site Search:


 
   
story category
New Bill Aims To Limit ETFs
Senator Klobucher tries again...
by Karl Bode Friday 04-Dec-2009 tags: prices · business · wireless · consumers
A few weeks ago, you might recall that Verizon decided they were going to raise their early termination fees for smartphone users from $175 to $350. You might also recall how this annoyed Minnesota Democratic Senator Amy Klobuchar, who wrote to both the FCC and Verizon to complain that the ETF hike was "anti-consumer and anti-competitive." As had been rumored, Klobuchar yesterday unveiled a bill taking aim at early termination fees. According to a Klobuchar press release, the bill would impose limits on how high such fees could be, while requiring betters communication between carriers and customers. The bill would:

•Prevent wireless carriers from charging an ETF that is higher than the discount on the cell phone that the wireless company offers consumers for entering into a multi-year contract. For example, if a wireless consumer enters into a 2-year contract and receives a $150 discount with the contract, the ETF cannot exceed $150.

•Require wireless carriers to pro-rate their ETFs for consumers who leave their contracts early so that the ETF for a two-year contract would be reduced by half after one year and pro-rated down to zero by the end of a contract term.

•Require wireless carriers to provide "clear and conspicuous disclosure" of the ETF at the time of purchase.

•Require monthly billing statements to clearly state the pro-rated fee customers would be charged if they terminate their contracts before the end of the next billing cycle.

You might (or hey, you might not) recall that this is Klobucher's second effort to impose new laws governing ETFs and other carrier practices. Klobuchar previously introduced the Cell Phone Consumer Empowerment Act, which aimed to reduce and pro-rate ETFs -- but carriers managed to stall that bill by voluntarily making several changes to their business models. That included pro-rating ETFs, and 30 day no-obligation trials (which some carriers have since backed off of). Simply the threat of a new bill seemed to do the trick last time -- so stay tuned.

view: topics flat text 
Post a:
moonpuppy

join:2000-08-21
Glen Burnie, MD

Let's look at the 4 points 1 by 1

•Prevent wireless carriers from charging an ETF that is higher than the discount on the cell phone that the wireless company offers consumers for entering into a multi-year contract. For example, if a wireless consumer enters into a 2-year contract and receives a $150 discount with the contract, the ETF cannot exceed $150.
Sounds reasonable. Why should the fee be higher than the discount?

•Require wireless carriers to pro-rate their ETFs for consumers who leave their contracts early so that the ETF for a two-year contract would be reduced by half after one year and pro-rated down to zero by the end of a contract term.
Again, sounds reasonable.

•Require wireless carriers to provide "clear and conspicuous disclosure" of the ETF at the time of purchase.
Sometimes, you got to make salespeople honest and many will lie to make a sale.

•Require monthly billing statements to clearly state the pro-rated fee customers would be charged if they terminate their contracts before the end of the next billing cycle.
Again, reasonable.

Why do companies hate informed customers?
BosstonesOwn

join:2002-12-15
Everett, MA
Reviews:
·Comcast

Re: Let's look at the 4 points 1 by 1

Because informed customers make better choices and a lot of times those customers informed choices will be to move away from the company to another company.

Classic example of keeping the user uninformed so that they can control the customer.
--
"It's always funny until someone gets hurt......and then it's absolutely friggin' hysterical!"

ThrowDemsOut
If you can't convince 'em, confuse 'em
Premium
join:2002-03-03
Mullica Hill, NJ
kudos:4
said by moonpuppy:

I agree with all 4 points.

But the reaction against the amount of Verizon's ETF fee for smartphones of $350 is probably misplaced. They are eating that for all the smartphones they offer. So this bill wouldn't actually reduce this fee amount at all. But making sure it is zero at end of contract is a good feature of the bill.
--
My BLOG .. .. Internet News .. .. My Web Page

Kearnstd
Elf Wizard
Premium
join:2002-01-22
Mullica Hill, NJ
what they need to do is not allow ETFs on renewed contracts when no phone upgrades have been made as part of the renewal.

or in short, if the ETF was to recover your free or discounted phone then when you renew the contract and dont change the hardware it would be logical that you shouldnt have an ETF hanging over you as now you are simply cashflow in and minimal cost out to the company.
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports
openbox9

join:2004-01-26
Alexandria, VA
kudos:1

Re: Let's look at the 4 points 1 by 1

said by Kearnstd:

what they need to do is not allow ETFs on renewed contracts when no phone upgrades have been made as part of the renewal.
Why would you renew a contract if you aren't upgrading a phone/device? Why don't you roll into a month-to-month contract?

