Consumers union or professional whiner’s association?
Consumers Union is complaining to the FCC that consumers will have to pay Verizon a $325 early termination fee (ETF) if they decide to cancel their wireless service. This completely ignores the fact that the wireless service contract is a loan on the smartphone and that carriers like Verizon still lose money on these loans despite the ETFs. It also ignores the fact that carriers do offer early discounts on smartphone upgrades. I must have missed a memo somewhere that consumers have now a “right” to default on their smartphone loans.
As a part of their campaign, Consumers Union posted following video centered on the buyer’s remorse theme. A woman asks what happens in a “few months” when the iPhone 5 comes out, and if she’s out $300 or gets a discount. But regardless of when the iPhone 5 comes out, is a consumer entitled to a model 2012 car after they bought a model 2011 car? Are they entitled to default on their car loan without penalty? Or are they out $30,000?
Consumers Union is also complaining about the problem of carrier interoperability to the FCC.
“AT&T iPhone customers who want to make the switch to Verizon will have to purchase a new handset, which brings up long-standing concerns about the lack of interoperability among wireless networks and industry resistance to letting consumers carry their phones to a new wireless service.”
We have four major carriers two of which operate GSM while the other two operate CDMA. GSM (which uses SIM cards) is not compatible with CDMA. Verizon currently uses CDMA while AT&T uses GSM, and the FCC can’t simply wish those incompatibly away with the stroke of a pen. However, the free market is already forcing all carriers to transition to the latest generation of GSM technology called LTE.
[...] This post was mentioned on Twitter by Deb Shinder, GeorgeOu. GeorgeOu said: http://bit.ly/f0u7D1 Does @ConsumersUnion think we're entitled to refund on a new car when next year's model comes out? [...]
I’m not sure I understand what they want here. They want the cost of phones to go up so we don’t have to pay ETFs or read contracts?
This has more to matter with the life expectancy of a phone verses a car. A car has a life span of ten to twenty years. A Phone has a life expectancy of two to four years. If your phone has a less than that life expectancy you are pretty much tied to a contract the remainder which even with early upgrade isn’t always a nice price.
The sad thing is that people just came out of a recession, many of us are still struggling to get jobs and get back going again and yet we have groups like the consumer’s union that think with we all deserve the latest and greatest without taking into consideration the actual cost of the device. Maybe if they offered the device such as an iphone 4 without a contract, they would reconsider. After all, I can do that with ever other phone that I have. Why do I have to “lease” the iphone?
@Justin,
They want it both ways. They don’t want to pay $650 for iPhones and instead they only want to pay $200 up front. But they also want to be able to walk away from the contract and keep their $650 phone for $200.
They understand that this will basically kill hardware subsidies, but that is what they’ve always wanted. Tim Wu’s Wireless Carter Phone paper spent a lot of time bemoaning the US model of hardware subsidies and how European users paid up front, and they want the US to be the same way. By killing hardware subsidies, they feel this makes it easier to switch carriers making the competition between them more fierce (even more so than today). They don’t trust consumers to avoid short term savings so they want government to remove this option.
The same people want government to kill off the Kindle wireless model where users can only access what Amazon paid the carrier for on Kindle devices. It’s the same opposition to walled gardens and the attitude that consumers aren’t to be trusted to avoid walled gardens.
Time to use that right to refuse service to customers. Find these customers and cut off all of those who contracts end in the near future.
Did the title of this article change. I don’t remember it being so negative. Calling the Consumer’s Union a bunch of whiners seems honest yet negative. Calling them uninformed or deceitful seems more fitting in my book. But then again, we can’t be certain which one that is. Based on the current education system of the US, I would bet they are more uninformed.
Michael, calling them uninformed or calling them whiners are both negative statements. But as you noted, the criticism of their video was an honest assessment.
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