Cingular dropping more customers that they sold service to, due to50% policy

"http://www.dailymail.com/news/News/2006071912/"

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SMS wrote:
> "http://www.dailymail.com/news/News/2006071912/"

Big deal allowing customers to keep their phones and phone number. They
are the customers to keep in the first place. They bought and paid for
the phones and number portability has been required for several years now.

On Thu, 20 Jul 2006 18:24:31 GMT, Dave <[email protected]> wrote in
<zTPvg.14176$rT6.10061@trnddc03>:

>SMS wrote:
>> "http://www.dailymail.com/news/News/2006071912/"
>
>Big deal allowing customers to keep their phones and phone number. They
>are the customers to keep in the first place. They bought and paid for
>the phones and number portability has been required for several years now.

It makes no sense to keep unprofitable customers.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

On Thu, 20 Jul 2006 05:50:35 -0400, "Elmo P. Shagnasty"
<[email protected]> wrote in
<[email protected]>:

>In article <[email protected]>,
> SMS <[email protected]> wrote:
>
>> "http://www.dailymail.com/news/News/2006071912/"
>
>Can the customer charge Cingular an early termination fee?
>
>I'd sure as hell try, and make them defend themselves against it.

On what legal basis? Bluff and bluster?

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

"John Navas" <[email protected]> wrote in message

>> Big deal allowing customers to keep their phones and phone number. They
>> are the customers to keep in the first place. They bought and paid for
>> the phones and number portability has been required for several years
now.
>
> It makes no sense to keep unprofitable customers.

True. But isn't like we don't have a fixed account receivable business
model here. I mean, contract or no contract, you still pay monthly fees. So
every customer is profitable.

But if trying to keep them is a mandate to extend the predictability of
profits, and the only way to so is by using borderline illegal 2 years
service contracts who only historical legal basis hedged on cell phones
being defined as a "Luxury Item", to me, is pretty flimsy.

As with all businesses, quality product and service keeps customers. I
might be a rare customer exception, but I had no contract since 1998 and
never had a need to switch.

---

Sam wrote:

> True. But isn't like we don't have a fixed account receivable business
> model here. I mean, contract or no contract, you still pay monthly fees. So
> every customer is profitable.

This is true. On the one hand you'd think that it would make no sense to
have these customers leave, they're not unprofitable, they're just lower
profit than other customers. But on the other hand, if you can get a
certain percentage of those customers to pay more, you may not mind
having to lose others in the process. This is essentially what Cingular
is doing with the old AT&T Wireless customers and all the TDMA
customers. Let's face it, a very large percentage will stay, even at the
higher rates, and this makes up for the small percentage that will leave.

Wireless is unlike a business where you're actually manufacturing
something, since with wireless, each new customer doesn't require new
production (yes, eventually you'll have to add capacity, but in reality
the network is built out now, and the carriers are desperately trying to
use all the capacity they built).

Bottom line is that it makes sense to give your better customers better
deals on new equipment, it's just hard to take something away that
you've been giving away in the past.

"Elmo P. Shagnasty" <[email protected]> wrote in message
news:[email protected]...
> In article <[email protected]>,
> SMS <[email protected]> wrote:
>
>> "http://www.dailymail.com/news/News/2006071912/"
>
> Can the customer charge Cingular an early termination fee?
>
> I'd sure as hell try, and make them defend themselves against it.
>
Sure you can. Suppose they terminated a 2-year contract after 1 year, you
may be entitled to damages for breach-of-contract, fraud, misrepresentation.
etc. You probably have monetary damages, such as what you paid for phones
that are no longer useable or buying replacement phones, the costs of
switching to a new service, increased cost of the replacement service during
the balance of the term, and perhaps printing and publishing costs if you
lost your phone number. Just write them a letter "demand for payment"
listing those costs. Wait a month, then sue them in small claims court.

On Sat, 29 Jul 2006 06:42:53 -0700, SMS <[email protected]>
wrote in <[email protected]>:

>Sam wrote:
>
>> True. But isn't like we don't have a fixed account receivable business
>> model here. I mean, contract or no contract, you still pay monthly fees. So
>> every customer is profitable.
>
>This is true.

Actually false. There is a real "opportunity cost" of service, and low
revenue customers can in fact be unprofitable.

>Wireless is unlike a business where you're actually manufacturing
>something, since with wireless, each new customer doesn't require new
>production (yes, eventually you'll have to add capacity, but in reality
>the network is built out now, and the carriers are desperately trying to
>use all the capacity they built).

Also untrue for the reason stated above.

>Bottom line is that it makes sense to give your better customers better
>deals on new equipment, it's just hard to take something away that
>you've been giving away in the past.