insomniac
Oh Yeah
Premium
join:2002-09-22
Naperville, IL

Re: Let's look at the 4 points 1 by 1

One reason: changing your plan to a better one that wasn't previously offered.
--
If everything seems to be going well, you've obviously overlooked something.
openbox9

join:2004-01-26
Alexandria, VA
kudos:1

Re: Let's look at the 4 points 1 by 1

I've never incurred a contract or an extension of a contract for changing/upgrading service. I guess I've been lucky.
cyclone_z

join:2006-06-19
Ames, IA

Re: Let's look at the 4 points 1 by 1

said by openbox9:

I've never incurred a contract or an extension of a contract for changing/upgrading service. I guess I've been lucky.
I guess you have been. Back when I was a VZW customer, they required you to sign a new contract if you wanted to get a new plan. Until recently, they also required a new contract if you got more or less minutes. Or if you called them up. Or if you didn't. Pretty much anything. Ok those last two I made up, but it was almost that bad.
iansltx

join:2007-02-19
Golden, CO
kudos:2
I agree. All the tenets of that bill are reasonable and sensible. Why not?
glinc

join:2009-04-07
New York, NY
Reviews:
·Verizon FiOS

1 edit
They should also introduced a bill that will put customers in jail if they activate the phone and cancel after 30 days to sell the phone on the internet to make profit. Because clearly, these sort of ETF is aimed at people who does that causing the company to lose money.
moonpuppy

join:2000-08-21
Glen Burnie, MD

Re: Let's look at the 4 points 1 by 1

said by glinc:

They should also introduced a bill that will put customers in jail if they activate the phone and cancel after 30 days to sell the phone on the internet to make profit. Because clearly, these sort of ETF is aimed at people who does that causing the company to lose money.
Then Verizon needs to price their phones where this won't happen. Problem with that is they don't want to price themselves out of the market.

Hell, why not even mandate that if they cancel service and customers don't want to pay the ETF that they return the phone.

NOCMan
MacChatter
Premium
join:2004-09-30
Colorado Springs, CO
iPhone discount is about 600 dollars. So would you be comfortable with a 600 dollar ETF?
moonpuppy

join:2000-08-21
Glen Burnie, MD

Re: Let's look at the 4 points 1 by 1

said by NOCMan:

iPhone discount is about 600 dollars. So would you be comfortable with a 600 dollar ETF?
I bet Apple wouldn't be selling many iPhones if ATT didn't agree to subsidize it. And ATT took a massive hit on the first generation iPhones so I doubt any others will do a deal like that again. If they do, they deserve to go out of business.

Phone makers will need to see how they will market themselves to service providers and customer alike.
wierdo

join:2001-02-16
Tulsa, OK
Reviews:
·Cox HSI
·T-Mobile US
said by NOCMan:

iPhone discount is about 600 dollars. So would you be comfortable with a 600 dollar ETF?
If that's what the actual discount is, then sure, it makes perfect sense.

I hope that if something like this passes we move beyond the stupid discounted phone model. I'd rather get a monthly service discount for signing a contract as is common in other industries.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.
Skippy25

join:2000-09-13
Hazelwood, MO
Quote your "reliable" source because your figure is no where near what I have seen.

As a matter of fact I will even go so far to state that Apple could sell the phone outright for $600 and make a very handsome profit on every single one.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

1 edit

So?

As has been shown, an ETF is an entirely optional and preventable fee. There is no need for this bill, and all it will do is give cell phone companies another excuse to raise prices for service, and eliminate any discounts on phones that are offered now.
--
Blagojevich / Madoff 2012!

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA

Re: So?

said by pnh102:

As has been shown, an ETF is an entirely optional and preventable fee. There is no need for this bill, and all it will do is give cell phone companies another excuse to raise prices for service, and eliminate any discounts on phones that are offered now.
Absent collusion, simply raising service prices will negatively impact subscribership.

As to elimination of discounts on phones, the only point of those is lock-in. In markets without phone discounts, people seem to have little problem affording phones. Even if they didn't, not everyone *needs* a cell phone. Damned few *need* the type of connectivity that cell phones afford (and, no, having the ability jack your jaws on the phone during a movie does not count as a need).
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by nixen:

As to elimination of discounts on phones, the only point of those is lock-in.
True, but every cell provider already provides a reasonable amount of time during which a customer can bail if the service is not working for them. I don't see why most customers should have to lose a discount on phones that they now enjoy simply because a minority of people are whining about an entirely avoidable and preventable fee.
--
Blagojevich / Madoff 2012!

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA

Re: So?

said by pnh102:

said by nixen:

As to elimination of discounts on phones, the only point of those is lock-in.
True, but every cell provider already provides a reasonable amount of time during which a customer can bail if the service is not working for them. I don't see why most customers should have to lose a discount on phones that they now enjoy simply because a minority of people are whining about an entirely avoidable and preventable fee.
The "discount on phones" is really only a discount if you buy the argument that the first few hits of crack/meth/etc. the dealer gives you are free. There's simply no such thing as free or discounts. You pay for it *somewhere*.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by nixen:

The "discount on phones" is really only a discount if you buy the argument that the first few hits of crack/meth/etc. the dealer gives you are free. There's simply no such thing as free or discounts. You pay for it *somewhere*.
And under this law, we'll pay more because carriers would have no incentive to offer discounts.

