Early Termination Fees
I have recently heard that the FCC is thinking stepping in and taking action to help consumers in regards to early termination fees.
So far the majority of the talk I have seen has been in regards to cell phone services however it wouldn’t surprise me to see any rulings on early termination fees be applied to the satellite industry as well.
While I think the FCC is trying to help consumers, I think that if they extend any early termination fee rules to the satellite industry this could actually be bad for consumers.
In this day and age consumers always want things free. This free mentality has been a major downfall for the industry because as we all know nothing is free. Customers want free HD DVR’s, they want free service and they want free premium channels. The last time I checked all of the satellite companies were in business to make money. Also the last time I looked there is no one (or way) to make things like HD DVR’s for free. In order for the satellite companies to give this stuff away for “free” they must lock in customers for a period of time to recoup their costs. These companies must also have an early termination fee just incase the customer wants to leave to go to another company for their free offer. I can assure you that a $250 early termination fee that companies charge does not cover the cost of the hardware they placed in a customer’s home.
If the FCC does step in then your free HD DVR might just cost you $700 or more up front. From where I sit an early termination fee of $250 is a bargain.
But things just don’t stop there, sometimes retailers who install your satellite systems also have their own early termination fee, some folks might find this unfair but take a look. Did you know that most satellite retailers actually pay around MSRP for the products they put in your home for free? After you are installed they are paid for the install, which knocks down the price and earns the installer a profit. However if you don’t remain a customer for a certain length of time then the satellite companies charge them back. This means the satellite retailer not only loses the money they made on installing your system, but also the cost of the install including the labor and materials. The satellite retailers are taking a gamble every time they install a customer. In order for them to survive the customers must honor their agreement and that’s why some retailers charge an early termination fee as well.
Ultimately no company wants you to leave your contract early, they all want us to be happy customers. If you are having an issue and want to leave a company you should first really give the companies a chance to make you happy.
Another way to look at Early Termination fees is you are signing a contract, a contract is like a promise; don’t sign it unless you are prepared to live to your obligations of that contract.
Just another reason why “free” really isn’t free. Have a great weekend!
SWilson commented:
I don\’t have a problem with early termination fees for those who actually break a contract that they signed, but what about when you get a replacement receiver because the old one is broken and they put you into this phantom contract that they never tell you about when you activate the new receiver?? A customer could be with them for four years, have a receiver break, they can send out a replacement, and that obligated you to another 2 years of service?? What a scam that is, ESPECIALLY when you are leasing the equipment!!
NightNinja commented:
The cable companies don't have etf's or up front equipment fees because they incorporate those costs into the service cost and other monthly fees. For example, I have 2 HD DVRs from DirecTV and only pay one $4.99/month lease fee. To get the same thing from the cable company, it would cost me $6.99/month PER BOX. To get the same services as DirecTV from the 3 cable companies in my area, it would cost $30-40 more per month. So even if a new DirecTV install were to cost $200 up front, it takes no more than 7 moths to make that up.
ekilgus commented:
If this comes about and the HD DVR's start costing $700 that will solve the bandwidth dilemma for Dish as there will be significantally fewer HD subscribers.
weirman commented:
what about cable companies. Most companies don't charge for equipment or etf's!! So why do satellite companie's have to? Could you imagine if satellite companies went the way of cable companies and switched to no cost/no etf price structure then they could truly compete with cable companies.