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- 02-20-2008, 01:44 AM #1Someone Besides MeGuest
I was wondering if AT&T will buy out contracts (pay the cancellation
fee) if switching from other carriers?
› See More: Does AT&T buy out contracts?
- 02-20-2008, 02:08 AM #2Kevin WeaverGuest
Re: Does AT&T buy out contracts?
My friend asked that also. They said no. Mgr said something about being a
law they can't. I doubt it's a law. But none will do it. He also asked a few
others and they all said no.
"Someone Besides Me" <[email protected]> wrote in message
news:[email protected]...
>I was wondering if AT&T will buy out contracts (pay the cancellation fee)
>if switching from other carriers?
- 02-20-2008, 05:34 AM #3DevilsPGDGuest
Re: Does AT&T buy out contracts?
In message <[email protected]> "Kevin
Weaver" <[email protected]> wrote:
>My friend asked that also. They said no. Mgr said something about being a
>law they can't. I doubt it's a law. But none will do it. He also asked a few
>others and they all said no.
Absolutely no such law that would even slow down carriers, if they
wanted to do so.
They might not be able to pay out the fee directly, I'm not entirely
aware of competitive regulations in this area.
However, offering a $200 bill credit for customers who sign up after
getting an "evaluation of their needs" by bringing in one or more
previous bills and getting an assessment of the best plan available for
them on the new carrier wouldn't be illegal, were it worded correctly.
- 02-20-2008, 07:18 AM #4Thomas T. VeldhouseGuest
Re: Does AT&T buy out contracts?
Someone Besides Me <[email protected]> wrote:
> I was wondering if AT&T will buy out contracts (pay the cancellation
> fee) if switching from other carriers?
Why would they do that? They either have to pass that fee on to you directly
[which is not longer a buy-out] or they have to eat it and pass it along to
all customers; to those that honor the full term of their contracts and those
that don't. Once AT&T starts doing it, they all would have to, which would
nullify the effect. AT&T as much as the rest benefit from locking a user to a
plan for two years, so that is your answer; it just doesn't make sense to
offer to buyout a competitors contract.
--
Thomas T. Veldhouse
In the land of the dark the Ship of the Sun is driven by the Grateful Dead.
-- Egyptian Book of the Dead
- 02-20-2008, 10:12 AM #5DevilsPGDGuest
Re: Does AT&T buy out contracts?
In message <[email protected]> "Thomas T. Veldhouse"
<[email protected]> wrote:
>Why would they do that? They either have to pass that fee on to you directly
>[which is not longer a buy-out] or they have to eat it and pass it along to
>all customers; to those that honor the full term of their contracts and those
>that don't. Once AT&T starts doing it, they all would have to, which would
>nullify the effect. AT&T as much as the rest benefit from locking a user to a
>plan for two years, so that is your answer; it just doesn't make sense to
>offer to buyout a competitors contract.
The cost of acquiring new clients is usually over $200 anyway, adding a
bit of additional cost wouldn't be the end of the world.
Under the theory that this would being in more customers, it might delay
the time until a new customer becomes revenue positive, but this could
be overcome by adding an additional 6-12 months to the new contract if a
contract transfer program is used.
Long term though, all this would do would be to cause carriers to raise
termination penalties, and add other obstacles to transferring.
- 02-20-2008, 10:43 AM #6Thomas T. VeldhouseGuest
Re: Does AT&T buy out contracts?
DevilsPGD <[email protected]> wrote:
>
> The cost of acquiring new clients is usually over $200 anyway, adding a
> bit of additional cost wouldn't be the end of the world.
>
> Under the theory that this would being in more customers, it might delay
> the time until a new customer becomes revenue positive, but this could
> be overcome by adding an additional 6-12 months to the new contract if a
> contract transfer program is used.
>
> Long term though, all this would do would be to cause carriers to raise
> termination penalties, and add other obstacles to transferring.
It also delays their own customer from leaving. All the carriers have the
goal of reducing churn, and allowing contract buyouts would not progress to
this goal. Further, all they can do is offer a new subscriber a discount for
the amount of the ETF, as the ETF is applied by the previous carrier to the
customer and not to the new provider. So, in the worst case scenario, AT&T
might be giving a user a free phone under a 2-year contract and $200 worth of
credit to offset the ETF charged by the customers former carrier for breaking
contract. For one user, that is between 2 and 4 months of revenue! It used
to be said that a carrier doesn't make a profit on a customer until the 10th
month ... so you can do the math [assuming that still holds true].
--
Thomas T. Veldhouse
In the land of the dark the Ship of the Sun is driven by the Grateful Dead.
-- Egyptian Book of the Dead
- 02-20-2008, 11:04 AM #7John NavasGuest
Re: Does AT&T buy out contracts?
On Wed, 20 Feb 2008 09:12:34 -0700, DevilsPGD
<[email protected]> wrote in
<[email protected]>:
>In message <[email protected]> "Thomas T. Veldhouse"
><[email protected]> wrote:
>
>>Why would they do that? They either have to pass that fee on to you directly
>>[which is not longer a buy-out] or they have to eat it and pass it along to
>>all customers; to those that honor the full term of their contracts and those
>>that don't. Once AT&T starts doing it, they all would have to, which would
>>nullify the effect. AT&T as much as the rest benefit from locking a user to a
>>plan for two years, so that is your answer; it just doesn't make sense to
>>offer to buyout a competitors contract.
>
>The cost of acquiring new clients is usually over $200 anyway, adding a
>bit of additional cost wouldn't be the end of the world.
Just the opposite -- the total cost of acquiring a new customer is on
the order of $450-500, very high already, and the additional cost would
make it uneconomic.
