Telecoms Contracts
- Beware the *FREE* gift!
It’s always a sad moment when doing a telecoms audit to
discover that the client, invariably
disappointed with the service they are currently receiving, has signed into a 5
year contract for their telecoms, and they have 3 ½ years to go!
Further investigation typically reveals that the incentive
for this 5 year tie-in was a free line install! Now this can be a massive
carrot and seem like a big money-saver on setting up a business, however, I
want to share with you an audit I have just completed which would indicate that
this particular carrot is not that easy to swallow!
The offer is a simple one. You get a free line installation
and get put on “our best business call plan” with inclusive FREE minutes. That
seems like a great deal doesn’t it?
The problem with bundled packages, free installs and
massive length contracts is that they are not fair to the customer in so many
ways. The supplier of this offer knows
full well what their financial risk and reward is going to be, the end user is
oblivious and is making the decision trusting that the information presented to
them is providing great value, not knowing what to ask or look out for.
The Package under
Audit:
Free Line Installation, Inclusive Call Bundles and
Business Plan for non-bundled calls, all wrapped up in a 5 Year contract.
The Costs:
Description
|
Qtr Rental
|
Comments
|
Analogue Line
|
£54.15
|
Q6 of 5 Year contract
|
ISDN Digital System 2 Ch
|
£169.61
|
Q6 of 5 Year contract
|
ISDN Digital System 2 Ch inc package
|
£231.36
|
Q6 of 5 Year contract
|
ISDN Digital System 2 Ch
|
£168.36
|
Q6 of 5 Year contract
|
ISDN Digital System 2 Ch inc package
|
£231.36
|
Q6 of 5 Year contract
|
Call Charges for Out of bundle calls
|
£127.38
|
Q6 of 5 Year contract
|
Total Quarterly Cost
|
£982.22
|
|
The Perceived “Benefits”:
Analogue Line
Installation
|
£ 112 each x 1
|
£112
|
ISDN Digital System 2Ch
Installation
|
£ 320 each x 4
|
£1,280
|
Total “FREE” benefits
|
|
£1,504*
|
* Benefits are based upon the supplier pricing these
installations
Is it as good as
it looks?
So looking good so far? Let’s look at a competitive non free
installation; no free minutes included package 12 month agreements to see where
value is being delivered.
Upfront costs
Analogue Line
Installation
|
£ 80 each x 1
|
£80
|
ISDN Digital System 2Ch
Installation
|
£ 150 each x 4
|
£600
|
Total “FREE” benefits
|
|
£680*
|
The Costs:
Description
|
Monthly Charges
|
Qtr Equivalent
|
Analogue
Line
|
£
11.50
|
£
34.50
|
ISDN
digital System 2 Ch
|
£
23.60
|
£ 70.80
|
ISDN
digital System 2 Ch
|
£
23.00
|
£ 69.00
|
ISDN
digital System 2 Ch
|
£
23.00
|
£ 69.00
|
ISDN
digital System 2 Ch
|
£
23.00
|
£ 69.00
|
All
Call Charges*
|
£
95.58
|
£
286.74
|
Total
Costs
|
£
199.68
|
£
599.04
|
*Call charges do not include any free or bundled calls
and can be seen to be more expensive than the Free bundle minutes.
What does this
mean?
The above costs show that the supplier providing a Free
installation is inflating the costs of the installation to encourage the 5 year
contract so that the perceived saving is significant to seem worth entering
into a 5 year agreement.
What is obvious is that the 5 Year Contract with Free
stuff becomes more expensive at month 4 compared to the competitive offer and
that by the end of the 5 year contract they will have paid in this instance £
6,983.60 more than they should, a massive 36% more than a competitive tariff
and installation.
Buyer, beware!
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