[IP] more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers
Begin forwarded message:
From: Bob Frankston <Bob2-19-0501@xxxxxxxxxxxxxxxxxx>
Date: October 16, 2005 3:29:09 PM EDT
To: dave@xxxxxxxxxx, 'Ip Ip' <ip@xxxxxxxxxxxxxx>
Subject: RE: [IP] more on Locked In a Cell: How Cell Phone Early
Termination Fees Hurt Consumers
There's another way to look at those termination fees.
First we need to get past the lie that they are just tied to the cost
of the device when they are typically associated with the account.
Any business has a cost for acquiring a customer – if those fees are
indeed vital then it’s an indication of something very wrong in this
marketplace. Acquisition costs are part of doing business – if they
are the dominant cost then we have another strong indication that
here is something fundamentally flawed.
If the offerings are interchangeable commodities (because customers
find no compelling difference) and there are few other costs then why
isn’t cellular telephony just a mundane commodity. As I’ve pointed
out – we don’t need the carriers to do handoffs as the devices
themselves can maintain the relationships. All we need are access
points. Instead we get a maze of twisting winding billable passages.
Carrier 802.11 will be the same!
Coke and Pepsi also have few costs beyond acquisition and retention
but they can’t charge termination fees to consumers (though they do
control distribution systems). Unlike the Carriers, they haven’t
cornered the market on the sugar and water in the same way that the
carriers control connectivity.
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