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Cellular Phone Forum / Providers / Alltel / August 2005Contract by use of phone?
I'm in year 10 of a cellular relationship with Sprint/360/Alltel. I'm not a huge user of cellular minutes, but I like to have the phone around. Without getting into the options of pay-as-you-go phones or alternate rate plans, here's my issue. Anytime I ever shopped around and then called to cancel, Alltel would come up with a great plan or promotion and I would stick with them. 14 or 15 months ago, I got a decent rate plan, but I got a $10 off promotion that made it a very good plan. Anyway, around the same time, my phone went out so I needed another phone. I didn't get a very expensive phone, but I did get a phone through them. I don't remember any type of contract or agreement, but more on that later. Anyway, I got my bill last month and the promotion was missing, so the bill was $10 too high. I called the customer service number and the person told me that he would reinstate the promotion, no problem. He gave me the $10 discount for the month, and all was well. This month's bill came, and it was $10 high again. I called them back and was informed that my promotion had expired and that they didn't have anything else going on that they could do for me. I then inquired about cancelling the service, and was told that my phone from the previous year carried a 2 year contract. After much inquiry, I found that I didn't sign a contract, nor do they have any recording with my agrrement to the contract. They fall back on a one of the conditions from thier website that states receipt and use of the phone consititutes my agreement to their terms. Is this true? If it is true, I'm(or any customer is) truly at their mercy. It's hard to believe that they could win in any couort of law without some type of contract. In the past, they would mail you a contract to sign, or ask you to go by one of their stores to sign the contract. I'm sure that this has been beaten to death on this board, but I didn't see any discussion of it. Any ideas? Michael H. > I then inquired about cancelling the service, and was told that my > phone from the previous year carried a 2 year contract. After much > inquiry, I found that I didn't sign a contract, nor do they have any > recording with my agrrement to the contract. They fall back on a one > of the conditions from thier website that states receipt and use of > the phone consititutes my agreement to their terms. Nope....Without your signature there is no contract. It's an Alltel pipe dream. Ask any attorney. They'll talk to you free on your first visit. If Alltel persists, have the attorney send them a letter of representation. The usual fee is $25. His secretary punches your name into her word processor... You don't have a contract with Micro$not, either, just because you turned on your computer....(c; I'm amazed they don't want to keep a long-term paying customer any more. Out of the blue, after I'd only been on Alltel for 6 months I got another 100 free minutes promo. I have no contract. I brought my phone from Verizon and made it a condition of becoming a customer.  SignatureLarry >I then inquired about cancelling the service, and was told that my phone >from the previous year carried a 2 year contract. After much inquiry, I >found that I didn't sign a contract, nor do they have any recording with my >agrrement to the contract. They fall back on a one of the conditions from >thier website that states receipt and use of the phone consititutes my >agreement to their terms. How did you manage to get out of the store with a phone without any paperwork being drawn up? It seems unlikely that they just handed you a phone, especially if you had to pay for it. Are you certain you didn't have to sign something to get that new phone - even if it seemed to only be a credit card slip? You'd better check your paperwork. On the other hand, tell THEM to show you where the plan specifically says you've got more than a 1 year contract from that new rate plan 14 or 15 months ago. Most cell companies now days do in fact have a "use it and you own it" provision. T-Mobile even has an adhesive seal on their phone boxes now that says, "IMPORTANT: Read the enclosed T-Mobile Terms & Conditions. By using T-Mobile service you agree to be bound by the Terms & Conditions, including the mandatory arbitration and early termination fee provisions." It's just hard to believe you got a new rate plan without a new contract having to be signed. Now days, I would not be too surprised if they could win the case, based on your obvious knowledge that you had a new rate plan (you paid the changed bills starting 14-15 months ago). And with binding arbitration (not court), you might not prevail after all. So I'd suggest going for the written terms and conditions of that plan you've been on for the past year+, and then see where you go with it. If it was a 2 year contract, you might be stuck due to the implied consent of having continued to use the plan for over a year. If it's a 1 year contract, walk. C.R. I'm afraid you are right. I'm sure thaey have set themselves up to where they would win. Or maybe, they save enough money by not keeping any records, that they will bluff their way through this. As far as getting the phone, I didn't get it at the store. I spoke with someone at the customer service number, and it was mailed to me. In the past, if I got a new phone or rate plan, they either mailed it to me, or asked me to go to the local retail store to sign the contract. My issue is that this "implied contract" is a license for them to do what they want. If I'm truly stuck for another year, they could double my rate every month. Without some kind of contract that stipulates the terms(rate/minutes), the consumer is truly at their mercy. Without any kind of record retention, it seems as if they are getting into a grey area. Regardless, I have learned my lesson. THe sooner that I can run from Alltel, the better I'll be. It will be my life goal to make sure I can