If people want to go to the foreign model of paying full price for a phone, they are already able to. But for the rest of us who don't enjoy paying full price when it isn't needed, leave us out.
--
Blagojevich / Madoff 2012!

Steve B
Premium
join:2004-08-02
Seattle, WA

Re: So?

What is with this current thinking that this bill will get rid of the ETF all together? It WILL NOT DO THAT. Its only designed to make sure the carriers don't charge more for the ETF than what the customer received as a discount.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by Steve B:

Its only designed to make sure the carriers don't charge more for the ETF than what the customer received as a discount.
This just begs the question. Why is this even the government's business? The ETF is a fully disclosed and entirely avoidable fee. I could understand if the government was cracking down on phone companies imposing an ETF in a manner that wasn't agreed to by the customer first, but if an ETF is imposed in a manner that was fully disclosed to the customer beforehand and the customer agreed to the terms, then tough.

Again, if people do not want to be bothered with an ETF, they can buy a phone for full price already, among other things.
--
Blagojevich / Madoff 2012!
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: So?

said by pnh102:

said by Steve B:

Its only designed to make sure the carriers don't charge more for the ETF than what the customer received as a discount.
This just begs the question. Why is this even the government's business? The ETF is a fully disclosed and entirely avoidable fee. I could understand if the government was cracking down on phone companies imposing an ETF in a manner that wasn't agreed to by the customer first, but if an ETF is imposed in a manner that was fully disclosed to the customer beforehand and the customer agreed to the terms, then tough.

Again, if people do not want to be bothered with an ETF, they can buy a phone for full price already, among other things.
I`m personally enjoying watching mouthpieces like you and tk squirm while the FCC and Congress sticks it to the telecommunications industry.

In reply to your spurious argument, even if you pay full price for a phone you still have to pay the same `subsidized` price that everyone else pays. There`s no real incentive to buy a phone full price.

Not to mention the lock-ins and 2 year contracts in the US market allow phone manufacturers from actually competing with each other directly.

Computer technology depreciates in value and cost dramatically over time. The cost of hardware drops like a rock off a cliff after 1 or 2 years. The fact is that even for older phone models people have to pay marked up prices because there`s no real competitive market for phone hardware.

So yeah, a bill limiting ETFs sounds just about right considering the state of the wireless industry.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by sonicmerlin:

In reply to your spurious argument, even if you pay full price for a phone you still have to pay the same `subsidized` price that everyone else pays.
So why should those of us who are don't pay ETFs have to pay more for the people who seem to want to pay these fees?
--
Blagojevich / Madoff 2012!

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA
said by pnh102:

And under this law, we'll pay more because carriers would have no incentive to offer discounts.

If people want to go to the foreign model of paying full price for a phone, they are already able to. But for the rest of us who don't enjoy paying full price when it isn't needed, leave us out.
Do you even bother to read before you respond? Do you even bother to think before you write? There is no freaking discount. What you perceive as a discount just means that the provider is recovering their costs, elsewhere. If the discount is designed to be recouped in X months (and, let's be real, X is considerably less than your contract term), anything beyond X months is pure profit for them. Then again, you probably think that credit cards are free money, too.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell
wierdo

join:2001-02-16
Tulsa, OK
Reviews:
·Cox HSI
·T-Mobile US

Re: So?

said by nixen:

Then again, you probably think that credit cards are free money, too.
The $400 worth of gift cards and stuff I've received so far this month from my credit card companies indicates that there is indeed free money in credit cards if you're doing it right.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA

Re: So?

said by wierdo:

said by nixen:

Then again, you probably think that credit cards are free money, too.
The $400 worth of gift cards and stuff I've received so far this month from my credit card companies indicates that there is indeed free money in credit cards if you're doing it right.
Ok... And the transaction fees that Visa/MC/AmEx/etc. charge to the people you buy things from: do you think the sellers just eat that or do you think they raise their overall prices to account for the cost of accepting credit cards? That $400 would go much further if they didn't pass expenses on.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell
cyclone_z

join:2006-06-19
Ames, IA

Re: So?

said by nixen:

Ok... And the transaction fees that Visa/MC/AmEx/etc. charge to the people you buy things from: do you think the sellers just eat that or do you think they raise their overall prices to account for the cost of accepting credit cards? That $400 would go much further if they didn't pass expenses on.
Wow, I LOVE your signature. It is always amazing to me how the word "free" brings out the stupid in people. Nothing in this life is free except sunshine and anyone who thinks otherwise is living in fantasy land.

