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

[David Farber <dave () farber net>]

Begin forwarded message:

From: Michael Kende <Michael.Kende () analysys com>
Date: October 11, 2005 10:47:48 AM EDT
To: dave () farber net
Cc: Robert Daffin <rsd3414 () ACRretail com>
Subject: RE: [IP] more on Locked In a Cell: How Cell Phone Early  
Terminati on Fees Hurt Consumers


One would have thought that with number portability operators would have
changed these practices for a couple of reasons.  Prior to number
portability, it is likely that many of the most attractive (business)
customers were loyal mainly because on average they could least afford
to change their phone numbers, but now of course these customers are
free to shop around.  Operators of course always know more about their
own customers (average monthly bill, quick payment of bills, etc.) than
they could possiblly know about potential new customers (who have
signalled that they are not loyal to their existing provider) so I would
have thought they would try to identify and retain their best customers
with some type of loyalty plans.  I should say that whenever I call my
provider to ask about getting a new phone they always look up my number
and offer me a cheap handset if I sign another long-term contract, but
they have never offered me any loyalty deal out of the blue.

Michael

-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Tuesday, October 11, 2005 10:25 AM
To: Ip Ip
Subject: [IP] more on Locked In a Cell: How Cell Phone Early Terminati
on Fees Hurt Consumers



Begin forwarded message:

From: Robert Daffin <rsd3414 () ACRretail com>
Date: October 11, 2005 9:49:56 AM EDT
To: "'dave () farber net'" <dave () farber net>
Subject: RE: [IP] more on Locked In a Cell: How Cell Phone Early
Terminati on Fees Hurt Consumers


My wife and I use Nextel.  I purhcased both phones (Motorola i90's) at a
steep discount in exchange for a one year contract nearly three years
ago.
I've been month-to-month with them ever since the contract expired, and
there have been no changes in my terms of service.  I do occasionally
get flyers that offer me some slight savings for signing a new service
contract.


Out of curiosity, I investigated the purchase of two new phones from
Nextel several months ago, but was surprised to discover that the steep
discounts offered are only available to new customers.  Thus, even if I
was willing to sign a two year contract to get new phones, I'd have to
do it with another carrier to get the discount.  I find it fascinating
that Nextel is willing to offer such deals to attract new customers, but
is uninterested in offering the same to retain existing customers, even
when every other provider out there offers competitive new customer
discounts to current Nextel customers.

I don't know how the recent mergers will affect our situation in the
future, but for now, we're content with our phones, our plan, and our
service.  If we ever decide that we need new phones, or if Sprint/Nextel
decides to try to force us into a new contract, we'll likely have no
choice but to go to
another provider, in spite of our overall satisfaction with Nextel.
It is
no wonder that there is so much customer churn in the cellular market.

-R

-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Monday, October 10, 2005 5:01 PM
To: Ip Ip
Subject: [IP] more on Locked In a Cell: How Cell Phone Early Termination
Fees Hurt Consumers




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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