AT&T: "Early Termination Fees A Great Deal For Consumers"

[ptyork]

Originally Posted by deanhatescoffee

@JKingGrim: The rep you talked to was absolutely wrong about you needing to sign a contract if you have your own equipment. As far as the signal goes, if you can get a signal with T-Mo then you can get at least the same signal with AT&T, if not better due to their use of multiple bands.

Uhh, that's unfortunately very wrong. TMo and AT&T usually use different towers (only sometimes do they lease the same ones). Thus, you cannot be guaranteed a signal on AT&T in the same places that you get signal from TMo. Case in point--where I am right now. My office & my house. I'm with AT&T because they got a super signal at my house and we use the phone as a replacement for our landlines. Unfortunately they get a shoddy signal in my office (usually none unless I press my ear to my window). TMo is exactly the opposite (though the coverage at the house is better than AT&T's at the office).

The original point is a very valid one. If I'd known about the problems at the office I'd probably not have gone with AT&T, but I didn't have the opportunity to test it out there before my 30 day lock-in. I've begged and pleaded, but I'm stuck for another year or I'm out $175.

[ptyork]

Originally Posted by deanhatescoffee

@JKingGrim: The rep you talked to was absolutely wrong about you needing to sign a contract if you have your own equipment. As far as the signal goes, if you can get a signal with T-Mo then you can get at least the same signal with AT&T, if not better due to their use of multiple bands.

Uhh, that's unfortunately very wrong. TMo and AT&T usually use different towers (only sometimes do they lease the same ones). Thus, you cannot be guaranteed a signal on AT&T in the same places that you get signal from TMo. Case in point--where I am right now. My office & my house. I'm with AT&T because they got a super signal at my house and we use the phone as a replacement for our landlines. Unfortunately they get a shoddy signal in my office (usually none unless I press my ear to my window). TMo is exactly the opposite (though the coverage at the house is better than AT&T's at the office).

The original point is a very valid one. If I'd known about the problems at the office I'd probably not have gone with AT&T, but I didn't have the opportunity to test it out there before my 30 day lock-in. I've begged and pleaded, but I'm stuck for another year or I'm out $175.

[Ed Hansberry]

Originally Posted by Chris Gohlke

Again, I think it is a disclosure issue. In exchange for a 2 year contract, you are getting two benefits.

***long quote trimmed by mod JD***

How about just get a montly contract and forget the phone. I'd rather have a phone untouched by carrier crapware.

[Fritzly]

Originally Posted by Chris Gohlke

Again, I think it is a disclosure issue.

In exchange for a 2 year contract, you are getting two benefits.

1) Subsidized hardware
2) Discount to monthly fee

So to be truly transparent, you'd need the following options

1) Pay full price for hardware and have a no contract monthly rate of x

2) Pay full price for hardware and have a contract rate of (x - rate discount for contract)

3) Get subsidized hardware and a contract rate of (x - rate discount for contract + add on to recoup the cost of the subsidized phone)

The early termination fee should be some combination of the present value of the contract discount that you should not have gotten since you did not fulfill the 2 year contract and the costs of the subsidized phone that have not been recouped.

1) shoud read Subsidized and crippled hardware and Software with some missed apps. Go abroad for two weeks and the roaming charges will wiped out the "supposed" savings of the subsidized hardware.

[Rocco Augusto]

Originally Posted by JKingGrim

I would certainly love to believe you but according to AT&T this is not so. Whether or not you want a subsidized phone, you must sign a two year contract. The rep told me they dont even do 1 year contracts anymore.

The rep you spoke too was flat out lying to you. AT&T does offer you the option of signing up for service without a contract and at the time I was working with AT&T you would have to pay several hundred dollars up front to get this option. It seems like a rip off to most people, but there were a lot of people that would rather pay a few hundred bucks up front instead of being stuck in a contact for the next 24 months.

The same thing goes for one year contracts. If you choose to sign up for a one year contract, you pay $50-$100 more for the handset to make up for the subsidized price. To me it sounds like you encountered a sales representative that openly lied to you so they could get paid more. During my time at AT&T sales reps were paid nothing for signing a customer up on a contract free post paid plan (unless the customer added features to their account) and you would get paid a lot less for signing a customer up on a one year contract as well. This is why I'm a firm believer that the current commission scale that all cellular phone companies pay their employees needs to go.

More often than not I purposely go to cell phone stores just to see what lie I'll get spoon-fed just so the sales rep can get paid. More often than not they spoon-feed you with a shovel but every now and then you get a sales rep that is actually honest and does their job.

Originally Posted by ptyork

Uhh, that's unfortunately very wrong. TMo and AT&T usually use different towers (only sometimes do they lease the same ones).

True but a few years back T-Mobile struck a nationwide tower leasing deal with AT&T. This is why T-Mobiles coverage map went from looking like severely picked at left overs from Christmas dinner to something that customers might actually want to use. T-Mobile still doesn't have as good as coverage as AT&T, but it is a LOT better than it was a few years ago. The only downside is when T-Mobile launches its new 3G network, it will be incompatible with the frequencies used by other 3G networks throughout the planet. What this means for consumers is if you decide to take your unlocked 3G phone off of AT&T's network and move it to T-Mobile you would not be able to take advantage of their 3G network at all.

Originally Posted by Fritzly

1) shoud read Subsidized and crippled hardware and Software with some missed apps. Go abroad for two weeks and the roaming charges will wiped out the "supposed" savings of the subsidized hardware.

Well in all fairness to the carriers, you're not signing up with them to get service in another country.