Cell phones are NEVER free; you're just going on a payment plan. The person who just looks at the price of the device and not the cost of the contract is just like the person who falls for the car dealer scam of just talking about the payments and not the total price.
Necronomikro

join:2005-09-01
said by wierdo:

said by nixen:

Then again, you probably think that credit cards are free money, too.
The $400 worth of gift cards and stuff I've received so far this month from my credit card companies indicates that there is indeed free money in credit cards if you're doing it right.
Which is possible because the merchant gets screwed out of a certain percentage.
wierdo

join:2001-02-16
Tulsa, OK
Reviews:
·Cox HSI
·T-Mobile US

Re: So?

said by Necronomikro:

Which is possible because the merchant gets screwed out of a certain percentage.
Yep, the merchants do indeed pay a fee for service, part of which is rebated to me.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.

ReformCRTC
Support Your Independent ISP

join:2004-03-07
Canada

Re: So?

Yep, you ARE a weirdo, wierdo.

The merchants pay a fee and then pass it RIGHT BACK TO YOU, you bonehead!

There is no free lunch. How many fucking times do people have to repeat that?

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by ReformCRTC:

The merchants pay a fee and then pass it RIGHT BACK TO YOU, you bonehead!
The funny part is that cash customers, unless offered a discount for paying in cash, pay the same extra costs, but do not get any of that returned back to them in the form of credit card rewards.
--
Blagojevich / Madoff 2012!

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD
said by nixen:

Do you even bother to read before you respond? Do you even bother to think before you write?
I see that I have won yet another argument with you. Next.
--
Blagojevich / Madoff 2012!
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: So?

said by pnh102:

said by nixen:

Do you even bother to read before you respond? Do you even bother to think before you write?
I see that I have won yet another argument with you. Next.
PNH...I laugh at you.

nixen
Rockin' the Boxen
Premium
join:2002-10-04
Alexandria, VA
said by pnh102:

said by nixen:

Do you even bother to read before you respond? Do you even bother to think before you write?
I see that I have won yet another argument with you. Next.
That perception would be consistent with the rest of the fantasy world you live in, I suppose.
--
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. -- Bertrand Russell

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by nixen:

That perception would be consistent with the rest of the fantasy world you live in, I suppose.
Must suck to have to pay an ETF.
--
Blagojevich / Madoff 2012!
Skippy25

join:2000-09-13
Hazelwood, MO
Im sorry, I must of missed it. Which part of the outlined items would make the cost go up?

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by Skippy25:

Im sorry, I must of missed it. Which part of the outlined items would make the cost go up?
It is simply the law of unintended consequences. Companies impose ETFs so that they can retain customers. In exchanges, they lower the price people pay for phones. They'll make up the money some other way.

Personally, I like being able to pay less for a phone even if it means me getting into a contract. I'm generally happy with my provider and I have no reason to switch. Why should my bill go up just to pay for someone else who wants to escape a fully avoidable and disclosed ETF to which they have fully agreed to pay?
--
Blagojevich / Madoff 2012!

Steve B
Premium
join:2004-08-02
Seattle, WA

2 edits
There would be no reason to lose the discount. Its just making sure the fee is directly proportionate to the discount as this bill would require. This was the reason for ETFs anyway. The purpose (this is what we were told) of the ETF is to recoup the discount. This bill simply would require the carriers to adhere to that reason. In some instances with devices, it does appear to be adhered to. However, if carriers are freely able to start changing fees, the customers will end up being screwed in the end because the carriers will start charging based on what they think people will pay even though at some point becomes ripping us off.

There is nothing wrong with making sure the carriers stick to the original reason for ETFs. We need to derail this train before it goes too far off track.
michigandave

join:2007-05-16
Fenton, MI

Re: So?

said by Steve B:

However, if carriers are freely able to start changing fees, the customers will end up being screwed in the end because the carriers will start charging based on what they think people will pay even though at some point becomes ripping us off.
Yes, this is called the free market/capitalism. Something is worth whatever people will pay for it. I understand what you're getting at but if people will pay $500 for something that cost $5 to produce then in the end whose fault is it really?

Just sayin' is all.
--

sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: So?

said by michigandave:

said by Steve B:

However, if carriers are freely able to start changing fees, the customers will end up being screwed in the end because the carriers will start charging based on what they think people will pay even though at some point becomes ripping us off.
Yes, this is called the free market/capitalism. Something is worth whatever people will pay for it. I understand what you're getting at but if people will pay $500 for something that cost $5 to produce then in the end whose fault is it really?

Just sayin' is all.
Why don`t you look up the definition of a `free market` before `just sayin`` garbage?

