| There is always quite a bit of talk around about | | | | That means wireless networks should not charge |
| how unfair it is that wireless networks charge | | | | early termination fees to customers if they are |
| early termination fees or ETF. People ask, what | | | | not giving customers a discount in return. |
| gives the networks the right to charge these | | | | Additionally, flat-rate early termination fees that |
| fees. Are they trying to get the customer upset? | | | | companies charged in the past are not right. They |
| Don't they realize that upset customers won't do | | | | should decrease the further we go into the |
| business with them again? | | | | contract. If the customer leaves near the end the |
| All the arguments sound good, but are wrong, | | | | carrier loses much less than if they left early on. |
| mostly. The point behind these fees is being | | | | So the customer ETF should be much less. |
| missed. They were not originally set up as a profit | | | | Generally speaking early termination fees are fair. |
| center. This was simply set up to make sure the | | | | However companies began to wield them like a |
| company didn't lose money, then it changed over | | | | sword and abuse the customer. That is when the |
| time. | | | | customer started to turn on the whole idea. |
| In the US phones are sold on a different basis | | | | Generally speaking most wireless carriers have, or |
| than other countries. Elsewhere customers pay full | | | | are, reworking this charge and moving from a flat |
| price per phone. That means they pay hundreds | | | | rate to a pro-rated amount. This is fair. However |
| of dollars more per phone. In the US these | | | | this is for new contracts. Existing contracts are |
| phones are discounted by hundreds of dollars. | | | | still on the old basis. |
| Customers like this lower initial price. | | | | So this is a problem that will take care of itself |
| The network discounts the price and pays the | | | | over the next year or two as older contracts |
| additional amount themselves. As long as the | | | | expire. |
| customer stays for the length of the contract, | | | | The FCC has also asked all four of the major |
| typically two years, then the network recovers | | | | wireless providers, Verizon Wireless, AT&T |
| this large discount and makes a profit. | | | | Mobility, Sprint Nextel and T-Mobile USA and even |
| That's the key part that the customer forgets. If | | | | Google for that matter, to explain their early |
| the customer cancels in less than the length of | | | | termination fee policies. They also want to know |
| the contract the carrier loses money. | | | | how these carriers disclose this information to |
| There are only two prices carriers can charge; | | | | their customers. Perhaps some tweaking will be |
| the non-discounted price, and the discounted price. | | | | helpful. |
| People think the price they pay, the discounted | | | | There are many other wireless carriers, like Apple |
| price, is the only price. They think it is a marketing | | | | and Dell and all the smaller players as well. Perhaps |
| gimmick to have a non-discounted price. | | | | they will be asked the same questions at some |
| Customers think this is supposed to let them think | | | | point. |
| they got a better deal and that no one actually | | | | In the beginning this fee was not a profit center. |
| pays the full amount. | | | | However over time this may have changed and |
| This is where the cell phone industry is missing | | | | become one. If the carriers focus on protecting |
| the boat. They should explain that in many | | | | themselves from loss and not on profit, I think |
| countries customers do pay the full price. They | | | | customers would understand and both sides could |
| should also give the customer the choice up front. | | | | live in peace. |
| Let the customer choose the basis to do | | | | The pendulum swung one way in the beginning, |
| business. That will clear up the problem. | | | | then it swung to the unfair side, now it is time for |
| Tell the customer they have a choice. They can | | | | the pendulum to swing back to the middle where |
| either pay the full price and have no early | | | | it is fair for both the customer and the cellular |
| termination fees, or take the discounted price, but | | | | networks, and it looks like that is what is |
| have to abide by the two-year contract with the | | | | happening now. |
| carrier. | | | | |