>Under the theory that this would being in more customers, it might delay
>the time until a new customer becomes revenue positive, but this could
>be overcome by adding an additional 6-12 months to the new contract if a
>contract transfer program is used.
>
>Long term though, all this would do would be to cause carriers to raise
>termination penalties, and add other obstacles to transferring.
I think that would likely be a non-starter in the marketplace,
--
Best regards,
John Navas <http:/navasgroup.com>
"Usenet is like a herd of performing elephants with diarrhea - massive,
difficult to redirect, awe inspiring, entertaining, and a source of mind
boggling amounts of excrement when you least expect it." --Gene Spafford
- 02-21-2008, 11:35 AM #8lyaremkoGuest
Re: Does AT&T buy out contracts?
"Kevin Weaver" <[email protected]> wrote in message
news:[email protected]...
> My friend asked that also. They said no. Mgr said something about being a
> law they can't. I doubt it's a law. But none will do it. He also asked a
> few others and they all said no.
Actually it IS considered "Tortious Interference In A Business Relationship"
for any carrier to encourage a potential customer to terminate their
existing contract.
Same applies to all other business contracts. The competition may encourage
the potential new customer not to renew their existing arrangement once it
expires, but they are open to civil liability if they encourage them to
cancel early.
- 02-21-2008, 12:19 PM #9Todd AllcockGuest
Re: Does AT&T buy out contracts?
"lyaremko" <[email protected]> wrote in message
news:[email protected]...
> Actually it IS considered "Tortious Interference In A Business
> Relationship" for any carrier to encourage a potential customer to
> terminate their existing contract.
>
> Same applies to all other business contracts. The competition may
> encourage the potential new customer not to renew their existing
> arrangement once it expires, but they are open to civil liability if they
> encourage them to cancel early.
I doubt that would apply, since an early opt-out (in return for paying an
ETF) is actually part of the contract. Encouraging a customer to break the
contract and not pay might be interference, but buying one's way out of it
is simply fulfilling the contract early, much like paying a car or home loan
early. No harm, no foul, and the terms of the contract have been satisfied.
You don't necessarily commit to 2 years of service when you sign a cell
contract- you really commit to 2 years OR an ETF.
- 02-21-2008, 01:19 PM #10John NavasGuest
Re: Does AT&T buy out contracts?
On Thu, 21 Feb 2008 11:19:18 -0700, "Todd Allcock"
<[email protected]> wrote in <[email protected]>:
>"lyaremko" <[email protected]> wrote in message
>news:[email protected]...
>
>> Actually it IS considered "Tortious Interference In A Business
>> Relationship" for any carrier to encourage a potential customer to
>> terminate their existing contract.
>>
>> Same applies to all other business contracts. The competition may
>> encourage the potential new customer not to renew their existing
>> arrangement once it expires, but they are open to civil liability if they
>> encourage them to cancel early.
>
>I doubt that would apply, since an early opt-out (in return for paying an
>ETF) is actually part of the contract. Encouraging a customer to break the
>contract and not pay might be interference, but buying one's way out of it
>is simply fulfilling the contract early, much like paying a car or home loan
>early. No harm, no foul, and the terms of the contract have been satisfied.
>You don't necessarily commit to 2 years of service when you sign a cell
>contract- you really commit to 2 years OR an ETF.
My own take is that's not a terrible persuasive argument. Suggest you
read up on Tortious Interference case law. A contract isn't even
necessarily required.
--
Best regards,
John Navas <http:/navasgroup.com>
"Usenet is like a herd of performing elephants with diarrhea - massive,
difficult to redirect, awe inspiring, entertaining, and a source of mind
boggling amounts of excrement when you least expect it." --Gene Spafford
- 02-21-2008, 04:04 PM #11Thomas T. VeldhouseGuest
Re: Does AT&T buy out contracts?
John Navas <[email protected]> wrote:
>
> My own take is that's not a terrible persuasive argument. Suggest you
> read up on Tortious Interference case law. A contract isn't even
> necessarily required.
>
Those attourney pigs can make anything fly. But offering to pay a customer a
rebate in the amount of an ETF sounds legitimate to me. It doesn't sound like
it is in the interest of any carrier to offer it however.
--
Thomas T. Veldhouse
In the land of the dark the Ship of the Sun is driven by the Grateful Dead.
-- Egyptian Book of the Dead
- 02-21-2008, 05:43 PM #12Todd AllcockGuest
Re: Does AT&T buy out contracts?
"John Navas" <[email protected]> wrote in message
news:[email protected]...
>>I doubt that would apply, since an early opt-out (in return for paying an
>>ETF) is actually part of the contract. Encouraging a customer to break
>>the
>>contract and not pay might be interference, but buying one's way out of it
>>is simply fulfilling the contract early, much like paying a car or home
>>loan
>>early. No harm, no foul, and the terms of the contract have been
>>satisfied.
>>You don't necessarily commit to 2 years of service when you sign a cell
>>contract- you really commit to 2 years OR an ETF.
>
> My own take is that's not a terrible persuasive argument. Suggest you
> read up on Tortious Interference case law. A contract isn't even
> necessarily required.
Seeing that the local cable co is constantly trying to "buy" my DBS
satellite system for $400 if I convert to cable, I suspect a cell company
wouldn't have a legal problem offering a "bounty" on it's competitors'
customers.
Of course, the ability to do it doesn't mean it's a good idea for them
financially. As the recent pro-rated ETF and $99 unlimited plan ideas show,
competitive forces all but require cell companies to adopt, adapt, or co-opt
each other's new plans and policies, so a "bounty" would essentially just
end the ETF game, which is in none of their best interests.
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