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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."
AT&T CEO: So, basically when the new iPhone 3GS++ comes out, people will be leaving other carriers in droves.
Verizon CEO: No matter, every customer signed a contract with more words than the US Constitution which means they either didn't or are unable read it. In that contract, we reserve the right to increase our crippling early termination fee. So we'll juice that up to lock in size and by the time most customers can leave, we'll have an answer to your latest model.
Verizon Shareholder: I approve.
Verizon Customer: Why does my ass hurt?
My work here is dung.
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?
Verizon will go any lengths to protect their customers, even if it means killing them.
"This is an automated message notifying you that on the ... two five of ... November of ... 2009 your husband did conspire to change carriers with willful and malicious intent. Regarding this matter, he has been terminated in order to assure you continuous service. We apologize if you experienced any problems with your service during this technical adjustment. You will receive an invoice shortly for the professional handling of your husband and his disposal. Please remit payment by the end of ... December of ... 2009 to avoid further late charges and fees. To return to the main menu please press star, to talk to a Verizon funeral representative please stay on the line ... "
My work here is dung.
I agree with you 100 percent, well almost. Forcing Verizon to do anything that isn't in their corporations best interest is morally wrong. Because we all know that large corporation are only looking out for what is best for the consumer! If you get a "free" phone from Verizon for your aging mother so that she can stay in contact with you more easily, well then you SHOULD have to pay the early termination fee of $350.00 for that $29.99 piece of electronics when she passes away on the 21st month of your contract. And while we are at it, let us remove those other pesky regulations that the goverment has placed upon these large corporations. Let us remove the one where they are required to pay a minimum wage to their employees. We all know that this is just costing us jobs. Hell, my cousin Bruce could be making as much as 50 cents an hour AND have a job if it wasn't for that pesky goverment interference. Shame on you Mr. President (Because we all know that he REALLY makes all the laws, the Congress and Senate are just for show.) Let's remove the regulation that says Verizon must provide access to their lines from other competitors as well. I don't want no stinking Sprint customer to be able to call me. (You and your aging mother are using the SAME provider, aren't you?)
My point is that a truly and totally free market is a farce. There has to be a balancing act performed to keep the market truly competitive and profitable. Unfortunately, one groups idea of fair and balanced differs from another groups idea of fair and balanced. That is why we need regulation. Maybe this particular case isn't one that requires regulation. Maybe this particular case works as it currently is implemented. Obviously not everyone believes that, especially the person who DIDN'T get a DROID and then for whatever reason had to cancel their contract two months early.
Oh and one more thing. Maybe forcing PEOPLE to do something is morally wrong, but corporations are NOT people. People generally have to live with their actions, a corporation can merely disolve itself and start up as a completely different corporation. It is a lot more difficult for a person to simply disolve their identity and reappear under a completely new one free of all legal and moral obligations of their past actions. If the US goverment is going to provide corporations with that type of benefit then they do have a MORAL responsibility to make sure they don't abuse it.
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.
Obviously, you missed the part about "the agreement" being intentionally and maliciously complex, to the point that it is indecipherable to the average customer. Said customer, having been assured by the friendly sales rep, "It just says [insert standard salesman bullshit rap here]", signs anyway, in the mistaken belief that he's dealing with a fair and honorable business.
There are laws against trying to cheat customers. Hiding your draconian terms in an indecipherable "agreement" is anything but fair and honest. It should be illegal.
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.