 jsz0Premium
join:2008-01-23
Jewett City, CT | reply to Matt
Re: Increased ETF justified; bogus $1.99 data fees not The issue with ETF fee's is especially predatory. The logic doesn't work even if you base it on the MSRP. A phone being subsidized with a 2 year contract at $199 that MSRP's for $599 is a $400 "discount" Typically your contract has a minimum requirement so you will certainly be paying at least $60-$80 per month over a two year period that's $1440-$1920 to the carrier. So, based on the fraudulent MSRP number, that means about 25% of the profit they make at the low end of the spectrum covers the phone subsidy. So in this case after your first 7 months in the contract the carrier has broken even on the subsidy. Let's be generous and extend that by 5 more months. That means less than half way through your contract you're not longer being subsidized. This example is even worse when you consider this $599 phone is actually being sold to the carrier at maybe $400 or less. That means your subsidy ends up being less than 15% of the revenue the carrier makes off the 2 year contract. In the above example that means your subsidized period is over in less than 6 months yet you have 18 months left in debtors prison.
So why can't you cancel?
A) You signed a contract and that's your own fault
B) You signed the contract for a subsidized phone because the carrier & handset makers collude to deny you access to a free market unsubsidized choice by working together to inflate the MSRP.
I can understand some level of contract lock-in by the carrier but they're just being greedy and misleading here. 1 year subsidized contracts would be reasonable and reflect the reality of what the carrier is actually covering up front. It's a lot more like "rent-to-own" than subsidizing. |
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 jester121Premium
join:2003-08-09
Lake Zurich, IL
 ·voip.ms
| Nice math, except you conveniently left out the part where a portion of what you pay actually goes toward the cost of making phone calls. 
Congratulations on getting the knee-jerk word "predatory" in there though -- that makes the customer sound like a victim, which is always good for a specious, emotion-backed debate that's void of logic and reason. |
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jsz0Premium
join:2008-01-23
Jewett City, CT | said by jester121:Nice math, except you conveniently left out the part where a portion of what you pay actually goes toward the cost of making phone calls. That part is small. Read AT&T's financial statements. They don't disclose exact figures but you can make a pretty good guess based on what they do disclose. Somewhere around 80-85%+ profit margin which is in-line with other services. That's why I overshot the number of months the subsidy covers. From 7 to 12 and from 3 to 6 or 12. That's plenty of time for the carrier to make a fair profit. It's not exact but without real figures it's impossible to know.
Congratulations on getting the knee-jerk word "predatory" in there though -- that makes the customer sound like a victim, which is always good for a specious, emotion-backed debate that's void of logic and reason.
I specifically mentioned it is ultimately the customers fault for signing the contract. The big issue is how the handset makers and carriers create an artificial market to prevent the customer from having other choices. It's fine if they want to offer these 2 year contracts and, for many people, it might make complete sense to sign one. If you're happy with your carrier and plan to be with them for 2 years the ETF is a non-issue. In most cases if you buy an unlocked handset and signup for the same 2 year contract and decline the subsidized phone you're going to pay *exactly* the same price. How is that fair? It just shows the subsidy is made up and inflated to mislead customers. That is absolutely a predatory practice because the handset maker and wireless carriers are actively preventing you from buying an unlocked handset in a free market and then giving you no choice but to pay for a subsidy you're not even getting if you do decide to pay the hugely inflated price.
My solution is for the carriers to have to disclose the exact cost they are paying for the phone. Let the customers do the math and make their choice. They can't make a good choice if the information they're getting is just a made up number that exists only to make the 2 year contract look better giving the customer no other alternative choices or points of reference. |
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jester121Premium
join:2003-08-09
Lake Zurich, IL Reviews:
·voip.ms
| The retail price of phones is clearly visible on the signs in the store, and presumably not too difficult to locate on their website (though I don't care to check for myself at the moment). After paying an activation fee, a phone owner can sign up for service with no contract at all -- it will probably take jumping through some hoops because the trained monkeys aren't used to it, but I know people who've done it with a few carriers and it is available.
Hooty for you and your solution -- why would the carriers disclose their unit costs to you you or any customer, or to their competitors? It doesn't happen in many other industries and it's not information to which a customer has a reasonable expectation.
Not to trot out the same tired song, but if you think your way is better and customers would clamor to get a piece of it, start your own company and do something about it. There are plenty of small regional cell companies out there that are reselling carrier service and seem to be making a go of it in whatever their niche might be, so maybe yours is an idea whose time has come.
My suspicion is that no one really gives a damn -- remember, the people buying iPhones and paying the $30/month are the same ones who Karl and the rest of the BBR crowd are always ridiculing for spending $0.10 for a 160 byte (or whatever) text message and doing it hundreds of times a month. |
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jsz0Premium
join:2008-01-23
Jewett City, CT | said by jester121:The retail price of phones is clearly visible on the signs in the store, and presumably not too difficult to locate on their website As previously noted the MSRP price is an artificial value. This is where the arrangement becomes quite deceptive to customers. If the issue is investigated and it can be proven that the carriers and handset makers collude to artificially reduce competition and increase prices they will have to change their business practices. The FCC is already looking into it. The FCC has the mandate to do this because the wireless carriers are using public property in the form of licensed wireless spectrum to deliver their service. |
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| MSRP is a scam to begin with.
What many of you may not know is that there are also minimum selling prices and as a reseller you have to maintain that price or you will lose your right to sell their products. And resellers cannot legally tell you want their prices are for a product. Doing so will put them in breach of contract and they could be held financially liable. |
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