more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers

[David Farber <dave () farber net>]

Begin forwarded message:

From: Rahul Tongia <tongia () andrew cmu edu>
Date: October 10, 2005 5:41:50 PM EDT
To: dave () farber net, Ip Ip <ip () v2 listbox com>
Subject: Re: [IP] more on Locked In a Cell: How Cell Phone Early  
Termination Fees Hurt Consumers


Dave and Gerry,

It is very common for carriers to subsidize a phone in return for a  
contract of 1-2 years, at a minimum price level.  That much seems  
fair.  A few issues are worth remembering, however:

1) The CDMA networks largely work in different bands, i.e., a Verizon  
phone (i.e, one for the VZW network) just will not work on any other  
network (at least digitally).  VZ and Sprint are in different bands.   
Nextel uses a different technology.  The GSM networks are more  
interoperable, but Cingular and T-Mobile lock their phones (can't  
insert another company's SIM).  T-Mobile, however, is much more  
helpful about this, and lets you unlock the phone with a valid  
reason, even during the 1-year contract. AT&T/Cingular is much worse  
about this, and people I know have nice, shiny paper weights after  
their contract expires.  Maybe this is not just the fault of the  
network Cos, but also device manufacturers?  This is especially with  
"must-have" devices coming up, and going to a specific provider  
first, e.g., a Treo or Razr?
2) Most providers do not offer a rebate for those bringing their own  
phones to the network, and still make you sign the same contract to  
get the lowest monthly rate.  This strikes me as unfair.  I bought my  
own Treo600, unlocked, from Palm, and then went through a 1 year  
contract with T-Mobile, and am currently in a contract from  
Cingular.  I still pay the same monthly fees as those who get new/ 
shiny phones for free.
3) There are service dealers I know of who offer rebates to those who  
sign up for a new contract in exchange for using their own phone.   
But then this involves grey areas such as their then selling off your  
instrument to the market in exchange for a rebate from them (the  
store) and not from the cellular big-co directly.

Rahul


--On Monday, October 10, 2005 5:00 PM -0400 David Farber  
<dave () farber net> wrote:


> Begin forwarded message:
>
> From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
> Date: October 10, 2005 2:12:10 PM EDT
> To: dave () farber net
> Subject: Re: [IP] more on Locked In a Cell: How Cell Phone Early
> Termination Fees Hurt Consumers
>
>
> Dave [for IP]--
>
> Could we hear from an IPer who is either with Verizon Wireless/
> Cingular/Sprint or who has direct experience with real world data?   
> Are
> there differences across carriers?  (Normally, if there's an
> anticompetitive practice going on, I would expect this to become a
> dimension of competition)
>
> Gerry
>
> ----- Original Message ----- From: "David Farber" <dave () farber net>
> To: "Ip Ip" <ip () v2 listbox com>
> Sent: Monday, October 10, 2005 10:47 AM
> Subject: [IP] more on Locked In a Cell: How Cell Phone Early   
> Termination
> Fees Hurt Consumers
>
>
>
>
> > [My experience with Cell Companies is not what Gerry describes. I
> > always supply the phone since I am not happy with the cell phones
> > sold in the USA. Yet I am tied up with 1 or 2 year contracts with
> > $175 cancellation agreements. Why?? djf]
> >
> > Begin forwarded message:
> >
> > From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
> > Date: October 9, 2005 1:13:21 PM EDT
> > To: dave () farber net
> > Subject: Re: [IP] Locked In a Cell: How Cell Phone Early
> > Termination  Fees Hurt Consumers
> >
> >
> > Dave [for IP]--
> >
> > Re: cell phone contracts.  I think the way this works is that you
> > can  get a cellphone at a below-market price from your service
> > provider in  return for a one- or two-year contract, OR you can buy
> > your phone  elsewhere and get the service without a contract (or
> > maybe a contract  of shorter duration).  So this is a trade-off,
> > you get a price break  on your instrument in return for a longer
> > contract.  But you don't  have to take this; you can still avoid
> > the lengthy contract by buying  your own phone at a market price.
> >
> > Why is this a problem?  If you don't like the long contract, then
> > don't take the price break on the phone.  Seems to me a perfectly
> > legit deal.
> >
> > The practice of automatic contract renewal I think is sleazy, but
> > it  is very widespread.  Even Consumer Reports automatically re-ups
> > my subscription on my credit card every year, and CR is a very
> > legit  outfit.
> >
> > Now let's be honest here.  If you sign a contract to get the
> > cheaper phone, then as soon as you actually have the phone you want
> > to get  out of the contract, and this seems to be what this is all
> > about.   "Gimme the cheap phone, then I'll whine about how I'm
> > being exploited  by a long-term contract".  Pretty cheesy.
> >
> > Professor Gerald R. Faulhaber
> > Business and Public Policy Dept.
> > Wharton School, University of Pennsylvania
> > Philadelphia, PA 19104
> >
> > ----- Original Message ----- From: "David Farber" <dave () farber net>
> > To: "Ip Ip" <ip () v2 listbox com>
> > Sent: Saturday, October 08, 2005 10:05 PM
> > Subject: [IP] Locked In a Cell: How Cell Phone Early Termination
> > Fees Hurt Consumers
> >
> >
> >
> >
> >
> > > Begin forwarded message:
> > >
> > > From: Monty Solomon <monty () roscom com>
> > > Date: October 5, 2005 3:00:50 AM EDT
> > > To: undisclosed-recipient:;
> > > Subject: Locked In a Cell: How Cell Phone Early Termination Fees
> > > Hurt Consumers
> > >
> > >
> > >
> > >
> > > Locked In a Cell: How Cell Phone Early Termination Fees Hurt
> > > Consumers
> > > August 2005
> > >
> > > Executive Summary
> > > http://masspirg.org/MA.asp?id2=18535
> > >
> > > Press Release
> > > http://masspirg.org/MA.asp?id2=18541
> > >
> > > Full Report
> > > http://masspirg.org/reports/lockedinacell05.pdf
> > >
> > >
> > >
> > >
> > >
> > >
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> >
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