iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
 ·Comcast
| Seriously people... Verizon is effectively building the customer part of their buildout costs for FTTP into their monthly fee, and punching you with an ETF if you leave before they've amortized the customer equipment. Sounds perfectly reasonable to me, though I also say that the raised VZW ETFs are reasonable. If you don't like them, use cable which has no ETFs. Or go month-to-month with Verizon.
Building setup fees into the monthly cost of service happens all the time (cell phones for example) and that's why there are ETFs if you end service before the end of a contract, at least in this case.
If you want to know why cable doesn't have such ETFs, that's an easy answer: you rent (or buy elsewhere) your cable modem, and chances are your house has already been hooked up for cable before so installation costs are minimal. Verizon OTOH gives you an ONT and router at install time and does some rather expensive fiber-pulling to give you service. They only do this if you sign up, so it's a cost that's directly tied to your account.
Seriously though, if you sign up for a triple play bundle that guarantees a low price over two years with DL/UL speeds that cable can't match, would you really switch out from FiOS? If so, budget $15 per month of your remaining contract as an installation fee, spread over 24 months. Would you really rather have the $360 as an upfront installation fee? I didn't think so either.
Now whether Verizon is shortsighted and paranoid about their customer base by charging ETFs and effectively assuming that someone who cancels service before two years are up won't come back to finish amortizing equipment costs is another matter. I would say they are. But to my knowledge Verizon FiOS is never the only internet option in a given area (there's always cable) so that fear may be well-founded, and if customers don't want FiOS they don't ahve to get it. |
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Flycat
join:2003-05-12
Lawrence, MA Reviews:
 ·Verizon FiOS
| I've been a customer for over 2 years on a now-grandfathered plan. If they move forward with this plan they will force me to move to comcast because I currently rent and I'm actively looking to buy a house in near future. With their limited footprint who can say if they'll be available.
I refuse to pay an addition $20/m because I can't commit for 2 years. And those of you defending the ETF's as part of the way to cover the install, how does this figure into your argument?
If they have a superior product why do you need a ETF? Why not just charge a modest installation fee and let your service dictate who stays and who goes? |
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iansltx
join:2007-02-19
Golden, CO
kudos:2 | A modest installation fee is a barrier to entry. An ETF is a barrier to exit, which *might* translate into a barrier to entry. Which would you rather have, a $99 phone on a two-year contract ith a $200 ETF or the same phone for $300 upfront? |
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 jester121Premium
join:2003-08-09
Lake Zurich, IL | That's a silly question, no one goes into a 2 year phone contract assuming they're going to want to break the contract and pay the ETF. |
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 KramerPremium,Mod
join:2000-08-03
Richmond, VA
kudos:1
·Verizon FiOS
Host:
Microsoft Help
Satellite Radio
Wireless Security
| reply to iansltx
said by iansltx:Verizon is effectively building the customer part of their buildout costs for FTTP into their monthly fee, and punching you with an ETF if you leave before they've amortized the customer equipment. Sounds perfectly reasonable to me, though I also say that the raised VZW ETFs are reasonable. If you don't like them, use cable which has no ETFs. Or go month-to-month with Verizon. Verizon is financing the customer part of their buildout as well as every other part of their buildout into their monthly fees and ETFs. You can't divide the revenue and say this pays for this and that pays for that. It is ludicrous to say that verizon is using the ETF to totally recoup costs. Their ETF is partially punitive. If you cancel your service 1 day before your contract ends, you would still owe Verizon a big chunk of change. This is punitive. If I cancelled my service in 4 months without penalty (since my contract is up then), went with Comcast for 6 months and then came back to Verizon, I'm sure they would still want me to agree to an ETF, even though the fiber to my door is sill there as well as the ONT. An ETF might be fair as they would still incur some costs hooking me back up, but not as much as if I were a new customer. An ETF in this case would be even more punitive.