Matt
All noise, no signal.
Premium
join:2003-07-20
Jamestown, NC
kudos:12
said by pnh102:

said by nixen:

As to elimination of discounts on phones, the only point of those is lock-in.
True, but every cell provider already provides a reasonable amount of time during which a customer can bail if the service is not working for them. I don't see why most customers should have to lose a discount on phones that they now enjoy simply because a minority of people are whining about an entirely avoidable and preventable fee.
Tell that to iPhone customers who have seen their service degrade over time but still have a hefty ETF to pay.
--
trafficcloak.com - pptp/sstp vpn services

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by Matt:

Tell that to iPhone customers who have seen their service degrade over time but still have a hefty ETF to pay.
But even in these situations people have been able to get ETFs waived, as allowed by a typical cell phone contract.

I still think that if government wants to crack down on fees, instead of going after a fully disclosed and preventable ETF, why not go after all the hidden fees that are tacked on to your bill which are NOT disclosed up front? Why not require that the advertised price of service include all such fees? Since this impacts far more people than an ETF, I think this would be a better use of government's time.
--
Blagojevich / Madoff 2012!
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: So?

said by pnh102:

said by Matt:

Tell that to iPhone customers who have seen their service degrade over time but still have a hefty ETF to pay.
But even in these situations people have been able to get ETFs waived, as allowed by a typical cell phone contract.

I still think that if government wants to crack down on fees, instead of going after a fully disclosed and preventable ETF, why not go after all the hidden fees that are tacked on to your bill which are NOT disclosed up front? Why not require that the advertised price of service include all such fees? Since this impacts far more people than an ETF, I think this would be a better use of government's time.
The government is not a single, serial processing entity. It`s a massive organization that can tackle multiple issues at once. I think the government should go after both issues here. Hidden fees and ETFs.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by sonicmerlin:

It`s a massive organization that can tackle multiple issues at once.
Yea, badly.
--
Blagojevich / Madoff 2012!

NOVA_Guy
ObamaCare Kills Americans
Premium
join:2002-03-05
If the bill passes, and companies eliminate discounts on phones, then they won't be able to charge any early termination fees to consumers. (One of the clauses limits ETFs to the amount of discounts provided.)

I'd say that was a good thing.

What a concept: requiring wireless companies to treat customers fairly. I'm not normally a big fan of legislating actions like this for companies, but when sufficient competitive pressure doesn't exist (the wireless market is an oligopoly) then something needs to be done to ensure that consumers' desires are adequately represented.
--
To all liberals: I am NOT one of your parents, so get the heck out of my wallet. It's time for you to grow up and take some personal responsibility for taking care of yourselves, which means not relying on the government to give it all to you.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by NOVA_Guy:

If the bill passes, and companies eliminate discounts on phones, then they won't be able to charge any early termination fees to consumers. (One of the clauses limits ETFs to the amount of discounts provided.)

I'd say that was a good thing.
And you can already get cell phones for full price and not be subject to any ETF. So this means absolutely no action is needed by Congress. If that's what someone wants to do, then by all means let them do it. If someone would rather get a discount and be bound to a contract, let them do that as well.

Why is this type of customer choice a bad thing?
--
Blagojevich / Madoff 2012!
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: So?

said by pnh102:

said by NOVA_Guy:

If the bill passes, and companies eliminate discounts on phones, then they won't be able to charge any early termination fees to consumers. (One of the clauses limits ETFs to the amount of discounts provided.)

I'd say that was a good thing.
And you can already get cell phones for full price and not be subject to any ETF. So this means absolutely no action is needed by Congress. If that's what someone wants to do, then by all means let them do it. If someone would rather get a discount and be bound to a contract, let them do that as well.

Why is this type of customer choice a bad thing?
Even if you pay full price for a phone you pay the same `subsidized` monthly fee.

It`s not customer choice when the choices are limited by what the colluding carriers are willing to offer.

Whatever your definition of customer choice is, it`s obviously not Congress`s or the FCC`s definition.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: So?

said by sonicmerlin:

Even if you pay full price for a phone you pay the same `subsidized` monthly fee.
Which begs the question, why change the rules if the prevailing ones offer most people (who don't pay ETFs) a discount?

You can do what you advocate here if you like without any government involvement, buy your phone at full price and you too can enjoy the joy of paying full price for a phone and service.

Most other people have no problem getting a discount and would gladly continue the current policy because this new rule will simply raise the cost of the phone to an end user.
--
Blagojevich / Madoff 2012!

jjoshua
Premium
join:2001-06-01
Scotch Plains, NJ
kudos:1

It's still a stupid system

Unlocked phones and plans should be sold separately and carriers should be required to activate any compatible phone.

Carriers can feel free to give service discounts for multi-year contracts.
BosstonesOwn

join:2002-12-15
Everett, MA
Reviews:
·Comcast

Re: It's still a stupid system

I whole heartedly agree. I love the fact that metro pcs will activate any phone that works on their towers.

I dislike the branding and locking down of any phone. I dislike the fact that if I pay full price for a phone , they still lock my service in to a contract. for at least a year. And charge me an activation fee.