dissuade as many people as possible away from these sheisters. Michael H. michaelharris1333@hotmail.com Wrote: > I'm afraid you are right. I'm sure thaey have set themselves up to > where they would win. Or maybe, they save enough money by not keeping [quoted text clipped - 17 lines] > > Michael H. You don't get a $200 telephone for $20 without some sort of obligation Nobody that has been with a cell phone provider for 10 years can ge that sort of discount and claim to be naive about being obligated t the company for a contract. There are no free lunches. It's the wa cell phone companies make up the money lost on discounting the phon especially if you are a person only paying $20 a month for service They are running a business to make money. One single signal to cove about 30 miles cost $3 million dollars. This is not a cheap industry Cell phones are a luxury item. As for the contract, if you got th phone in the store you could not have walked out without signin something and the contract lengths are even printed on the receipt Over the phone you are told and given a 14 day money back guarantee There is a copy of the contract agreements included in the box when Fe Ex delivers the phone. You can get all the lawyers you want but if yo don't read the paperwork that's your own fault. By keeping the phon beyond 14 days you agreed to those terms. People take a littl responsibility for yourself. You all know the way it works. Oh and b saying that you will run from Alltel and disuade people from doin business with them, I got news for you, unless you plan on going t prepaid service or some fly by night local barely works service ever other legitimate cellular provider requires the same contracts for th same things. It works the same way across the industry. For ever person leaving a cell company there is another one coming in with th same mentality that he got screwed by his previous provider because h assumed the same things without bothering to do any reasearch. Cel phones and the contracts involved are not something new and mysteriou everybody! It's your responsibility to know what your getting into. D your homework. That's the way the business works -- IMNRM Back off a little. Maybe you should take the time to read a little closer. I don't have an issue with agreeing to a longer contract. I have a huge issue with any company that tells me about an agreement that I made in which I didn't sign an agreement, not can they produce an audio recording of this "alleged agreement". Agreeing to keep the service 24 months isn't my problem. You should read more carefully. I DIDN'T get it at the store, and NO there wasn't a contract in the box. My issue is that midway through my 24 months, they discontinue a promotion that I was getting. I want to know why I wasn't given ANY contract with rates or rate changes mentioned. As a longtime customer, I was given a rate change well before I ever BOUGHT another phone. I BOUGHT the phone at a later date with NO RATE CHANGE. You are ASSuming that I was given a $200 phone for free. Hey, news flash, a $200 retail phone didn't cost Alltel $200. I can't remember the exact price or phone, but I paid at least $50 for a phone that was a "no-frills" phone. No fancy camera or anything else, just a phone. As I mentioned in the early post(that you apparently overlooked), in my previous 10 years, whenever I got a new phone or had a contract change, I was asked to go to the store to sign a contract, or it was mailed to me to sign and return. There wasn't anything in my package except for the new phone with it's box and papers(manual, warranty, etc). Under these circumstances, without a contract, what would deter them from raising my bill another $10 next month or $20. If we don't have acontract to look at, what do I have to go by? Again, I think it's a bluff, but I'm not sure how much trouble that I'm willing to go through. I may ride it out and then run from Alltel. I don't need a business lesson from you on the cellular industry. I know how they make money, and that they make lots of it. I can also remeber when I first had a phone how I got itemized billing. Somewhere along the way, they dropped it, but for some strange reason, my monthly bill didn't drop. Sounds like you should head back to your kiosk, there is another customer there just waiting to get rooked. > You don't get a $200 telephone for $20 without some sort of obligation. > Nobody that has been with a cell phone provider for 10 years can get [quoted text clipped - 24 lines] > everybody! It's your responsibility to know what your getting into. Do > your homework. That's the way the business works. > You are ASSuming that I was given a $200 phone for free. Hey, news > flash, a $200 retail phone didn't cost Alltel $200. Correct- it costs them between $250-350, depending on the phone. The cost to the consumer is subsidized. > Correct- it costs them between $250-350, depending on the phone. The > cost to the consumer is subsidized. I'd predict, but do not know, that any cellphone is marked up about 70-100% from its wholesale price to its retail price. I'd also predict, the "contract price" is somewhere near the wholesale+shipping cost minus the ETF, perhaps, the breakeven point on all but the cheapest phones. Radio Crap runs on a 67% markup....as do most electronics retailers. Mark your calendars, Alltel or any of the rest of them don't actually lose a dime. Those "free" phones are just about the price of the ETF. They all start making money on them in the first few months, otherwise they'd all be going tits up...which they're certainly not! SignatureLarry > > Correct- it costs them between $250-350, depending on the phone. The > > cost to the consumer is subsidized. [quoted text clipped - 3 lines] > "contract price" is somewhere near the wholesale+shipping cost minus the > ETF, perhaps, the breakeven point on all but the cheapest phones. And your predictions would be wrong. EVERY carrier has a line item on their balance sheet for equipment subsidies- a number that is reported to the SEC with everyother