TekSavvy → Why doesn't Teksavvy have a deferred payment option?

This message is really aimed at Marc or Andre, but others can comment on it as well.

I have been asked by several people recently for a good Internet Provider and I recommend Teksavvy. What always happens is that they get a sticker shock when I tell them the upfront fee and then the monthly fee.

As you know, with Resellers, you have to pay a $65 activation fee + cost of the new modem + shipping charges on top of the monthly fee.

What I think would be a good idea is to give the new members an option to pay for these costs over 6 months instead of upfront and charge a nominal layaway fee. This way the costs are more spread out then a $200+ bill upfront. People don't want to fork out the fee upfront to a new company. Keep in mind that for cable users, they would also have to purchase a router so that also adds more to their upfront costs whereas with Rogers (and perhaps Cogeco) offer wireless modems so that lowers the costs as well.

TSI offers a modem deferral fee but why not include the activation fee as well? I think people will gladly pay an extra $5 to defer the costs for 6 months then have to pay upfront. I work with many Seniors who are on a fixed income and not (pardon the Pun) Techsavvy so trying to get them to join becomes a challenge. The first thing they say is "Cogeco, Rogers" don't charge this much upfront and I can rent/pay for stuff in time and not right away. They don't understand that they are deferring the costs but are paying MUCH more then resellers.

Thoughts?

So when the new customer bails after a couple of months or can't pay the huge monthly cost, Teksavvy is now out or has to chase down the balance owing for the deferred costs? No contract so I can see why it won't work.

They will have to do this already with the modem deferment option so how would this be any different? I don't think there are many people who go around joining ISPs and bailing after 2 months.

They can put a contract for the 6 months if they opt for the deferral option and then do a month to month afterwards.

You'd be surprised.

About people canceling shortly after getting the service hooked up.

...but that means that they have to get into contracts, which TekSavvy doesn't have. A big selling point for them is no contracts. That also brings in a bunch of costs Im sure for them to have the legal team come up with contracts/ terms and conditions for those contracts and so on to protect them if someone tries to bail early.

I like your suggestion and I will pass it on as feedback. gbwalsh does also have a good point which makes it somewhat difficult to recover in those situations. In regards to our Rent-To-Own option, a good portion of the modem is paid on the first invoice so we're not having to chase down a large chunk of it if it goes wrong.

I just signed up with Cogeco (TV) and although I didn't have to pay upfront, I got a huge bill in the mail (Activation + First Month (Partial) + Full month).

You'd be surprised how often it happens. It's down a bit now (at least in Ottawa) with Bell and Rogers both blocking wholesale installs for non-payment. Before you could not pay Bell, then go to Rogers and not pay them, then occasionally you could sign up with Teksavvy and not pay them, then start, etc.

And unfortunately there are quite a few more deadbeats out there then we'd like to think, so these are the people Teksavvy needs to worry about. Money is tight for everyone, and $200 can be a lot of money, especially if you are switching in an attempt to save money.

I personally re-upped for another 2 years with bell mobility not long ago and while i didnt pay up front, my first bill was nearly $500 when my cancellation fee, activation fee and 1st month was all factored in, so i can understand the situation

the only way i can see this being viable is if tsi implements contracts, and quite frankly, that's a disincentive for a lot of people. yes, upfront costs can be large, but, in my case, with DSL/TSI (via Bell), i get a helluva lot more out of my buck than i would with other providers. a quick look on Bell's site means i pay 20$/mo less with tsi (for slightly slower speeds).

and even with contracts, when people walk away prior to the end of the contract, it becomes an accounting nightmare to keep chasing after them.

It makes a lot of sense that TekSavvy does it the way they do:
• no contracts: avoids legal complexity and dramatically larger AR/collections, credit checking functions
• distinguishes them from the contract BS of the major incumbents
• when a customer has made an upfront investment in activation, modem, etc., there's a built-in incentive to stay with TekSavvy (not saying people don't leave for other reasons or that they shouldn't)
• it's worth noting that TekSavvy pockets little or nothing of those up-front charges, i.e. the activation fee passes through to the incumbents

Less risk with initial upfront costs recouped = less ongoing cost to their customers. If you keep asking them to be like Rogers and Bell I don't think you'll like how it all turns out.

Also, TekSavvy is not a reseller.

FYI, we're all on a "fixed" income...seniors or otherwise.

As others have said, on paper it seems like a great idea, but then you run into people who don't pay and then TSI has to track them down and the costs incurred for that would result in the prices the incumbent slap on....

People wonder why their prices are higher?...simple, A/R, collections people, systems for that all have to be paid for somehow, so everyone shoulders the burden for that...

Same with having a lower upfront fee, TSI doesn't have that because the monthly costs are lower, so you either go with the incumbent, get a free install and end up paying more over the life of the contract vs monthly...

Lots of companies do this....insurance comes to mind....if you can pay it all up front for the year you typically pay less vs. paying them on a monthly basis...its pretty much the same for most things in life, if you pay up front you tend to get better terms vs an invoice type situation.

You guys raise good points but I am thinking more of the seniors that are both price and technology challenged. Why not have senior friendly plans that offer them some incentives. Many companies offer this and it is a BIG demographic. Seniors are trying to stay connected with grandkids and need affordable technology packages. They don't need tech support as this is what grandkids are for. Lol

Increasingly more seniors are better off than most other generations. You're really talking about a low-income, lower "cash flow" option. Ironically, all the contracts that offer lower up-front cost end up costing the consumer more over time. Which is how lower income people are usually victimized, be it payday loans or other rent-to-own scams. Your heart is in the right place but your brain isn't. Also, frugal people can find used modems fairly easily. There is also good access at local libraries, not that I'm suggesting low-income people should get shunted there.

I looked at the modem fee deferal, for all purposes I saw, it was a waste of time.

Up front, $75 instead of $130, so a savings of $55, but over 6 months you have to pay $150 for the modem, so $20 more.

I suppose it is a nice option for some, but with all the other upfront install fees, why bother?

A simple solution would be to decouple the internet contract and the modem lease contract.

Lease the modem under a contract and keep the internet on month to month so even if they move to a new ISP they can continue to payout the modem. Best of both worlds and you can even offer the service to non-TSI customers. It'd have to be on better terms than $75 upfront though. $24.99 up front, $11.99/month for 12 months or some such.

Amen. That is what perpetuates the income gap in this country, not unfair wealth distribution. The option exists for most things to pay over time or pay upfront and occasionally one simply cannot afford something upfront, whether that be a few hundred dollars for an ISP change or thousands for a car. The thing is that interest is charged on the principle and ends up costing more over time so the person who didn't have the money in the first place is worse off and may have needed to take other financing options for other products and services over the period payment.

There are certain situations though where it makes sense to finance even if you have the money, 0% interest being one. With cars though, most manufacturers up the MSRP to accommodate the 0% interest. The thing to remember here though is that you'll pay the same whether you finance or not, so even though the MSRP is upped, those paying cash will pay the same too.

The whole poor are victims due to finance rates is a false narrative. Poor with good credit can still get low interest credit for such purposes. Those individuals would not require such a service. The types of individuals who require the service are those who ruin their credit along with being poor. That subgroup tends to have a much higher default rate on financing which necessitates higher rates. More often than not they tend to have poor spending control more than anything.

Lets say TSI gets 10 customers at a $29.99 down, $11.99/m. If 3 of them default they only make 1.4%(~$18) profit on those 10 customers for a year's worth of financing. It may seem like the ~$32 per modem is a high finance rate but in reality it's to balance out the high risk. A lot of financing options like that only end up making 7-8% more overall.

+1

Totally!