Sorry but if im paying full price I want no contract and no etf. Simple as that.

That is why this bill I think is good and is a start to opening up the market.
--
"It's always funny until someone gets hurt......and then it's absolutely friggin' hysterical!"

Kramer
Premium,Mod
join:2000-08-03
Richmond, VA
kudos:1
Reviews:
·Verizon FiOS
Host:
Microsoft Help
Satellite Radio
Wireless Security

Go Go Klobuchar

I hope she doesn't let up this time. Verizon now pro-rates a contract by $5.00/month which isn't fair. If there is one day left on your contract you would still owe them over 50 bucks to get out and I don't know what the deal is with $300 termination fees. I don't have much hope for this passing, but it is nice to know someone out there in Washington is aware of what is going on and how we are being ripped off. I suppose $300 might be enough to get the attention of even a Senator, so there might be some hope this comes to a vote.

See 6 replies to this post
dynodb
Premium,VIP
join:2004-04-21
Minneapolis, MN

All our problems are solved.

Nice to know that solutions to all the serious problems in our country have already been found and implemented.

Now that there are absolutely no significant problems in the US for legislators to address, busybodies like Klobuchar are free to spend time addressing a mutually agreed upon, avoidable ETF.

Surely this means we have no debt, unemployment is low, fraud and corruption has been stamped out, and future generations have a utopian society to look forward to. Thanks, Amy!

See 9 replies to this post
djhexer

join:2002-10-07
Reno, NV

The real question is...

Why do manufactures charge sooo musch for equipment??

The iphone only costs how much to make??? like 20.00-50.00 per phone and at full price it cost a consumer almost 700.00??? hell you could charge a customer 299.99 for the phone w/o contact and still come out ahead (after paying for parts, employee wages, etc. etc.)

So that means that technically an iphone 3GS could be offered for 99.00 in contract

also what about a bill to stop FORCING people into data charges if they do not use it?? or lower the price of data?? I know some people that use a smartphone but never use their internet on it, they use it for colanders and such and if they need to get on the net they use it at a wi-fi spot.

I used maybe 500mb last month on my iphone and i still have to pay 30.00 vs someone else who uses 500 gigs
dynodb
Premium,VIP
join:2004-04-21
Minneapolis, MN

Re: The real question is...

said by djhexer:

Why do manufactures charge sooo musch for equipment??

The iphone only costs how much to make??? like 20.00-50.00 per phone and at full price it cost a consumer almost 700.00??? hell you could charge a customer 299.99 for the phone w/o contact and still come out ahead (after paying for parts, employee wages, etc. etc.)
If you believe that it costs no more than $50 to make an iphone, it's probably time to adjust your meds.

Even if that were the case, the manufacturing cost is irrelevant, as it'll always be lower than the wholesale cost.
Eek2121
Lovin Verizon FIOS

join:2002-10-12
Newton, NJ
Reviews:
·Service Electric..

Re: The real question is...

said by dynodb:

said by djhexer:

Why do manufactures charge sooo musch for equipment??

The iphone only costs how much to make??? like 20.00-50.00 per phone and at full price it cost a consumer almost 700.00??? hell you could charge a customer 299.99 for the phone w/o contact and still come out ahead (after paying for parts, employee wages, etc. etc.)
If you believe that it costs no more than $50 to make an iphone, it's probably time to adjust your meds.

Even if that were the case, the manufacturing cost is irrelevant, as it'll always be lower than the wholesale cost.
And you really need to adjust yours. The iPhone 3GS costs $200 counting materials and labor. The only thing to recoup would be R&D costs. Selling a 3GS for $299 would net apple a decent profit. The only 'reason' the 3GS costs so much is to allow for carrier lock in. Phone manufacturers do this because they can get away with profiting more, and carriers do this because it locks the user into service for 2 years. It's a win for the carrier, a win for the phone manufacturer, and a loss for the consumer.

How many people here would buy an iPhone 3GS w/o contract if it worked with any GSM carrier and only costed $299?

Am I saying that companies aren't allowed to make money? Not in the least, but i don't believe that businesses should be allowed to make a 300-350% profit. This is obscene and clearly shows little regard to the consume.

Remember, most large corporations treat their customers like sheep. You can say 'vote with your dollars' all you want, but sheep tend to follow the herd, and the minority (like me) who do vote with their dollars shed very little off a company's bottom line.
bsoft

join:2004-03-28
Boulder, CO
said by dynodb:

If you believe that it costs no more than $50 to make an iphone, it's probably time to adjust your meds.

Even if that were the case, the manufacturing cost is irrelevant, as it'll always be lower than the wholesale cost.
Well, it's impossible to estimate exactly how much the iPhone costs to manufacture, and exactly what it would be priced at if it were sold only as an unlocked device.