financial figure on a quarterly basis. The loss associated to this line item is not small, and backs up the informed claims that in many cases cellular phones do cost more than they are sold to the customer for. Just because they are small does not mean they are automatically inexpensive to make. > Radio Crap runs on a 67% markup....as do most electronics retailers. And anybody selling phones gets a commission on the service sold from the carrier- not a percentage of the phone price. This includes the big box stores. > Mark > your calendars, Alltel or any of the rest of them don't actually lose a > dime. Those "free" phones are just about the price of the ETF. They all > start making money on them in the first few months, otherwise they'd all be > going tits up...which they're certainly not! You got a source for this, or is this another of your uneducated guesses? > You got a source for this, or is this another of your uneducated guesses? Why would they give you a phone at a big loss for so little revenue? $600/year isn't much money. Of a 2 yr contract, they'd only make a couple of hundred on the first year. "The gods must be crazy" comes to mind. Doesn't make any sense. What does make sense is huge discounts on quantity...in any business. If I buy 50,000 cellphones, I buy them CHEAP, same as any other business. Why do you think cellphone companies are different? SignatureLarry > > You got a source for this, or is this another of your uneducated guesses? > > Why would they give you a phone at a big loss for so little revenue? > $600/year isn't much money. But $600/year times 30 or 40 million subscribers is a ton of revenue. > Of a 2 yr contract, they'd only make a couple > of hundred on the first year. "The gods must be crazy" comes to mind. [quoted text clipped - 3 lines] > buy 50,000 cellphones, I buy them CHEAP, same as any other business. Why > do you think cellphone companies are different? Because I've actually researched the business model, as opposed to providing "best guesses" when talking about the subject. Not only do they eventually make up the lost revenue from the sale (and then some), they have a legitimate business expense to write off. Ever wonder why the government mandated that sales tax on a cell phone is based on the MSRP and not the purchase price? Its because even they recognize the true value of the equipment and want their fair share. Ever wonder why some consumer group has never been able to have this overturned? Its because the MSRP's aren't artificially inflated as many like you would claim. No watchdog group has ever been able to prove anything other than the truth- the phones are many times sold at a loss. This number is reported to the SEC by all of the major carriers every quarter- in today's world of media scrutiny on the big, bad corporate thieves and their dishonest practices, this number would have come under attack years ago if it were nothing more than a shell game. Volume does not help with licensing costs. It costs the manufacturer x in licensing every time they make a phone. Volume does not help tremendously when dealing with proprietary hardware components. Miniturization of technology is not a cheap process, either. The uneducated statement that it must be cheap because it is too small to cost more than $50 is just plain wrong. > 30 or 40 million subscribers How much do they lose on 40,000,000 phones? SignatureLarry > > 30 or 40 million subscribers > > How much do they lose on 40,000,000 phones? I'm way too lazy to do the math- it would require compiling numbers from legacy carriers, determining how many were still on the network, figuring an average cost per quarter per new subscribers that are still on the network.............the short answer is "somewhere around 40,000,000 times the loss on a single phone." And while the number might seem extraordinarily high, it would have been realized over the course of many years and not incurred in a single quarter or year. >>>30 or 40 million subscribers >>> [quoted text clipped - 11 lines] >years and not incurred in a single quarter or year. > Not only that, but not all phones are the expensive ones, so ymmv. City folk are more likey to get fancy phones than country folk, partly because signal is not as much of an issue in the city as it is in the country, but also lifestyle preference. TH > >>>30 or 40 million subscribers > >>> [quoted text clipped - 12 lines] > because signal is not as much of an issue in the city as it is in the > country, but also lifestyle preference. Good point. Larry is just looking for a way to avoid the truth. One other thing Larry- the top three (now that the latest merger is done) have monthly receivables measuring in the BILLIONS of dollars. To write off millions of dollars a quarter to equipment subsidies represents the needle in the haystack. > If I'm truly stuck for another year, they >could double my rate every month. Without some kind of contract that >stipulates the terms(rate/minutes), the consumer is truly at their >mercy. Not entirely true: Go read the "fine print" on Alltel's web site. It stipulates that if they raise rates more than 10% (if I remember correctly) you have the option of bailing out with no ETF. I did my research prior to deciding whether to bail out when Alltel took over our carrier of almost 10 years. No, I was/am not impressed with Alltel at all - other than FINALLY agreeing to "waive" ETF's for existing GSM customers when they are dumping GSM before the end of the year. It took much work, many headaches, and quite a bit of very bad information from the vast majority of the employees I talked to before it was ever straight, but at least they did not hold people to contracts they could not continue to honor. I was all set to spring their own 10% increase policy on them - I just didn't have to. Realistically, if any company tried to "double [your] rate every month," they'd earn such a terrible reputation that they'd go down the tubes anyway. C.R. (brief and former Alltel customer) |
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