[JKingGrim]

About the coverage issue, one reason AT&T tends to have better coverage is because many of their markets (most? nearly all?) have 850mhz coverage as opposed to 1900mhz. Lower frequencies penetrate buildings better and go longer distances. This is one reason why 700mhz spectrum was so valuable. T-mobile has does not have any 850mhz licenses. I am pretty sure the entire network is 1900mhz. AT&T has good 850mhz (as well a 3G) here so I know I would get a better signal. Back in Blacksburg however, AT&T has only 1900mhz coverage so I dont know what I will get.

Originally Posted by Rocco Augusto

The rep you spoke too was flat out lying to you. AT&T does offer you the option of signing up for service without a contract and at the time I was working with AT&T you would have to pay several hundred dollars up front to get this option. It seems like a rip off to most people, but there were a lot of people that would rather pay a few hundred bucks up front instead of being stuck in a contact for the next 24 months.

When you say pay a couple hundred up front, you mean the cost of the handset right? There is no extra charge just because you are contract free? Since I already have a handset, I wouldn't have to pay anything extra right? What should I tell a rep who says they do not offer regular rate plans contract free?

Originally Posted by Chris Gohlke

Again, I think it is a disclosure issue.

In exchange for a 2 year contract, you are getting two benefits.

1) Subsidized hardware
2) Discount to monthly fee

With Flex pay on t-mobile, you can get regular rate plans at the same exact cost with the same features with no contract. Why shouldn't AT&T offer the same? As far as I am concerned the only benefit of the contract is the subsidized hardware. I don't think the monthly fee is also discounted. When your contract expires, you can continue to pay the same rate without extending the contract, can't you?

[Chris Gohlke]

Originally Posted by Ed Hansberry

How about just get a montly contract and forget the phone. I'd rather have a phone untouched by carrier crapware.

Originally Posted by Fritzly

1) shoud read Subsidized and crippled hardware and Software with some missed apps.

Would be my option 1 if you brought your own, just you would not pay for hardware since you brought your own.

Crapware and crippled hardware both suck but are probably outside the scope of ETF.

[Rocco Augusto]

Originally Posted by JKingGrim

When you say pay a couple hundred up front, you mean the cost of the handset right? There is no extra charge just because you are contract free? Since I already have a handset, I wouldn't have to pay anything extra right? What should I tell a rep who says they do not offer regular rate plans contract free?

Nope, even if you had the handset you would still have to pay several hundred dollars up front. There is a reason for this though. All of the carriers actually lose money on their customers until around 9-13 months into their contracts. that is when they actually start turning a profit. Usually this lose is due to the subsidizing the handset but a small portion of it is because of all the extra features users get like free nights and weekend minutes and free mobile to mobile minutes.

The carriers happily give these features to users on contracts because they know they aren't going anywhere for a few years, and if they do they will be required to pay an early termination fee. This is why when you sign up for something like the 'GoPhone Pick Your Plan' you get a lot less for the same amount of money as there is no guarantee you will be a customer next month.

Same thing can be said for signing up without a contract. There is no guarantee that you'll be a customer next month or even tomorrow and who is to say before you cancel your phone you will not rack up 10,000 mobile to mobile minutes (I've seen customers bills who use way more mobile to mobile than that too!).

You paying a little more up front makes it so if you do leave their network they don't lose any money off of you. Also if I remember correctly (it has been several years since I signed up a device this way) I think they treat this payment as a deposit and you get it back after the normal would be contract length. You would have to have double check on that though as the details are a little fuzzy to me.

[JKingGrim]

Originally Posted by Rocco Augusto

Nope, even if you had the handset you would still have to pay several hundred dollars up front. There is a reason for this though. All of the carriers actually lose money on their customers until around 9-13 months into their contracts. that is when they actually start turning a profit. Usually this lose is due to the subsidizing the handset but a small portion of it is because of all the extra features users get like free nights and weekend minutes and free mobile to mobile minutes.

The carriers happily give these features to users on contracts because they know they aren't going anywhere for a few years, and if they do they will be required to pay an early termination fee. This is why when you sign up for something like the 'GoPhone Pick Your Plan' you get a lot less for the same amount of money as there is no guarantee you will be a customer next month.

Same thing can be said for signing up without a contract. There is no guarantee that you'll be a customer next month or even tomorrow and who is to say before you cancel your phone you will not rack up 10,000 mobile to mobile minutes (I've seen customers bills who use way more mobile to mobile than that too!).

You paying a little more up front makes it so if you do leave their network they don't lose any money off of you. Also if I remember correctly (it has been several years since I signed up a device this way) I think they treat this payment as a deposit and you get it back after the normal would be contract length. You would have to have double check on that though as the details are a little fuzzy to me.

Thanks for the info. I didn't know carriers walked such a thin profit margin, but I guess it shouldn't surprise me. Most computer stores loose money with every laptop they sell. Thats why they want you to buy the $30 usb cable that probably costed a few cents to manufacture. Kinda similar situation here. Cheers.

[onlydarksets]

Originally Posted by JKingGrim

Right on the nail IMO. The contract itself is not unfair. You are getting a $150 discount on a phone in return for a commitment of two years. The problem is that there is no option to get service with out a contract.

But you basically do - just cancel the service and you're set. Or, pay full price and don't commit to a contract.

[makicr]

I think that a big part of their pushing the 2-year contracts is also to keep system stability. They are paying out money to build or rent more towers to provide more complete (and faster) coverage. They are making these investments and need to have a solid customer base to be able to finance them.

They also need to have a good understanding of what their customer base will look like in 1 year, etc, as they need to evaluate what additional enhancements are needed for the network. Just imagine how much slower the infrastructure updates would come if their customer base could just up and walk away if T-Mobile or Verizon had a real great offer that week.