However, the 32GB iPod Touch runs $300; even if we add in $100 for the GSM/UMTS chipset, camera, and GPS (there are unlocked phones for under $100 retail that contain all of these) we're looking at around $400. Which, incidentally, is what Apple charged fro the iPhone when it was unsubsidized.

A reasonable price for the 32GB iPhone 3Gs should be around $400, although as you point out it's not costs that set prices (that said, Apple would certainly be making a healthy profit at $400, at least as much as they make on the iPod Touch).

Considering that the subsidized price for the 32GB iPhone 3Gs is $300, we can conclude that the subsidy is worth about $100.
Skippy25

join:2000-09-13
Hazelwood, MO
said by djhexer:

Why do manufactures charge sooo musch for equipment??
Simple answer to this is.... because they are subsidized through the phone companies.

You are essentially buying the phone on credit. It is a fact and has been proven multiple times, people will spend more money on like items if they can "finance" them.

If you could not buy a phone from a service provider directly and the phone manufacturers had to compete for your business the phones would never cost anywhere near what they cost now.

ReVeLaTeD
Premium
join:2001-11-10
San Diego, CA

Re: The real question is...

said by Skippy25:

said by djhexer:

Why do manufactures charge sooo musch for equipment??
Simple answer to this is.... because they are subsidized through the phone companies.

You are essentially buying the phone on credit. It is a fact and has been proven multiple times, people will spend more money on like items if they can "finance" them.

If you could not buy a phone from a service provider directly and the phone manufacturers had to compete for your business the phones would never cost anywhere near what they cost now.
Exactly. The price for manufacturing the phone itself is severely inflated.

I remember when I bought the very first Sanyo SCP-5000 when it came out. It was a big deal because it was Sprint's highest resolution phone. I bought it direct with no contract as I was already in one - $500.

Here we are 8 years later and a phone with comparable features to that - say, any Samsung non-smartphone - is around $400-$500 retail. You're not going to convince me that the inner technology has not gone down in cost. It has. They're just not dropping the phone prices any, and pocketing the profit.

If you ask me the ETF should be the difference between the upfront cost paid by the customer and the true amount discounted, based on the VALUE of the phone at the time of termination, not the MSRP at purchase. In other words:

- I buy a Storm 2 at $600 today, on a two year contract, for $200 out of pocket. I pay that. So now the phone's remaining cost is $400.

- I make payments on the plan at around $50/month. We all know that plan rates are inflated, especially voice plans. So let's throw a random number...$10/month towards recouping the phone discount, or $120/year.

- I want to cancel service after 1 year.

The phone should depreciate for that year. I've already paid $320 towards its cost; that leaves $280. If the current value of the phone is $400, that means my ETF should be $120. No more than that. That's fair and I wouldn't have a problem with it as long as it's itemized and properly valuated, with clear disclosures. The problem is that there often is not clear disclosure about what's going on, the price is inflated, there's no depreciation, and the customer loses a lot of money.

kdshapiro

join:2000-03-29
Eatontown, NJ
Reviews:
·Optimum Online

Consumers forced the etf thing...

Cell phone companies should be allowed to charge an etf that is the difference between the current retail price and the discount price, exclusive of manufacturers rebates over the life of the contact.

If this bill goes through there could be etfs higher than $350. Then again consumers are a sleazy lot. Add a line with a smartphone. Cancel the line, pay the etf and sell the smartphone at a profit off the carriers back.
--
Ken

wireless buy

@sprintlink.net

On the first point

The first point makes sense if you think discounting the phone at time of purchase is the only cost that goes into signing up a customer....

which it isn't by a long shot
moonpuppy

join:2000-08-21
Glen Burnie, MD

Re: On the first point

said by wireless buy :

The first point makes sense if you think discounting the phone at time of purchase is the only cost that goes into signing up a customer....

which it isn't by a long shot
The costs you are talking about are made back in the service, not the costs of the phone.

If it weren't then why would T-Mobile sign me up for a 1 year contract on a phone that was a Pre-Paid T-Mobile phone?

Try again.

asdfdfdfdfdf

@Level3.net
Granted but why should the customer be on the hook for reimbursing a company for all the costs of signing the customer up?
If it costs $X to advertise to me and so on why should I have to agree to pay for such costs if I end service because the service is unsatisfactory? The company needs an incentive to provide a quality service. If their risk is assumed, up front, by the customers, what is their incentive to actually provide a satisfactory service so the customer doesn't bail?

That seems to suggest that companies have a right to be guaranteed a certain return and that much of the risk should be carried by the customer.
Since when is capitalism supposed to be risk free for business?
It costs money to sign people up. You then work to meet the needs of customers to keep enough of your customer base happy that you can maintain a viable business. The customers aren't responsible for guaranteeing that you don't lose money.

