ISP Says It's Doing Away With Contract Requirements; Wants People To Pay Them For Offering Good, Reliable Service

from the what-a-concept dept

In this era of mega ISPs and few small or independent options in many regions, it's always nice to learn of smaller ISPs who realize that competing on providing good service is a better strategy for attracting customers, instead of the game the big guys play: lock you into long term contracts knowing they're going to screw you over sooner or later and you'll have no real alternatives so you'll deal with it. I had that experience myself with both Comcast (who took my service down from 10am to 4pm every day for nearly a month, and each day I'd call and they'd say it was "scheduled maintenance" for that day only, and refused to tell me if any was scheduled for the next day) and AT&T (who signed me up for service, and then cancelled it without telling me because I was too far from the CO). Eventually I found Sonic.net, who has been wonderful, but they're a local ISP.

Over in Utah, an ISP called Direct Communications has announced that it no longer requires contracts and instead they want you to sign with them because, you know, they offer a better product:
Over the past couple of years, our non-customers in annual focus groups have told us that the thing holding them back was our contract terms. Many people did not want to sign long-term commitments various reasons—some did not feel secure in their employment and feared they might not be able to pay for service in a few months; many said they were looking to move out of Eagle Mountain sometime in the coming year; others said they just don’t like contracts as a matter of principle. We agree—people should stay with us because we offer the best, most reliable service in Eagle Mountain, and not because we have them locked into a contract. However, until recently, our hands were essentially tied because of NECA and FCC regulation.
As alluded to in that last line, they were limited by regulatory issues that just expired making this more difficult. While they actually did offer a no-contract option before, for regulatory reasons they had to require a massive installation fee in such cases:
Contrary to some reports, we actually have never required a contact for internet customers. New customers could always choose to forgo a contract term. However, very few people ever chose to sign up without a contract because we have always offered free installation with a 1-year commitment. We previously required a $185 broadband installation fee if new customers did not want to sign a 1-year commitment up front. This was largely dictated by FCC requirements for telecommunications and broadband companies like us. Recently, these regulations have changed to give us more leeway in deciding how to set contract and installation terms.
There will still be an install fee, but it's $75, which is much lower, obviously.

I have no idea how good the company's service is, but this is the kind of thing you start to see when there's real competition (and less regulatory interference). It would be nice if more such ISPs were able to exist around the country, but they're still pretty limited, unfortunately.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Dane Jasper (profile), Jan 8th, 2013 @ 4:24pm

    FCC required contract, or install fee??

    Dane Jasper with Sonic.net here. Bravo for service providers requiring no commit, particular for residential customers. But the point in this article that seem to imply that the FCC somehow required ISPs to use term commits, or to charge install fees makes no sense to me. As a long-time operator, this seems an odd claim to make..

     

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  2.  
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    Shmerl, Jan 8th, 2013 @ 4:25pm

    What was the reason behind such consumer unfriendly requirements by FCC?

     

    reply to this | link to this | view in thread ]

  3.  
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    Chris Rhodes (profile), Jan 8th, 2013 @ 4:32pm

    Re:

    The purpose of all government regulations is to screw the consumer. Working as intended.

     

    reply to this | link to this | view in thread ]

  4.  
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    Anonymous Coward, Jan 8th, 2013 @ 4:48pm

    what kind of "law" forces ISP's to charge an install fee? WTF?

     

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  5.  
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    Anonymous Coward, Jan 8th, 2013 @ 4:53pm

    Re:

    Your tax dollars at work

     

    reply to this | link to this | view in thread ]

  6.  
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    Dane Jasper (profile), Jan 8th, 2013 @ 4:56pm

    Re:

    I don't believe there is any such requirement. It's a very odd quote.

     

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  7.  
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    Anonymous Coward, Jan 8th, 2013 @ 4:58pm

    I had that experience myself with both Comcast (who took my service down from 10am to 4pm every day for nearly a month

    ...

     

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  8.  
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    Simple Mind (profile), Jan 8th, 2013 @ 5:43pm

    but is there any competition?

    If there is no competing service then you have customers locked in no matter if they sign a contract or not. That is exactly my situation. I have 1 ISP available to use. When I moved here they made me sign a 2 year contract. I plan to live here 10 years and be on internet the entire time, so the contract is worthless from their end. From my end it is actually a benefit because it locks them in to not raising my rates for 2 years.

    In this case I think you are just over blowing some marketing rhetoric of this company. They found that people that are unstable are unwilling to sign a long term contract. They found that by lowering the fee for no contract some of them would sign up for the short term. Basically they found that wise business practice can make them more money. Then they spin it in the news as doing something special for people. It is only special because most other companies are too stupid to figure out that having a no-contract option can make them more money.

     

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  9.  
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    Anonymous Coward, Jan 8th, 2013 @ 5:54pm

    I would be happy to get a better internet service with actual support when there is a problem. As it is, I'm locked in by lack of competition. I would also like to ditch one of the big ISPs just for agreeing with the idea of 6 strikes. While it hasn't kicked in yet, I've noticed a lot of funny stuff with my connection... and no, I don't torrent. It's the idea.

