FCC Wants Wireless Providers to Let You Out of That Contract
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How many times have you signed a long contract with a wireless provider only to find it’s way too much money? Then you would have to pay even more to get out of the contract. It’s a problem many wireless subscribers face. The FCC has been working to make wireless providers charge less for their services.
It’s no doubt that wireless companies use the early termination fees to keep customers locked into a contract. They claim that they do it because they lose money on all of the free incentives they provide customers when they sign up. It turns out though that they were only losing about $14 per handset according to Dr. Lee Selwyn, president and founder of Economics and Technology Inc.,.
I would like to see the FCC go one step further and make the wireless providers provide contracts where there is no termination fee at all. These companies are already raping their customers with poor customers service and extraordinary fees. They get about 10 cents for every text message and minute of a call that is sent AND received. Not to mention all the additional charges they add onto your bill. It would put more pressure on the wireless companies to charge better prices and compete against one another instead of letting them collude and set similar pricing on all of their plans like they do now.
2 Comments
the oracle
June 13th, 2008
at 12:44pm
As someone who has worked in the wireless phone industry, for a number of years, I’d have to say that Dr. Lee is smoking some bad stuff.
If one has access to the figures, which I’ve had, it’s easy to see that the most modest of phones (the free ones) cost the company about $85 to $90 - others cost a lot more. Note that I’m talking about bare cost to the provider.
So what can happen is that one can have no early termination fees, and extra things like free nights and weekend minutes go away, and the cheapest ‘free’ phone becomes about $100.
Or, the contracts can stay as they are, and free phones, N&WE minutes, and termination fees stay.
There is no free lunch. Another thing that customers forget about is the amount of good will and service their being under contract garners them. The contract offers benefits to both parties.
If people want to rail against something truly bad, they should argue for the European style of service, which is more equitable - the originating caller gets charged for the call, the receiving party has no charges for answering their phone.
leftystrat
June 13th, 2008
at 6:18pm
I read that the industry is letting this one pass because the alternative would hurt much worse.
I also read earlier today (damn if I can remember where) that the gov’t has a Sprint contract with none of these fees because they won’t tolerate it.
Interesting, no?