Originally Posted by charliex
i make cellphone games, we buy phones at full retail all over the place, or get them free from the makers on a prelease, sometimes we need a new contract and we'll still have to sign up for the cancellation fees or lengthier contracts although generally you can get a 1 year contract for a lot of phones, they just don't tell you, and will suddenly remember you can do things like that once you push the question.
so subsidy of the phone you have itself doesn't always come into in, subsidy of the other phones they sell might though.
they have still asked for two years contracts , even if we provide a phone.
Of course they'll ask for two year contracts, no matter what. The salesman gets a larger commission for a two year contract than a one year. They're incentive-ized to push two years and not mention one years unless you ask them about it first.
The real rip-off though, is you providing the phone and them still putting you under an ETF. The main argument for carriers charging ETFs is that, since they subsidize the phone up front, and then make their money back slowly over the life of the contract, customers being able to just walk away from contracts without penalty would devastate their bottom line.
Of course, they wouldn't have to worry too much about that if their service was good, but in purely economic terms, ok, it makes sense. But... wtf if you supply your own phone? The carrier isn't doing you any economic favors up front then. So, how is an ETF justified in those cases? It really can't be, not by any good reason I've heard yet.
The industry is starting to see more of a push from consumer groups and politicians to regulate ETFs, and of course they're counter-lobbying and coming up with some bullsheeite reasons why ETFs are actually good
for the industry. But in reality, aside from protecting a carrier's phone subsidy investment, what ETFs mainly do is protect weaker, more poorly run carriers who provide bad service. It ends up being a Berlin Wall meant to keep dissatisfied customers in, and it may actually be self-defeating. The only good justification for an ETF is if they give you a discount on a phone.
A few carriers have even seen the future coming (ETFs becoming increasingly restricted by legistlation) and are trying to get out ahead of the trend. Verizon, for example, actually pro-rates the ETF over the life of the contract. For every month you're under contract, your ETF is reduced $5. That isn't much, but over time, does add up.
However, Verizon does that largely because its churn rate/customer loyalty is very good... it doesn't have to erect a high fence to keep its customers in. It'd be hard to imagine a company with bad churn and a lot of customers leaving, like Sprint right now, doing the same thing voluntarily.