Of course.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

On Sat, 29 Jul 2006 04:03:41 -0400, "Sam" <[email protected]> wrote in
<[email protected]>:

>
>"John Navas" <[email protected]> wrote in message
>
>>> Big deal allowing customers to keep their phones and phone number. They
>>> are the customers to keep in the first place. They bought and paid for
>>> the phones and number portability has been required for several years now.
>>
>> It makes no sense to keep unprofitable customers.
>
>True. But isn't like we don't have a fixed account receivable business
>model here. I mean, contract or no contract, you still pay monthly fees. So
>every customer is profitable.

Not true. There is a real "opportunity cost" of service, and low
revenue customers can in fact be unprofitable.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

"John Navas" <[email protected]> wrote in message
news:[email protected]...
> On Sat, 29 Jul 2006 06:42:53 -0700, SMS <[email protected]>
> wrote in <[email protected]>:
>
>>Sam wrote:
>>
>>> True. But isn't like we don't have a fixed account receivable business
>>> model here. I mean, contract or no contract, you still pay monthly
>>> fees. So
>>> every customer is profitable.
>>
>>This is true.
>
> Actually false. There is a real "opportunity cost" of service, and low
> revenue customers can in fact be unprofitable.

Actually, the original statement was true. Your claim is flawed at even the
most basic level, and shows a lack of any practical personal knowledge of or
experience with the subject. The opportunity cost of service mentioned is
prevelent throughout all price points and typically impcts mid-tir accounts
more than any other sector of the subscription base. The impact of this on
tenured low-tier customers is minimal at best- these customers have long ago
learned how to live within the terms of their price plan and do not have as
many issues as mid and high tier accounts.

>
>>Wireless is unlike a business where you're actually manufacturing
>>something, since with wireless, each new customer doesn't require new
>>production (yes, eventually you'll have to add capacity, but in reality
>>the network is built out now, and the carriers are desperately trying to
>>use all the capacity they built).
>
> Also untrue for the reason stated above.

Also true for the reasons above- your logic is still fatally flawed (what a
shock).

"John Navas" <[email protected]> wrote in message

>> True. But isn't like we don't have a fixed account receivable business
>> model here. I mean, contract or no contract, you still pay monthly fees.
So
>> every customer is profitable.
>
> Not true. There is a real "opportunity cost" of service, and low
> revenue customers can in fact be unprofitable.

This applies to nearly everything. Exclusive time (hence dollars) can be
lost when products and services are not optimally allocated at the highest
potential/profitable consumer.

So what are we really talking about here about "Opportunistic Cost"?
Bandwidth allocation for the non-contractual and/or lower tier customers?
Are we back to net neutrality issues? Service contacts also gives you
better estimate of long term profits margins and that is always great for
stock holders.

---

Sam wrote:
> "John Navas" <[email protected]> wrote in message
>
>>> True. But isn't like we don't have a fixed account receivable business
>>> model here. I mean, contract or no contract, you still pay monthly fees.
> So
>>> every customer is profitable.
>> Not true. There is a real "opportunity cost" of service, and low
>> revenue customers can in fact be unprofitable.
>
> This applies to nearly everything. Exclusive time (hence dollars) can be
> lost when products and services are not optimally allocated at the highest
> potential/profitable consumer.

This is only true when the supply of products and services needs to be
allocated. It's like buying a car. When the supply of a particular model
is essentially unlimited, the dealer is willing to sell at a lower price
to the price sensitive customer, even if that customer represents only a
tiny profit. The alternative is for the customer to go elsewhere, which
would mean no profit. But when the supply of particular model is
limited, the dealer is going to allocate the supply to the customer that
will pay the most.

Wireless service, at least at this juncture, is similar. A low value
customer, with the minimum calling plan, is not a loss to the carrier.

> So what are we really talking about here about "Opportunistic Cost"?
> Bandwidth allocation for the non-contractual and/or lower tier customers?
> Are we back to net neutrality issues? Service contacts also gives you
> better estimate of long term profits margins and that is always great for
> stock holders.

The bandwidth allocation for the lower tier customer is correspondingly
lower.

If we're still talking about the actual subject of this thread, then it
does make sense for Cingular to drop customers that are roaming too
much, though the truth is that these customers should never have been
sold service in the first place.

