Tuesday, September 18, 2007

"She did what? Is she stupid?"

Legislation introduced by Sen. Klobuchar aims to end high termination fees and unexpected dead zones. Critics say it is overregulation.

As if having four carriers in town, T-Mobile, ATT, Sprint/Nextel, Verizon as well as resellers like Virgin, isn't enough competition to drive fees and coverage down and up respectively, Amy Klobuchar, assuming all more-pressing issues have been solved, is sticking her ignorant nose into the wireless business. It's not like we have an evil monopoly going here.

Why are there termination fees? Because if you haven't noticed, Amy, a cellular phone, even a very basic one, has an acquisition cost of a couple hundred dollars to the carrier. There is no free lunch and there is no "free" phone.

The carriers subsidize the handset in exchange for a one or two-year contract. Correct me if I am wrong, but I am pretty sure everybody knows this.

That is how carriers have made it possible for virtually everyone that wants one to have one nowadays.

If you don't like your carrier after you have fulfilled your contract, you can switch and even take your number with you. You can sell your old phone on eBay, sign a new contract, and get another "free" phone.

So, Amy, what will be the result of your ill-advised and asinine proposal (assuming it has a chance)?

Termination fees will be traded for higher activation fees and monthly access fees and equipment costs. Much higher equipment costs.

The Cell Phone Consumer Empowerment Act? Even the title sounds asinine.
Update: more from Kermit here.


Aaron APC said...

This is not only naive, but downright ignorant. There are a couple very simple ways to get out of a contract with little/no cost.

The easiest way to get out of a contract is too look at those notices from your cell phone company about rate changes. These contracts are bi-directional: so anytime the cell phone company changes your rates (most often bumping up the price for text messages or misc. downloads), it considered a revision of contract and you should be able to literally walk away from it without penalty.

Second, there are websites that allow you to swap to another carrier and take up someone else's existing contract with the provider you are looking to join.
(www.celltradeusa.com, www.cellswapper.com)

Bike Bubba said...

Actually, I don't know that it costs that much to get a cell account started. You can just buy minutes and get out of the store for $50 or less. You don't get quite the coverage that the monthly plans give you, but for those of us like me who use it rarely, it's a nice deal.

And no thanks to our junior Senatrix for trying to ruin some good deals via regulation.

jroosh said...

Actually, I don't know that it costs that much to get a cell account started. You can just buy minutes and get out of the store for $50 or less.

...all I would say is go to eBay and find that "$50" phone and you will be surprised to see them selling for twice that to people that can't or won't sign new contracts to get the subsidy from the carrier.

Plus don't forget in many cases a commission is paid to someone to activate the client.

Even the $50 phones cost two or three times that to the carriers. I know this because I used to be in that business years ago and still have quite a few clients in the telecom industry.