Education before Goverment Regulation.
I just read this post on techdirt (techdirt.com), Faking Death to Get out of Mobile Phone Contracts, and while I keep expecting to hit saturation point on the stupidity of people, I keep being amazed by the things I read about.
One thing I could never understand, especially since I used to sell cell phones, is why people would willing submit themselves to a two year contract for service from an industry that has a reputation for having horrible customer service. I don't care how much money you save on the phone up front, how can being locked into a contract and losing every last ounce of negotiation power and being out of warranty coverage even close to benefitial?
The difference between a one year contract and two is usually between $50 and $100 dollars, though occasionally it can go higher because of special promotions, but how much is it going to cost you if something happens to your cell phone in that six to nine month period between the end of your one year warranty and that magic point where your carrier will happily give you a new discount in exchange for a contract extension? If you're using a GSM carrier, like AT&T or T-mobile, you'll be out buying a phone that's a year or more older off of someone else second hand, and you won't know what horrors this person has subjected the phone to before you got it, and won't have a guarantee that it'll work 'til you're able to extend your contract to get a newer phone again. If you're on a CDMA carrier like Verizon or Sprint, well, then you get to either buy a phone outright, or see if you can coax customer service into activating an old phone if you can find an old one to buy off of someone and hope it doesn't have an esn that's flagged as stolen.
This isn't even considering details like suddenly finding yourself needing your phone in areas that your coverage doesn't cover, changes in usage due to anything from emergencies to change in family structure, or even something as simple as your carrier being bought out and overhauled half way through your contract. Signing a two year contract means you're at the mercy of your carrier to attempt to accommodate your change in needs, or you have to hope that the new owners of the company aren't going to change things drastically for the worse.
Having been through more than a few of these messes while my father was in charge of my cell phone, I've become more than a little paranoid about cell phone contracts. When I first got a cell phone, our carrier was AT&T (not to be mistaken for the current version where Cingular/SBC renamed itself due to the better brand recognition on the other name), they offered coverage around Dillon Beach, the place my grandfather lived 10 out of 12 months a year. Most of my mom's family was on this carrier in fact, and we made much use of mobile to mobile minutes. Then AT&T decided they should start switching its user base to GSM, since it was a widely adopted standard around the world. About this time, Cingular started sniffing around, and eventually bought them up.
At the time Cingular did this, they had already managed to score a reputation as the worst of the worst in the cellular market, despite being a young upstart. When they bought AT&T, they now held the largest network of users, and this did nothing to help them out. We started losing coverage in areas we previously had used our phones frequently from. Weird charges started showing up on our bill. And at the time I was getting fed up with it, and looking to take my cell phone under my own name and to a different carrier, my dad was convinced to extend the contract on my phone in exchange for a small discount on his bill. He later claimed that he thought he was extending the contract on his own phone, not mine, but even if that was true, small one time discounts on service, without getting a new phone, are completely a rip off for customers.
When finally the contract on my phone was up, I selected T-mobile as my carrier, as while they were a young upstart at the time, I knew multiple people with their service who gave good enough feedback, they were rated top in customer service by JD Powers, they didn't do security deposits (either you passed credit or you didn't) and they only did one year contracts. I selected a phone I liked, it served me well, and about half a year after my contract ended, I looked into upgrading to something with blue tooth, and found out that T-mobile had succumbed to the temptation of the two year contracts. When I bought my current phone, I insisted on a one year contract much to the confusion of the lady who sold it to me.
I was confused about the reaction of the lady who sold me my phone, as while I know they pay her better if she gets the two year contract, and adds on things like the insurance, she had to understand that these things are primarily to the benefit of the company she works for. Her reaction when I say no to these things is not supposed to be confusion, it's supposed to be an attempt to tell me about the benefits of these things. However, her confusion on the topic tells me why the cell phone carriers continue to get away with the two year contract games, people really either don't care or don't understand. There are not enough of us who are willing to hang onto our phone a little longer, who take care of the phone to keep it functioning longer, and who are willing to pay more for our phone up front in order to avoid being screwed over by the company we've contracted for service through.
I suppose my biggest annoyance is, how can paying $5 a month, for 24 months ($120) to make up for the second half of the contract being without warranty on the phone, be a good trade off for paying another $50 for the phone on a one year contract instead and have the option of upgrading the phone at a discount instead of getting a refurbished version of the same phone you had if the phone dies before two years? If was a parent, and had a child that frequently lost things, then the insurance could be worth it, since paying $120 over two years is easier than paying $150 or more each time the child loses the phone, even if the child loses the phone frequently and gets cut off insurance for it. I think it usually takes two or three loses in a half a year to a year to qualify for being cut off, so even that way I'd come out ahead. Traveling business people and people with horrible luck would benefit from insurance also, but most people can keep a phone functioning for more than a year, and can avoid voiding a warranty in that year.
I get especially frustrated because while I hate the companies providing the service, I really don't believe that trusting our government to "fix" the problem with more regulation is the answer. If people were educated, made informed choices (these choices are available, and choosing them more frequently will make the companies sit up and notice), we wouldn't need the government protecting the stupid and the uniformed from themselves.