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Cellular Phone Forum / Providers / ATT Wireless / February 2008Does AT&T buy out contracts?
I was wondering if AT&T will buy out contracts (pay the cancellation fee) if switching from other carriers? 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. >I was wondering if AT&T will buy out contracts (pay the cancellation fee) >if switching from other carriers? >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. > 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. > Actually it IS considered "Tortious Interference In A Business > Relationship" for any carrier to encourage a potential customer to [quoted text clipped - 4 lines] > 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. > 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.  SignatureThomas T. Veldhouse In the land of the dark the Ship of the Sun is driven by the Grateful Dead. -- Egyptian Book of the Dead >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 [quoted text clipped - 3 lines] >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. > 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. [quoted text clipped - 6 lines] > 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]. SignatureThomas T. Veldhouse In the land of the dark the Ship of the Sun is driven by the Grateful Dead. -- Egyptian Book of the Dead >>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 [quoted text clipped - 6 lines] >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 [quoted text clipped - 3 lines] >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, SignatureBest 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 |
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