Comments on: Sprint Ordered To Refund Early Termination Fees to Customers

By: Dean

Dean — Mon, 27 Oct 2008 03:46:28 +0000

Actually, Verizon now offers the ability to go month to month if you provide your own equipment, with no early termination fee. Also, all Verizon ETFs are now variable. They start off at $175 and decrease $5 per bill cycle. Not quite full proration, but fair enough. As far as the discounted price of phones go, cellular carriers generally lose money on the phones they sell at two-year pricing. Some phones are even given away for FREE. They do this, of course, because they generally make their money back along with a profit during that two-year agreement. Subsidy or not, call it whatever you’d like. Game consoles often work similarly. Sony, for example, sells its PS3 at a sizable loss, knowing that in most cases the game revenue generated during the life of the console will more than make up for the initial loss. Sony, however, doesn’t deal with contracts and has to put a lot more trust into the customer. The current $399 price is already discounted nearly a hundred bucks from the cost of manufacture. I wouldn’t mind signing a 2 year contract with Sony, promising to buy one game a month, if it meant that I would get a PS3 for say, $225, with an ETF of $175 (If I cancel early, then 225+175=$400, which is no more than the original cost that I WOULD HAVE OTHERWISE PAID ANYWAY!).

By: Andre Kibbe

Andre Kibbe — Mon, 27 Oct 2008 01:24:12 +0000

First, service contracts impose ETFs even if you bring your own phone. Second, the ETFs aren’t prorated. Third, the discounted price of phones is a promotion, not a subsidy. Think of game consoles and digital cameras with technology equivalent to what goes into a cell phone with a higher list price. The price tiers are industry norms that bear no relation to production costs. Economies of scale are much higher on cell phones than, say, digital cameras, so naturally they should cost less. There is nothing to “subsize.” If carriers want to keep customers in the free market, they need to either provide better service than their rivals or offer lower prices. Then prices and services would self-regulate.

By: Dean

Dean — Sun, 26 Oct 2008 00:07:35 +0000

This is rediculous. Without early termination fees, the cell phone companies will not be able to offer discounted pricing on new phones and upgrades. So instead of possibly paying $200 for ending the contract early, now you are going to have to pay something like $150 more UP FRONT to purchase your phone in the first place, since the cell company has no way of guaranteeing you won’t just take your brand new phone to another company the next month, etc. If you wait until the end of the contract, there is no ETF and you got a great price on your original phone. Let’s take a look at the following three possibilities, and you decide which is most appealing. ONE: you pay a mandatory extra $150 up front since your new phone is not discounted because there is no contract agreement. TWO: there is a contract, you get a great discount on your phone and pay nothing up front, and you only pay $200 at some later point if you do indeed end the contract early…OR you pay nothing at all if you ride the contract out (but you still got a great price on your phone when you signed up). THREE: Pay $200 security deposit, which you get back after 2 years unless you port to another carrier. You get the phone discount, but $200 of your money is locked up for two years or so. I’d rather have that money in my hands during that time, and just promise to pay it if I end service early. No matter how you look at it, contract service with ETFs give the best value to the customer so long as they don’t terminate service early.