What do you think would happen with regard to FIOS if the government made ETFs illegal today? Anyone who says Verizon would charge a hookup fee of something close to $360 isn't thinking straight. They probably could get away with $50. The new customers that Verizon would hope to get would come to halt. It would effectively end their roll-out. Verizon could raise their prices for everyone, but as you point out: for every market verizon is in their is almost always a cable competitor. The price that verizon can charge is very sensitive. They would be reluctant to charge much more than the competition. If the government made ETFs illegal today, as far as CATV, Internet and Phone Verizon almost certainly would just lose the additional revenue and complain a lot. They couldn't do anything because competition would keep them in a cage. The ETF acts in an anti-competitive fashion because it serves no other purpose but to keep the customer from benefiting by the advantages that competition can offer. They are not recouping costs, they are retaining customers by threat.
In any event, If this $360 ETF is really going to happen, I think Verizon is making a colossal mistake in doing so. Most people sign the contract and don't really think they are going to want to switch. They put the fee out of mind and the only time verizon or any other company wants you to think about that fee is when you get fed up with them and want to leave. In this case, I think the cable companies are going to have a wonderful time reminding each and every Verizon customer the deal they signed or may sign with the devil. I'm looking forward to it. |
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iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
·Comcast
| $15 is a big chunk of change? Though you're right about the contract/ETF after Verizon has paid off the equipment.
As far as the illegal ETF thing, it won't happen. Too much money going from Verizon et al into government coffers, both with taxes and campaign contributions.
Again, whether or not the ETF is a bad business decision for Verizon is entirely up for debate. Seems like contracts/ETFs are how the telcos roll, and until the market knocks some sense into their heads that's how they'll continue to roll.
Also, keep in mind that Verizon is offering a bundle discount in return for the ETF. They offer services month to month (though this sort of invalidates what I said about startup costs). |
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KramerPremium,Mod
join:2000-08-03
Richmond, VA
kudos:1 Reviews:
·Verizon FiOS
Host:
Microsoft Help
Satellite Radio
Wireless Security
| I stand corrected on the FIOS ETF. I was thinking more of the cellular charges where at the end of a $175 ETF you still owe them over $50 and I assume that is over $100 with the $350 ETF. The FIOS fees certainly are less punitive.
The government is already looking into this, but I suspect you are right. The time to have done something about this was years ago, when the cellular companies started doing this. Competition itself will eventually put an end to it. I'm assuming this Verizon practice will be short lived. They have a good product and there is no need to promote it like a snake oil salesman. The new Google phone that comes out in a few months will go a long way to end cellular ETFs. |
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 dvd536as Mr. Pink as they comePremium
join:2001-04-27
Phoenix, AZ
kudos:4 | reply to iansltx
said by iansltx:A modest installation fee is a barrier to entry. An ETF is a barrier to exit, which *might* translate into a barrier to entry. Which would you rather have, a $99 phone on a two-year contract ith a $200 ETF or the same phone for $300 upfront? and if i bring my own phone i still get hit with ETF so out the door goes the subsidized handset arguement.
this is simply making money off unhappy subs.
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When I gez aju zavateh na nalechoo more new yonooz tonigh molinigh - Ken Lee |
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iansltx
join:2007-02-19
Golden, CO
kudos:2 Reviews:
·Comcast
| You can bring your own phone to T-Mobile and they discount the plan and give you no contract. Bring your own phone to AT&T or Verizon and there's no contract needed either. The only local carrier here with contracts will wave them if you bring your own phone if I remember correctly, or at worst limit them to one year. Not sure about Sprint, but they may do something similar. |
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| reply to iansltx
I live in one of the very first Fios areas. I'm on my third annual contract, which they pretty much make you do, because otherwise you never get another new channel. The renewal contract still has an ETF. I think it's $120.
The first year might have to do with reclaiming installation costs, but renewals sure don't.
I'm really annoyed at being forced to buy stuff I don't need. 10/2 was plenty fast enough. 15/5 would have been gravy, especially if it was really 25/15. I had to order 25/15 because it went with the Extreme HD TV bundle. And I really don't want a landline any more. |
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