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fldrice

join:2011-08-18
San Jose, CA

[DSL] Contract Renewal

DSL Extreme has served as my ISP since 2003. Billing is usually able to renew my contract while keeping the current pricing structure or at the very worst, increasie the monthly rate by $2-3.

While renewing my contract last August, I was able to upgrade to a 3.0mbs/512kbs line for $14.95/mo and was told that the contract rate at the end of introductory period would be $19.95/mo at most. When I inquired about a contract renewal today, I was shocked to find out the best billing can do for me is $24.95. When you put things into perspective, a $10 monthly increase amounts to a 55% rate hike which seems a bit excessive.

The Billing Dept. representative I initially spoke to even admitted that I could get a better if I cancelled my line and signed on again as a new customer. It's sad that ISPs no longer believe in fostering customer loyalty. Looks like Dslx has now taken a page out of Comcast and AT&T's playbook.


dslx_nick
Premium,VIP
join:2011-12-24
Chatsworth, CA
kudos:29
It's not that we're taking pages out of their playbook - it's that we have to play within their rules. We resell DSL service, which means if the base rate we have to pay goes up, then we have to pass on those increased costs as well. We do the best we can to negotiate lower costs from telcos so we can, in turn, pass on lower prices to our customers, but inflation and increased costs of operation are unfortunate facts of life.

fldrice

join:2011-08-18
San Jose, CA
reply to fldrice
From my point of view, if there really was an increase in operational costs, service rates would increase uniformly across the board i.e. there would be an increase in promo rates. This is not the case and thus, it would seem that Dslx is transitioning away from the previously more fair and transparent pricing structure to that of the "introductory bait & switch" scheme of the big telcos.

Nick, please understand that this is by no means a personal attack on the Dslx support staff here at broadbandreports; I have always found that you and colleagues have provided speedy and efficient support when I needed it. I just don't like the direction Dslx is headed.


dslx_nick
Premium,VIP
join:2011-12-24
Chatsworth, CA
kudos:29
Oh, no offense taken. Do understand - I don't think the telcos have significantly increased costs of operations during the second and subsequent years, but in many cases the initial year is priced so low as to offer little or no profit, with the expectation that the later years of subscription balance it out for a net profit. It's the same principle as the loss leader, really. However, they have increased the costs that *we* have to pay to keep doing what we're doing. Since that's the baseline from the telco we have to work with, that's why the prices we offer have to vary in a similar manner.

If anything, it's the initial year of service that has the highest operation cost, as that's the year where the connection is originally set up, which requires time in the office to set up on the computers, labor to physically connect cables where needed, etc. Also, if there's a pre-existing problem with the phone line (such as a frayed cable or the like), that usually gets found and fixed during the first year, too. Those costs-of-business get 'balanced out' against projected future profits from later years, hence the lop-sided pricing when comparing first year to later years. That's why someone signing up for a brand-new account as a monthly account (rather than annual contract) has to pay an initial set-up fee - because there's no guarantee that the customer will actually stay long enough for the company to recoup those initial set-up costs.

This also explains why the telcos offer cheaper costs to us when an annual renewal contract is agreed to vs. a monthly subscription - there's some reasonable expectation that the customer IS going to be sticking around and using the service for year(s) to come. If the servers are running for 12 months a year, it doesn't make a difference to the electricity used if they're running for twelve individual 1-months or one combined 12-month, after all.

It's not just DSL Extreme - look at just about ANY subscription-based service, such as cellphone plans, cable TV, other DSL or cable internet providers, etc. It's an industry standard, really. Can't say that I LIKE it (your cellphone bill shouldn't be even remotely comparable to your car payments! ) but there you go. Trust me, I wish I could say otherwise


NormanS
I gave her time to steal my mind away
Premium,MVM
join:2001-02-14
San Jose, CA
kudos:12
Reviews:
·SONIC.NET
·Pacific Bell - SBC
reply to fldrice
said by fldrice:

While renewing my contract last August, I was able to upgrade to a 3.0mbs/512kbs line for $14.95/mo and was told that the contract rate at the end of introductory period would be $19.95/mo at most. When I inquired about a contract renewal today, I was shocked to find out the best billing can do for me is $24.95.

Interesting. AT&T in San José once offered me an upgrade from 1.5M service to 3.0M service for a mere $17.95 a month; back when they were still SBC. At the end of the contract year the price went up to $24.95 a month; and I never got another price break from SBC (or, later, AT&T). When I finally bailed, we were up to $35 a month for the service; now at $38 a month.

Fortunately, I found a CLEC selling their own service; though they also resell AT&T. They (Sonic.net, LLC) are equally stuck as DSLX as far as reselling AT&T Internet service. The ILEC gets to call the shots for the competitive resellers.
--
Norman
~Oh Lord, why have you come
~To Konnyu, with the Lion and the Drum