MPLS to SD-WAN, improve connectivity to on-premises and cloud applications, enable secure branch Internet access everywhere, and seamlessly integrate cloud data centers and remote users into the network with a zero-trust architecture. With Cato, your network and business are ready for whatever’s next. Learn more.