On Mon, 31 Jul 2006 20:41:41 -0400, "Sam" <[email protected]> wrote in
<[email protected]>:

>"John Navas" <[email protected]> wrote in message
>
>>> True. But isn't like we don't have a fixed account receivable business
>>> model here. I mean, contract or no contract, you still pay monthly fees. So
>>> every customer is profitable.
>>
>> Not true. There is a real "opportunity cost" of service, and low
>> revenue customers can in fact be unprofitable.
>
>This applies to nearly everything. Exclusive time (hence dollars) can be
>lost when products and services are not optimally allocated at the highest
>potential/profitable consumer.

There is both a _marginal_ cost and an _opportunity_ cost of service.

The marginal cost of providing cellular service is much lower than
opportunity cost (see below) if and only if there is excess network
capacity, and it's not as low as it might seem because part of the
marginal cost is the reduction in service quality to other customers as
a result of reduced excess capacity (because part of the purpose of
excess capacity is to handle spikes in demand).

>So what are we really talking about here about "Opportunistic Cost"?

Opportunity (not "opportunistic") cost includes the cost of lost
opportunity from resources consumed, including network capacity. In the
case of cellular service, that's the ability to service a full revenue
subscriber, measured as the difference between the low revenue
subscriber and the full revenue subscriber. Thus, for example, if a
full revenue subscriber is $50/month and a low revenue subscriber is
$25/month, the opportunity cost of the low revenue subscriber includes
both the marginal cost (direct cost plus overhead) plus the lost
opportunity revenue for those resources ($25/month). Thus even if
marginal cost is only $10/month (it's probably much more than that), the
opportunity cost is $35/month, versus only $25 in revenue, which shows
why it's a bad deal for the supplier.

>Bandwidth allocation for the non-contractual and/or lower tier customers?

The fallacy of marginal cost is that the excess network capacity isn't
free; in fact, it's quite expensive. That leaves the supplier with the
unpleasant option of shedding low revenue subscribers as full revenue
subscribers are added and excess capacity decreases.

>Are we back to net neutrality issues?

Not even remotely.

>Service contacts also gives you
>better estimate of long term profits margins and that is always great for
>stock holders.

Stockholders are more interested in (a) ARPU, (b) margins, (c) churn,
and (d) subscriber growth. Term agreements only have a bearing on (c),
and just an indirect bearing at that, and come with the cost of hefty
equipment subsidies, pushing down margins (b). While low revenue
subscribers can help (c) and (d), that comes at the expense of (a) and
(b), which the investment community tends to see as a net downer.
Instead of low revenue subscribers, Cingular focuses on prepaid
customers, which only hurt (a) while helping (b), (c), and (d), less of
a downer.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

"John Navas" <[email protected]> wrote in message
news:[email protected]...

>
> Opportunity (not "opportunistic") cost includes the cost of lost
> opportunity from resources consumed, including network capacity. In the
> case of cellular service, that's the ability to service a full revenue
> subscriber, measured as the difference between the low revenue
> subscriber and the full revenue subscriber. Thus, for example, if a
> full revenue subscriber is $50/month and a low revenue subscriber is
> $25/month, the opportunity cost of the low revenue subscriber includes
> both the marginal cost (direct cost plus overhead) plus the lost
> opportunity revenue for those resources ($25/month). Thus even if
> marginal cost is only $10/month (it's probably much more than that), the
> opportunity cost is $35/month, versus only $25 in revenue, which shows
> why it's a bad deal for the supplier.


So, if I read all of this correctly, you are saying that CIngluar does not
have the network capacity to provide service to all of their current
subscribers. therwise, why would you claim this phantom "opportunity cost"
that you associate with lower revenue subscribers?

Scott wrote:
> "John Navas" <[email protected]> wrote in message
> news:[email protected]...
>
>> Opportunity (not "opportunistic") cost includes the cost of lost
>> opportunity from resources consumed, including network capacity. In the
>> case of cellular service, that's the ability to service a full revenue
>> subscriber, measured as the difference between the low revenue
>> subscriber and the full revenue subscriber. Thus, for example, if a
>> full revenue subscriber is $50/month and a low revenue subscriber is
>> $25/month, the opportunity cost of the low revenue subscriber includes
>> both the marginal cost (direct cost plus overhead) plus the lost
>> opportunity revenue for those resources ($25/month). Thus even if
>> marginal cost is only $10/month (it's probably much more than that), the
>> opportunity cost is $35/month, versus only $25 in revenue, which shows
>> why it's a bad deal for the supplier.
>
>
> So, if I read all of this correctly, you are saying that CIngluar does not
> have the network capacity to provide service to all of their current
> subscribers. therwise, why would you claim this phantom "opportunity cost"
> that you associate with lower revenue subscribers?
>

I don't get that from the OP at all, what I do seem to get is that
apparently you're quite the ass that seems to go out of his way to troll
John's posts.


--

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