Perseus

@ccmaine.net

Bad Idea

The government needs to stay out of it and allow the free market and consumer demand to work. Costs of cell phone service have gone down over the years. Flat rate plans are now available and will continue to go down in cost so long as the government doesn't regulate.

Look at Internet access for example. When I started in this business, people were paying $40 a month for 30 hours of dial-up Internet access. Now you can buy DSL for $20. The lack of regulation allowed ISPs to pay for their network costs and maintenance (and make a profit, which is the whole point of being in business and is how you get paid each payday).

Allow the same model to work with cell phones. Regulating carriers with stupid bills like this will result in higher rates for a longer period of time, just like with landlines. Anyone notice that post-deregulation there are now flat rates for phone service and nobody is paying 35 cents a minute for long distance?

Allow the companies to compete in a free market, and over time the rates will come down and the ETFs will as well. Force it prematurely and you will put some companies out of business and you will see higher rates for a longer time.
wierdo

join:2001-02-16
Tulsa, OK
Reviews:
·Cox HSI
·T-Mobile US

Re: Bad Idea

said by Perseus :

Allow the companies to compete in a free market, and over time the rates will come down and the ETFs will as well. Force it prematurely and you will put some companies out of business and you will see higher rates for a longer time.
The facts are inconveniently against your argument. The cost of wireless service at most companies has only increased in the past three or four years. at&t's current plans are significantly more expensive for a similar number of minutes than the plan I'm on.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·SONIC.NET
·RoadRunner Cable

Re: Bad Idea

said by wierdo:

The facts are inconveniently against your argument. The cost of wireless service at most companies has only increased in the past three or four years. at&t's current plans are significantly more expensive for a similar number of minutes than the plan I'm on.
Nonsense. My cellphone bill has dropped dramatically in the past two years, and I've never worried about an ETF. My cost per minute continues to drop, year after year.

If you take responsibility for your own actions, you won't find yourself worrying about exit penalties. Fancy, luxury PDA phones are not cheap. If you feel you must have one, then don't cry when the carrier makes you sign a guarantee to pay off the real cost of the phone after it has lost its luster and you want to move on.
wierdo

join:2001-02-16
Tulsa, OK
Reviews:
·Cox HSI
·T-Mobile US

Re: Bad Idea

Just as a point of fact, my at&t plan includes 150 more minutes a month at the same price point I have now. Additionally, the price of data has increased by $10 in the last five years.

And just FWIW, I'm not on contract and haven't been since 2004. I don't buy phones from at&t, I buy unlocked phones, thanks, so don't start in with the ad hominems.

The only thing competition has done recently is get us incredibly expensive unlimited voice plans. For my usage patterns, unlimited m2m and n&w minutes are plenty.

Until about 2004, there was enough competition in the market to drive rates ever lower. In 1998 I was paying $80 or $90 a month for 400 minutes with no mobile to mobile or night and weekend minutes good anywhere in the US. (not long prior to that, there wasn't such a thing as free roaming nationwide)

By 2001, I was up to 550 minutes for $70 a month. In 2004, I started paying $70 a month but also got 850 minutes, unlimited mobile to mobile, unlimited nights and weekends, and a second line.

Today I could get fewer minutes for the same money, but with no added benefits. Perhaps that's because there are fewer competitors than there once were. I wouldn't know, I'm not an economist.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.

meohmy

@vzbi.com

Don't sign

if you don't like the contract don't sign it.

Karl Bode
News Guy
join:2000-03-02
kudos:29

Re: Don't sign

If you don't like customers complaining about ETFs, go sell dairy farm equipment. Make any better sense?

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4

But their voluntary pro-rates aren't true prorates

Like verizons $10/mo pro-rate that should be $14.58/mo on the $350 24month contract!
--
When I gez aju zavateh na nalechoo more new yonooz tonigh molinigh - Ken Lee

Dylan

@rr.com

Alternative...

Karl, nice article. I wanted to respond by addressing, in particular, those people who are facing ETFs because their wireless service was too expensive so they had to end their contracts prematurely. For these people, avoid the ETFs and the expensive plans by seriously cutting your wireless costs; an intuitive but often realistically tough proposition. However, I work in the consumer advocacy division of the Houston-based company Validas, where we electronically audit and subsequently reduce the average cell bill by 22 percent through our website, »www.fixmycellbill.com (and I'll add that 22 percent equates to over $450 per year for the average user).

You can find out for free if fixmycellbill.com can modify your plan to better suit your individual needs by going to the website. Check out Validas in the media, most recently on Fox News at »www.myfoxtampabay.com/dpp/consum···s_072409 .

Good luck to everyone reading on retaking control over your wireless expenses.

Dylan
Consumer Advocacy, Fixmycellbill.com

Saturday, 11-Feb 10:03:08 Terms of Use & Privacy | feedback | contact | Hosting by nac.net - DSL,Hosting & Co-lo
over 12.5 years online! © 1999-2012 dslreports.com.