    I constantly have problems with this ISP that hunts for reasons to charge more. Once a month it seems, I call them to straighten out their bill.

    During install, now that was a cute little deal. I asked for a turn key install. Router, external wiring to the residence, install of a wall jack as none was there, and set up of the router.

    What I got was something else. A tie in to the existing network interface from the node. Nothing else. So I went and bought the wire, ran it, installed the jack, bought a router, installed and set that up. Only to find that nothing worked. So 6 days later, some guy shows up to test it and low and behold, the wire between the node and interface was broken. So he lays a wire on the ground between them. 10 days later some one shows up to bury the wire.

    At the end of it all, I get a bill for install, router, network interface (that was already there) and tech install and setup. The guy never even came in the door... hello. After a week of go around, finally one of the supervisors finally figures out to ask the question of if the installer came in the house as it wasn't one the work order as being done.

    It is such poor service as this, which makes me wish for another provider. This is not to mention other problems that occurred with billing and lack of actual service.

     

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  10.  
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    Mike Masnick (profile), Jan 8th, 2013 @ 6:38pm

    Re: FCC required contract, or install fee??

    But the point in this article that seem to imply that the FCC somehow required ISPs to use term commits, or to charge install fees makes no sense to me. As a long-time operator, this seems an odd claim to make..

    Interesting... I had just assumed there was something to it, but now I'll have to look into it. Shame on me for making the assumption...

     

    reply to this | link to this | view in thread ]

  11.  
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    Jeff Rife, Jan 8th, 2013 @ 9:01pm

    Re: Re:

    My guess is that there was some sort of extra money from some government fund for the ISP (or tax break) if they had a customer who was guaranteed to be with them for at least X months. If the NECA they mention in the press release is the "National Exchange Carrier Association", it's likely related to the Universal Service Fund. If NECA stands for "National Electrical Contractors Association", it's probably a union issue.

    It might be a variable amount based on length, and 12 months was the point that the ISP could "break even" on an install fee. It's also likely that it might only apply some locations based on a combination of federal and local regulations.

    But, yeah, it's still ISP-speak for "we found a way to make the same amount of money (or even more) and look more consumer friendly, and blame it all on someone else for why we weren't doing it before".

     

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  12.  
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    guessing, Jan 8th, 2013 @ 10:17pm

    Re: Re: FCC required contract, or install fee??

    Believe this may be related to fees that "secondary" providers were/are required to pay the pipe owner for a new connection, some passed it along directly as an install fee, some baked it into the ongoing price. Don't think the FCC dictated that resellers charge a fee, but they likely were paying one to Ma Bell et al.

     

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  13.  
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    Ninja (profile), Jan 9th, 2013 @ 3:34am

    Regulatory capture. It's plain and simple. Much like copyright greatly benefits the big MAFIAA players the current rules within telcos sphere makes it much harder for the smaller player to grow.

    Welcome to crony capitalism.

     

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  14.  
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    Anonymous Coward, Jan 9th, 2013 @ 5:57am

    $75.00 still a ripoff. If you are laying an entire new wire then maybe. Otherwise later. Non news about another ripoff ISP.

     

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  15.  
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    Dane Jasper (profile), Jan 9th, 2013 @ 6:48am

    Re:

    I don't think there is any such requirement, so blaming the FCC is silly.

     

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  16.  
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    Anonymous Coward, Jan 9th, 2013 @ 7:24am

    This is news? I've never needed a contract with my local broadband ISP (Cablesystem franchise), so it's always been amusing to me that others insist on it. Pretty much guessing the contracts are to keep you signed up with crappy service.

     

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  17.  
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    MattP, Jan 9th, 2013 @ 8:35am

    Re:

    I'd go out on a limb and say the cost of them to roll out a truck is more than $75.00. If you haven't committed to stay with the service for a period of time they're not going to be able to recoup the initial setup cost.

    It would be interesting to see them offer a refund of the $75.00 once you've been with them for a set period of time though.

     

    reply to this | link to this | view in thread ]

  18.  
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    nasch (profile), Jan 9th, 2013 @ 7:27pm

    Re: but is there any competition?

    It is only special because most other companies are too stupid to figure out that having a no-contract option can make them more money.

    Wasn't that the point of the article?

     

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  19.  
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    Anonymous Coward, Jan 10th, 2013 @ 10:35am

    Re: Re:

    And when I say, "all the cable is already going into my house where I need it and I know how to set up a modem, so I do not need someone out here just to plug it in," does the $75 fee go away? I imagine not.

    And that's where the problem is. It's then not an installation fee, it's a way to milk a bit more money out of you.

    It's like my bank (PNC, in case you're interested). I was trying to track down a transaction. Their online system only went back a couple of years, I was looking for further. I went into the bank, and they told me it would be $20 per report pulled (a report being 1 month). $20. To do 1 database query. I said no thanks and walked out.

    These aren't charges which are a cost of doing business, they're charges to screw people who are otherwise not in a position to stop from being screwed.

     

    reply to this | link to this | view in thread ]


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