Regulating early termination fees
It seems the cell phone providers can’t help but rip-off consumers that want to cancel early. Now the FCC will be stepping in to regulate how much a service provider will be able to charge when you terminate your contract. That is all well and good, but why do the service providers have to lock you in with expensive termination fees in the first place? There are many other services I am able to walk away from, without being taxed. Why are there penalties at all?
In a previous article I have mentioned the key value proposition to a supreme mobile phone service provider:
“The first cell phone company that provides truly reliable service, unlocked phones, low-cost unlimited calling plans, and high-speed internet access – with no hidden charges – will reign supreme over all others.”
http://newleaders.com/discussions/148-100-genuine-incorporated
I would like to append — “Allows you to cancel at any time without any risk whatsoever.” There are a ton of great services out there that allow you to only pay for what you have used, without service contracts and obligations to fulfill. If you are over it, then you should be able to walk away at anytime. Just pay for what you used and say goodbye. Too often, we accept unfair treatment as consumers because certain industries have found a way to fleece us. It’s wrong, and we shouldn’t tolerate it anymore.
I beg any one of these mobile phone companies to grow a conscience and stop overcharging, hiding fees, and locking in consumers. This behavior will be your demise, and you encourage your customers to find new ways to innovate right past you. You are asking for it. It may not be today or tomorrow, but someday we’ll cut you out of our monthly expenses all together.
Original Article — http://online.wsj.com/article/SB121156578704717875.html?mod=googlenews_wsj
Posted on May 25, 2008 by Kevin Milden
@Brian — Thanks for the further clarification. I agree it is not as simple as it seems to the end consumer, but I think people would be willing to pay more for hardware if there were fewer strings attached. Most companies sell unlocked hardware that has little or no contract, but there is always some sort of catch. The price is usually astronomical for the hardware without a contract. Everyone has to make money, but it is usually at the expense of the customer who isn’t well-educated about their plans and policies. I guess what I am looking for is the “Bring your own hardware” super-fast and cheap service provider. A company that hangs its hat on superior customer service and a fair cost to the customer. It doesn’t seem like that much of a stretch. Apple made a go of it with the iPhone data plans. So we know that it is possible, depending on the provider’s modus operandi.
Posted on May 28, 2008 by Kevin Milden
I see what you are saying with regard to superior customer service, I am all for that. I think it is tough to get around the FCC and other prohibitory laws, etc. to run a viable company that has the capability to bring any hardware to its network. All phones are not created equal, and networks run on different bandwidths/technologies and OSs.
I personally fail to see a difference in what Apple did with the iphone. They are forcing people to sign 2 year contracts with at&t, requiring data plans (not that you would want it without), & pay a lot for the equipment (granted it is incredibly advanced and great technology)…?
Posted on May 30, 2008 by Brian
The networks and equipment manufacturers are also working on a symbiotic mutualistic basis, so their branding is a common capitalistic free market tactic. I think you might see the rise of prepay and month-to-month, like metropcs, become more popular as the technology for broader networks is developed…maybe this is where the future is? wimax, etc?
Posted on May 30, 2008 by Brian
@Brian — I agree the AT&T/iPhone deal still locks you into a very expensive plan. The solution isn’t simple. Maybe we’ll have to wait for something like Wimax before we see the cost of plans decline significantly. I just wanted to point out that the built-in unlimited data plan was the first step in the right direction. The added cost to have it isn’t terrific, but it is much better than having to pay extra for additional data transfers. Dyson (the vacuum cleaner company) pitched Hoover on adopting their technology and they declined because it did away with the bag, which was a revenue stream for Hoover, regardless of the benefit to the consumer. It was only after Dyson became successful did they start making vacuum cleaners without bags. I think the mobile phone service providers have the same mindset as Hoover. They make us pay extra for certain services because they want to protect certain revenue streams. Someday, one of these providers will realize they can make so much more by benefiting their customer, rather than bleeding them. The rest will follow the leader. At least I hope.
Posted on May 30, 2008 by Kevin Milden
Post Your Thoughts
I agree with your frustration and ultimately, the ridiculous notion of the ETF and 2- or 1- year contract that the wireless industry has bestowed upon us. I think it boils down to loyalty among carriers, as each one is using enticements in the form of equipment deals to attract the customer. This does, however, as you mentioned, cause hidden costs in the form of contracts and early term fees. It is a giant market to pay for bandwidth and towers, etc, but like every business there is always overhead. The companies do, however, offer that non-contractual MSRP cost of equipment option usually – is this what you would prefer in the long run? Maybe if the consumer invested more in their technology, they would be more willing to give loyalty a chance? I suppose it likens to satellite companies that invest a lot of $ in all the hardware and installation time, but on a smaller scale; more in the form of a single handset. It is such a new and specialized industry that it is difficult to compare directly. As far as unlocked handsets, the equipment manufacturers can make a lot more by having specific contracts with specific carriers…What if the iphone was available on every network? What if every app was available on mac, pc and linux? The specialization would be lost with focus to make great apps that are supported well on specific platforms.
It is a tough multi-faceted argument. Great topic and thoughts!
Posted on May 27, 2008 by Brian