A Proposal to Cell Phone Providers for Openness
It's obvious that the claims that 'Early Cancellelation Fees' which are attributed to 'susidizing the phone' are actually more than that. The cell phone provider wishes, obviously, that the customer continue using the service and they apply a penalty for discontinuing.
At the same time the cell phone companies tend to hide the actual costs of these new advanced devices. They really are advanced electronics and have a retail price that reflects that.
So how does a cell phone provide get the results they currently have while being much more open about it?
Sell the cell phone on a 2 year installment plan for the full retail price. The plan must be seperate from the service. If a person elects to discontinue the service they still must fulfill paying for the phone. But the phone must not be locked.
The cell phone service is provided at a slightly higher than fair price. If there are REAL cancellation costs these must be documented and paid for UP FRONT. This is so a customer may cancel at any time, after paying their current bill, without an additional charge.
Now here's the part for the cell phone company. The cell phone provider provides, for each month paid on the installment plan on the cell phone, a voucher which may be applied against the next months service charge. This is the 'subsidy'.
The customer therefore has a large incentive to continue using the cell service since there is a discount which they won't have if they quit the original and go to a competing service.