 homenodePremium
join:2007-11-18
Bullhead City, AZ | reply to fAcEtIOUs
Re: Getting new rules locked in by FCC better than lawsuits .... Speaking as one of the guys that helped invent "churn", it's the "churn" that casues the need for ETFs. It used to be that phone companies had you locked-in because they were a monopoly. Then, with deregulation in the 1980's, they started competing on price. The price wars got customers "shopping" for service every few months and switching every time they got a better deal. It got worse when the phone companies started offering rebates to sweeten the churn from competitors, to the point where there were BBS's that kept the best switch deals up to date for all the phone companies out there. (Remember Dr. Bob's "Long Distance for Less"?)
Companies started instituting the ETF to add a stick to the carrot of changing vendors. Yeah, you could get 6 months free and a $100 rebate, but you had to pay it all back if you quit before the year was up. Made sense: you're going to have customer poaching going on no matter what, and most customers aren't rational consumers in that they look at the cheap price and the shiny-shiny to make a decision.
It's the air fare wars all over again. Southwest offers reasonable, fair prices in all their markets, regardless of the number of competitors they have. Other airlines, like American, Delta, Northwest, United, offer cheap fares where they compete against Southwest and HUGE fares where they don't.
Southwest doesn't have an "ETF" on its tickets - yes, you can change a ticket 5 minutes before the plane leaves and pay NO PENALTY on rebooking the flight. Every other airline has draconian ETFs - $150 change fee plus the fare change - usually double or triple the price of the original ticket.
The point in this digression: you have two completely different business models working in the airfare market. And you have customers using both - with most customers taking the "shiny-shiny" of a $100 ticket on American with no possibility of getting a refund or rebooking - instead of the $150 Southwest ticket with no strings attached. (If this wasn't true, you wouldn't have AA or DL or UA or NW in business any more.)
SO...until a telco decides to "do a Southwest" - which would be flat-rate contracts, phones purchased separately or added to the contract for a nominal or no fee, and either no ETFs or a "reasonable" ETF like one month's additional fee and the reamining cost of the phone, you'll continue to have the freebies and come-ons because customers love that "shiny-shiny" feeling...
Maybe Sprint will be the first one to do this - they need to do SOMETHING to break out of their current funk! |
