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Subject: [IP] more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers

  • From: David Farber <dave@farber.net>
  • To: Ip Ip <ip@v2.listbox.com>
  • Date: Sun, 16 Oct 2005 16:36:03 -0400



Begin forwarded message:

From: Bob Frankston <Bob2-19-0501@bobf.frankston.com>
Date: October 16, 2005 3:29:09 PM EDT
To: dave@farber.net, 'Ip Ip' <ip@v2.listbox.com>
Subject: RE: [IP] more on Locked In a Cell: How Cell Phone Early Termination Fees Hurt Consumers



There's another way to look at those termination fees.



First we need to get past the lie that they are just tied to the cost of the device when they are typically associated with the account.



Any business has a cost for acquiring a customer &#x2013; if those fees are indeed vital then it&#x2019;s an indication of something very wrong in this marketplace. Acquisition costs are part of doing business &#x2013; if they are the dominant cost then we have another strong indication that here is something fundamentally flawed.



If the offerings are interchangeable commodities (because customers find no compelling difference) and there are few other costs then why isn&#x2019;t cellular telephony just a mundane commodity. As I&#x2019;ve pointed out &#x2013; we don&#x2019;t need the carriers to do handoffs as the devices themselves can maintain the relationships. All we need are access points. Instead we get a maze of twisting winding billable passages. Carrier 802.11 will be the same!



Coke and Pepsi also have few costs beyond acquisition and retention but they can&#x2019;t charge termination fees to consumers (though they do control distribution systems). Unlike the Carriers, they haven&#x2019;t cornered the market on the sugar and water in the same way that the carriers control connectivity.





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