Area Man Pays Twice for the Same Cell Phone
By Mitchell Lazarus on January 10, 2016 Posted in Cellular, Wireless
Telephony
Area Man v. Verizon II – a re-match of the mis-matched. You may pay
twice, too, the next time you upgrade.
(Blogger’s Note: See that disclaimer over to your right, under “Welcome
to Our Readers.” This post reflects the views only of the author, not of
the law firm or its clients.)
A few days before Christmas, my cell phone stopped working. It was
almost 11 p.m., but Verizon tech support promptly answered my call
(really). A friendly and helpful woman with a clacky keyboard narrowed
the problem to my SIM card. She gave me the address of a Verizon store
near my home that would replace the SIM card for free.
The next day the store was crowded, but they took care of me quickly.
Another friendly and helpful woman, with amazingly intricate decorations
on her fingernails, re-diagnosed my problem as a bricked phone. I had
thought it was fully insured, but it turned out the insurance did not
cover failing to place and receive calls. Who would want that? The woman
offered to sell me the next-up model of my present phone for nothing
down and so much per month.
Let’s pause here. For years I have been paying Verizon $215 a month for
two cell phones, unlimited voice and text on both, and 6 GB of shared
data between them. (Yes, I know you have a better deal, and no, I don’t
want to hear about it.) The other phone belongs to my daughter who is a
stand-up comic in New York and occasionally models for book covers,
activities that consume surprising amounts of data. We both like shiny
new phones, and we both upgrade regularly. Verizon includes most of the
cost of the upgrades in the monthly bill. Assuming they finance $500 for
each of our phones over two years, I figure about $45 of the total
monthly bill goes toward paying off the phones. You can do the
calculation here. That’s why Verizon insists on a two-year contract – to
make sure they get fully paid back – and why they will charge an Early
Termination Fee (ETF) if I leave the contract before the two years are up.
A lot of people seem not to understand how this works. They think a $700
iPhone costs just the $200 they hand over up front, and don’t realize
part of their monthly payment goes to paying down the other $500.
Verizon probably has the truth somewhere deep in the paperwork, but
otherwise appears willing to let the misconception stand.
This means that the monthly rate should go down by $45 after two years,
when the phones are paid off. Just kidding. Of course Verizon keeps the
rate the same. But hold that thought.
Back at the store, admiring my shiny new phone, I learned Verizon has
changed how it does business. It no longer subsidizes the phone as part
of the service contract. Now it handles the phone purchase as a separate
transaction. I pay for the service for as long as I use it. But I pay
for the handset only for two years, and then stop.
That’s good, right?
It would be, but for one fact: the service contract remains at $215 a
month. That amount is still big enough to include a subsidy for the
phones – even though I am now paying for my phone separately. So I am
paying for that phone twice. At the end I will have paid $1,000, plus
interest, for $500 worth of phone. The next time my daughter gets a new
phone, I will also pay twice for hers, and Verizon will be pocketing an
unearned $45 each month.
But wait, you say – I still have a few months to run on my old phone, so
I really am paying for two. True, if you really think the monthly
service rate will do go down when the old phone is paid for? It never
has in the past.
Or, you say, if I don’t like the deal I can leave Verizon and go to
another carrier. The market is “vibrantly” competitive, according to the
cell phone trade association. But changing carriers would entail paying
Verizon hefty ETFs for both lines. I am locked in to a bad deal.
In all fairness, when I expressed my displeasure at the store, the
fingernail lady called over a FIOS guy who both increased my home
Internet speed and cut that bill by $20, so I actually came out a little
ahead. Of course I am a Trained Professional who knows how to raise my
voice in a cell-phone showroom full of holiday shoppers. But that should
not be necessary. Call me naive and old-fashioned, but I think any
customer should get reasonable treatment up front without having to ask
for it.
The FCC does not get involved in cell phone pricing, on the theory that
the market is sufficiently competitive not to need regulation. In
practice, though, nothing stops Verizon from charging me anything it
wants, up to the point where I’m willing to pay the ETF to get rid of
them. Maybe that’s in their DNA. Verizon traces its direct ancestry back
to the old AT&T monopoly phone company, which had a reputation for not
caring much about its customers. Their prices were high, in those days.
But at least you paid them only once.
--
*================================================ Duane Whittingham -
N9SSN (ARES/RACES, EmComm, Skywarn & Red Cross)
http://www.radiodude.info ================================================*
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