Slashdot Mirror
Verizon Defends Doubling of Early Termination Fee
I Don't Believe in Imaginary Property writes "Verizon is defending its decision to double its Early Termination Fee from $175 to $350 after being called to account by the FCC. They claim it's because the higher fees allow them to offer more expensive phones with a lower up-front cost (PDF), and they also say that because they pro-rate the fee depending on how much of your contract is left, they still lose money. Apparently doing something about the Verizon customer service horror stories isn't as good a way to retain customers as telling them that they have to pay several hundred dollars to leave."
If you don't want to pay the fee, you should avoid it by not signing an agreement with Verizon. If you don't like Verizon's customer service, you should avoid it by not signing an agreement with Verizon. Or sign an agreement and live up to your obligations and avoid the fee that way.
Don't hire the government to force the people at Verizon to do things against their will -- unless the people at Verizon have truly defrauded you, personally, out of a significant amount of money. Because forcing people to do things against their will is (almost always) morally wrong.
The FCC and FTC definitely need to step in the the wireless market. Policies like this promote stagnation and high prices.
Why should the customer be bound to a wireless contract when this doesn't apply to landlines? I've said before that wireless contracts are keeping prices artifically high, allowing providers to charge quite similar rates for similar plans, because it is so difficult to switch. If customers were not tied to contracts, the ensuing price war might bring wireless rates down closer to prices that I have seen outside the USA.
Speaking of other countries - Why is the USA one of few countries where I can't just pop the SIM or UICC card out of my handset and put it into a new one? Why did it take intervention by the Chinese government to force device manufacturers to standardize chargers to minimize electronic waste?
"they also say that because they pro-rate the fee depending on how much of your contract is left, they still lose money"
Wow... that's the biggest load of BS I think I might have seen all week.
They don't lose money off of the pro-rated fee... at absolute worst they lose money because they lost a customer, and even that's unlikely unless the company is teetering on the edge of bankruptcy. Heck, if a customer terminates early and the company collects that fee, they can actually earn interest on the whole termination fee sooner instead of collecting it over a period of several years.
I'm not sure in what sort of reality they think saying something like this would be likely to make anybody feel even slightly sorry for them.
File under 'M' for 'Manic ranting'
I think a better deal would be to split the discount you get for the phone and the charges for the actual service. Its that simple. On your bill, you get your Phone mortgage and your plan charges.
Then we can discuss further separating the link between the phone and the plan. The phone aspect should be treated like a straight out loan. You pick one of: the monthly payment, interest rate, or duration of loan and the provider picks the other two. Of course you should have a "buy out" option on each statement that tells you how much you need to pay to completely OWN the phone.
THEN we can realistically compare and discuss the discounts that providers give for service contracts. Right now, the system is too hidden and vague. It severely prefers customers who jump providers every 2 years and creates a lot of waste (useless phones). It punishes current and future loyal customers. Customer acquisition is a LOT more expensive than keeping current customers, and the system prefers the former with the later bearing the additional expense burden.
how many people would buy the iphone or Droid at $600?
As many as buy cars, TV's, or any other consumer item on credit? It wouldn't be much different for cable networks to offer TV's with their subscriptions, or, to have a car analogy, gas companies that give you a car and require you to pay for an amount of gas each month.
But either way it's pretty much a scam; financing baked into the price which makes it easier to trick consumers into non-competitive rates for both the consumable and the financing.
It's an oligopoly (with a high risk of collusion)...
You think? A couple years back, text message cost 10 cents on AT&T, Sprint, T-Mobile, and Verizon Wireless. Then surprise-- they all go up to 15! Then 20!
500 text messages take up less bandwidth than a minute of conversation.
I'd say there's a high risk of collusion too.
No, it seems like a good deal when it's a good deal.
Because the phone companies are owned by big institutional investors that require big dividends and steadily increasing profits, they have to make it harder on consumers, who basically don't have anywhere else to go.
Phone companies need to be publicly regulated utilities, like they are in countries that have more advanced phone systems than the US.
The "Free Market" has kept us technologically behind much of the world when it comes to wireless phone service.
You are welcome on my lawn.
Uhh. There is no free-market in the US for just about anything. Cellphone companies license spectrum that no one else can use and become defacto monopolies.
I have traveled a bit and only one country that I have been to had a free-market of any kind. Ghana, West Africa.
Ghana has between 4 and 6 cell phone providers that compete with one and another.
Ghana would not give exclusive rights to any cellular company when they first approached the country before there was cellular technology in the country.
Instead Ghana started it's own government-run cell company because no major provider would agree to anything but a monopoly position.
Strangely enough... 6 competing companies are there now making money hand over fist, and the Ghanaian government just sold their old government phone/internet company to Vodacomm.
Privatization does work, in a real free market. We live in a completely socialized state that pretends it is a free-market driven economy.
Sleep is for the weak.
The moral of your story seems to be: free market works, when the state occasionally intervenes (not necessarily with direct regulation - the case you described is a wonderful example of how else the market can be affected) to keep the competition going.