[comp.dcom.telecom] Legal Aspects of "Those Cellular Phone Deals"

Ede <ted@mbunix.mitre.org> (08/24/90)

>In California, it is no longer legal to market cellular phones and
>require activation as a condition of sale.

I know this is a dumb question, but what's the logic behind the law?  

>And that (with variations), friends, is how cellular phones are sold
>in California.

And is Massachusetts, that's how it's done too.  Fretter and Highland
regularly sell Novatel transportables for under $200, and other
cellular phones for as low as $79.  And they get a kickback of
$200-$400 depending on how hard up either Cellular One or Nynex are.
When I bought my phone, I was obligated to use Cellular One for three
months.  I signed a slip saying I would pay Highland $300 if I dumped
service before the end of the three month period.

My mom bought a phone.  That week Fretter had the better deal, and she
was forced onto Nynex for three months.  She stuck with it for about
six months, but when Nynex raised basic service almost $20/month, she
called Cellular One.  Within two days they set up service and, at no
charge, went to her office to reprogram the phone.  (Heck, they saved
the original $300, that'll pay for bus fare to just about anyone's
office!)

Sure, it's a bit of a scam, but who cares, I don't need a law to
protect me from it, I knew the deal before I went to the store.
Saving the $300 made it economically feasible for me to buy a phone.
It was well worth sticking with a company for two or three months.
And with two carriers in most areas, it's hardly a problem.  If you're
looking to buy a phone, and you don't like the carrier that the store
is pushing, just go to their competition.  They're sure to be pushing
the other carrier.

I think the people that are doing most of the complaining are the
shops that specialize in cellular phones.  They can't do the business
that the department stores do.  Either they can't get the same sizeable
kickbacks, or choose not to apply it to the price of the phone, and
now they can no longer compete.  I have a hard time feeling sorry for
them.


Ted Ede -- ted@mbunix.mitre.org -- The MITRE Corporation -- Burlington Road
linus!mbunix!ted -- Bedford MA, 01730 -- Mail Stop B090 -- (617) 271-7465 

john@bovine.ati.com (John Higdon) (08/24/90)

Ede <ted@mbunix.mitre.org> writes:

> I think the people that are doing most of the complaining are the
> shops that specialize in cellular phones.  They can't do the business
> that the department stores do.  Either they can't get the same sizeable
> kickbacks, or choose not to apply it to the price of the phone, and
> now they can no longer compete.  I have a hard time feeling sorry for
> them.

In California, the whole flap over hardware tied to service
arrangements came about from the squealing of service "resellers".
These are middlemen who buy up banks of numbers from the provider and
then work in conjunction with retailers. These agreements came up at
the beginning of cellular service in the area, but seem to be on the
wane. 

Resellers were complaining that they were being squeezed out, having
to share more and more of their kickbacks with the retailer so that
their "customers" could remain competitive with those doing business
directly with the provider. What really hurt were those retail
operations that were operated by the provider directly. As you might
expect, if it were up to the provider, you would be given a phone for
free if they could expect a certain level of usage in return.


        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395
    john@bovine.ati.com     | San Jose, CA 95150 |       M o o !