Beware of contracts with technology companies on clarkhoward.com

Technology companies love to hook customers into contracts (euphemistically called "agreements") because they're scared of competition.

For example, both Clark and his executive producer Christa are Clear customers for high-speed Internet. Christa signed a contract, while Clark went the non-contract route.

Now Christa can't get a signal in the townhouse where she and her family are temporarily living. So she has to pay $5/month to suspend the service for an anticipated nine or 10 months while flood damage in her main residence is repaired.

Clark, meanwhile, is not getting a decent signal at his house. As a non-contract customer with Clear, all he had to do was cancel his service and go back to a cable or phone provider for high-speed Internet.

In related news, Verizon Wireless has raised its termination fee to $350. That's simply outrageous!

The key rule here is that when you sign up for any service -- cable, satellite, home phone -- you must find out if there's an "agreement." You may have to sort through 40 or more pages of legalese to find out like Clark recently did. Why can't we have a simple, one page plain English disclosure about this stuff?!

What others are saying

The Lesson is Do Your Homework
The lesson is you sound like a bookworm who doesn't business homework.
1) contracts stifle competition and allow the company to ripoff the customer and payoff the shareholder. Same business model: big monster mega banks/big monster wireless companies. Get a clue.
What's wrong with getting a new phone every month? Either you pay the full price with no contract or the subsidized price with contract. DOH!
2) If the wireless companies provided great service, which they don't, then the customers become loyal with no contracts needed. Funny how nearly every major wireless company ex-USA has no contracts, provides better service and makes more money. Sounds like you have the GM mentality.
3) Give Christa some slack. She lost her house. Try doing homework on that.
4) The $300 term fee is not only for the Droid. It's for everything Verizon. DOH! BTW, 401ks are a ripoff foisted on the American public by lobbyists of guess who? big monster mega companies. If we citizens don't get in gear and get active, we will lose our nation. Get a clue, please?
By Karl @ 11/09/09 11:27:26 PMreport abuse
no contract
These companies should have a no contract plan but you have to purchase your own phones. Some of them do. If you don't want a contract, fine, pay 500 for a nice phone. Another thing, cell companies should charge minutes for the person making the call and not charge both-they doing it like that in asia and europe.
By mr. lee @ 11/09/09 03:27:00 PMreport abuse
ETF
Ok, so $350 feels high. Just pay the non-subsidized price instead and don't sign a contract ($560 btw for a no-contract Droid). Never worry about ETFs again.
By Daniel @ 11/09/09 12:27:30 PMreport abuse
Clear Service
Thank goodness I didn't sign a contract for Clear service. I couldn't get a signal in my townhome. Clear even sent a rep out. The rep said "no way". There is no signal here. WiMax is not all that great it seems.
By patdesign @ 11/08/09 08:26:45 PMreport abuse
termination fee of $350
the termination fee of $350 is outrageous. Consumer reports did a investigation in 1/09 and found the subsidy is included in your monthly rate. at the end of your contract period if you sign up again your rate does not go down
By Peter @ 11/07/09 11:33:43 AMreport abuse
Harsh
Liam, a bit harsh don't you think? When your house is flooded and you are looking for temporary housing, making sure you get a decent Clear signal is kinda low priority in my mind. What other homework did you want her to make? Also, with a contract, Clear waives the $35 activation fee. Christa is losing $5 per month. At 10 months, she only lost $15. In light of a flooded resident, that's nothing.
By z @ 11/07/09 11:12:25 AMreport abuse
Give me a break!
Contracts are for suckers. Contracts are never drafted for the benefit of consumers! Contracts are a legal way to stifle the competition while remaining profitable and reducing the "swirl" effect when customers do not get the service that was promised. There are too many providers who do NOT require an "agreement" to join one that does.
By Another Old Guy @ 11/07/09 08:54:49 AMreport abuse
The Lesson is Do Your Homework
Clark is stupid to say that tech companies (I'm thinking in particular wireless companies) have contracts solely because they're scared of competition. These companies make a signficant investment in subsidizing equipment for new customers, and without a contract a customer could drop service and get a new phone every month. The companies are actually running a business and have shareholders to answer to, and I would bet that most of Clark's readers/listeners fall into that group through their 401K/pension funds.

Christa was dumb for contracting into a service without doing her homework. Wireless coverage isn't like some Google app - it requires real capital investment to build out and maintain a network. Clear has a long road ahead of it to build out coverage, and its capital financing situation to do so is a bit tenuous.

