[IP] more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers
Begin forwarded message:
From: Andrew Lippman <lip@xxxxxxxxxxxxx>
Date: October 10, 2005 6:36:56 PM EDT
To: dave@xxxxxxxxxx
Subject: Re: [IP] more on Locked In a Cell: How Cell Phone Early
Termination Fees Hurt Consumers
It would be nice if the simple economics were that the longer
duration contracts underwrote the phone discount, but the carriers
are not that simple. The longer contract avoids churn, simplifies
planning and also pays for the phone. I have not found a deal where
I could buy reasonable service alone without the term. Locking you
in is the name of the game. I have a monthly contract from Sprint,
but it was the only one I could find with digital access. It is more
expensive.
The larger problem is that the phone subsidy means that cell phone
manufacturers are separated from their users, so they lack the direct
feedback that would give better product iterations. In a handful of
countries, this is illegal (e.g., Finland, where Nokia is bigger than
the carrier, I guess.) It is perfectly reasonable to require that
they offer competitive shorter term contracts, and longer options for
those who want the deal with the subsidized phone included. That
latter option ought to bring cost savings via carrier mass purchasing.
It's you own political choice as to whether you think this is a
matter of legislation rather than normal competitive business
practice. Personally, I am suspicious about the synchrony of the
carrier's competitive terms...
andy lippman
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