In regard to Verizon's $350 termination fee on the Droid, I imagine that's a reflection of how high their subsidy on the device is.
By Liam @ 11/06/09 05:16:09 PMreport abuse
Verizon ETF
The increased ETF applies to SMARTPHONES like the Droid, Blackberry, and HTC phones. Also the $350 fee decreases by $10/month served.
All other "feature" phones will continue to have the standard ETF of $175 (minus $5/month completed)
By quint @ 11/06/09 04:09:40 PMreport abuse
Verizon $350 early termination fee
Clark is right. To pay $350 for a termination fee is outrageous. For that amount they can shoot their droid into outer spaced
By George Miller @ 11/06/09 04:09:27 PMreport abuse
Verizon $350 early termination fee
Clark is right. To pay $350 for a termination fee is outrageous. For that amount they can shoot their droid into outer spaced
By George Miller @ 11/06/09 04:09:23 PMreport abuse
What about the equipment?
No harm, no foul? What about the equipment? I heard you can't return it after 7 days.
By yo @ 11/06/09 02:56:40 PMreport abuse

The Lesson is Do Your Homework

The lesson is you sound like a bookworm who doesn't business homework.
1) contracts stifle competition and allow the company to ripoff the customer and payoff the shareholder. Same business model: big monster mega banks/big monster wireless companies. Get a clue.
What's wrong with getting a new phone every month? Either you pay the full price with no contract or the subsidized price with contract. DOH!
2) If the wireless companies provided great service, which they don't, then the customers become loyal with no contracts needed. Funny how nearly every major wireless company ex-USA has no contracts, provides better service and makes more money. Sounds like you have the GM mentality.
3) Give Christa some slack. She lost her house. Try doing homework on that.
4) The $300 term fee is not only for the Droid. It's for everything Verizon. DOH! BTW, 401ks are a ripoff foisted on the American public by lobbyists of guess who? big monster mega companies. If we citizens don't get in gear and get active, we will lose our nation. Get a clue, please?

By Karl @ 11/09/09 11:27:26 PMreport abuse

no contract

These companies should have a no contract plan but you have to purchase your own phones. Some of them do. If you don't want a contract, fine, pay 500 for a nice phone. Another thing, cell companies should charge minutes for the person making the call and not charge both-they doing it like that in asia and europe.

By mr. lee @ 11/09/09 03:27:00 PMreport abuse

ETF

Ok, so $350 feels high. Just pay the non-subsidized price instead and don't sign a contract ($560 btw for a no-contract Droid). Never worry about ETFs again.

By Daniel @ 11/09/09 12:27:30 PMreport abuse

Clear Service

Thank goodness I didn't sign a contract for Clear service. I couldn't get a signal in my townhome. Clear even sent a rep out. The rep said "no way". There is no signal here. WiMax is not all that great it seems.

By patdesign @ 11/08/09 08:26:45 PMreport abuse

termination fee of $350

the termination fee of $350 is outrageous. Consumer reports did a investigation in 1/09 and found the subsidy is included in your monthly rate. at the end of your contract period if you sign up again your rate does not go down

By Peter @ 11/07/09 11:33:43 AMreport abuse

Harsh

Liam, a bit harsh don't you think? When your house is flooded and you are looking for temporary housing, making sure you get a decent Clear signal is kinda low priority in my mind. What other homework did you want her to make? Also, with a contract, Clear waives the $35 activation fee. Christa is losing $5 per month. At 10 months, she only lost $15. In light of a flooded resident, that's nothing.

By z @ 11/07/09 11:12:25 AMreport abuse

Give me a break!

Contracts are for suckers. Contracts are never drafted for the benefit of consumers! Contracts are a legal way to stifle the competition while remaining profitable and reducing the "swirl" effect when customers do not get the service that was promised. There are too many providers who do NOT require an "agreement" to join one that does.

By Another Old Guy @ 11/07/09 08:54:49 AMreport abuse

Clark is stupid to say that tech companies (I'm thinking in particular wireless companies) have contracts solely because they're scared of competition. These companies make a signficant investment in subsidizing equipment for new customers, and without a contract a customer could drop service and get a new phone every month. The companies are actually running a business and have shareholders to answer to, and I would bet that most of Clark's readers/listeners fall into that group through their 401K/pension funds.

Christa was dumb for contracting into a service without doing her homework. Wireless coverage isn't like some Google app - it requires real capital investment to build out and maintain a network. Clear has a long road ahead of it to build out coverage, and its capital financing situation to do so is a bit tenuous.

In regard to Verizon's $350 termination fee on the Droid, I imagine that's a reflection of how high their subsidy on the device is.

By Liam @ 11/06/09 05:16:09 PMreport abuse

Verizon ETF

The increased ETF applies to SMARTPHONES like the Droid, Blackberry, and HTC phones. Also the $350 fee decreases by $10/month served.
All other "feature" phones will continue to have the standard ETF of $175 (minus $5/month completed)

By quint @ 11/06/09 04:09:40 PMreport abuse

Verizon $350 early termination fee

Clark is right. To pay $350 for a termination fee is outrageous. For that amount they can shoot their droid into outer spaced

By George Miller @ 11/06/09 04:09:27 PMreport abuse

By George Miller @ 11/06/09 04:09:23 PMreport abuse

What about the equipment?

No harm, no foul? What about the equipment? I heard you can't return it after 7 days.

By yo @ 11/06/09 02:56:40 PMreport abuse

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Nov 06, 2009 -- Beware of contracts with technology companies

What others are saying