Are ISP Termination fees fair

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BTR

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#205721 24-Nov-2016 15:08

I've been reading a few threads on GZ lately about ISP early termination fees and it got me thinking are they fair.

ISP's seem to have a fixed amount for their ETF usually around $300 for a 24 month contract however mobile providers usually have different rates depending on where you are at in your contract term so why don't ISP's do this? I know they usually have the cost of a "free" modem to cover but some ISP's don't seem to offer services without being in a contract even if you have your own model already......

So that means if you pick an ISP that turns out to be a dud you have very little chance of moving to a better provider without parting with a wad of cash.....

Thoughts?

timmmay

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#1676743 24-Nov-2016 15:19

I suspect they have to pay chrous or similar for a fixed period (12 months?) once you sign up, plus modem, on-boarding costs like staff, etc. Yes, I think the idea of a cost is fair, but I don't know if the magnitude of the cost is fair.

surfisup1000

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#1676744 24-Nov-2016 15:27

Fair is probably too vague a word.

I have listened to other people regarding these things, and , terminating the ISP contract early means you are liable for liquidated damages... which is the actual cost of breaking the contract for the other party (this is what they can claim under NZ law, it doesn't matter what they state they can claim or they could claim your soul if they put it in small print).

Some companies try to override NZ law by specifying amounts way over and above the actual cost to themselves. The idea is that most people don't know their rights and will just pay up, great for the company right?

So, they are just trying it on.

NonprayingMantis

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#1676752 24-Nov-2016 15:39

Depends on what you are getting in exchange for the contract.

If you are getting, say, a free modem, a free PlayStation etc then I think ts reasonable for the isp to recover those costs if you break the contract.
If the contract is incurred just to take a new plan, which some isps do, then I think any break fee thahigher than the cost of malign that change (literally a few dollars) is unreasonable.

darylblake

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#1676757 24-Nov-2016 15:56

We (Mynxnet) charge an install fee for the circuit. Therefore when you leave, whenever you want there is no penalty.

If we decided to do contracts (which we don't at this stage) then we may wave the install fee. However if you left early then we would probably be inclined to charge a early termination fee.

gzt

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#1676818 24-Nov-2016 16:04

Currently Spark are offering 3 months free + small account credit for switch or upgrade to unlimited on 12 month contract. Break fee is $300 and is approx equal to the free services and account credit. That one seems reasonable.

Clearly there are variations in provisioning costs . Pricing and offer is simplified with one size fits all.

tdgeek

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#1676901 24-Nov-2016 17:37

surfisup1000:

Fair is probably too vague a word.

I have listened to other people regarding these things, and , terminating the ISP contract early means you are liable for liquidated damages... which is the actual cost of breaking the contract for the other party (this is what they can claim under NZ law, it doesn't matter what they state they can claim or they could claim your soul if they put it in small print).

Some companies try to override NZ law by specifying amounts way over and above the actual cost to themselves. The idea is that most people don't know their rights and will just pay up, great for the company right?

So, they are just trying it on.

Thats a bit cynical. There is an install cost to pay the LFC or Chorus. Free modem. Take account of the margin thats made over 12 months. Deduct the modem and install cost recoveries. That won't leave a big bucket of cash. If all connections were no contract thats quite ok. Then the customer has an issue with paying a connection cost, buying a modem, getting a VDSL splitter installed. If you can connect any of these services for zero up front, thats a good option. If you intend to switch providers after 2 months, or if the whatever freebie is over, say the 3 months free, that just doesn't work. Not a lot different to a late payment fee, that also is not a free bunch of money for nothing for the telco.

networkn

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#1676902 24-Nov-2016 17:40

Of course it's fair. If you signed a contract and the OTHER party terminated, you would likely be out of pocket. If the average consumer who grizzles about these ETF's actually considered anyone but themselves at any point (I know, consumers don't generally do that), they would understand that contracts exist to give TWO parties certainty about the items being contracted.

In this case, the ISP, and Upline Provider (Chorus, Enable etc), use it to forecast profits, demand for support services so they can hire adequate staff to support the subscribers, maintenance, protect cashflow, investment in future infrastructure, capacity planning etc etc. There are about a hundred other things that suffer if people break contracts as well, but I can't be bothered listing them.

MANY contracts have penalties for noncompletion which may or may not be beyond the actual cost of the items provided for this reason. It's not specific to the telecommunications industry.

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gregmcc

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#1676949 24-Nov-2016 19:52

networkn:

Of course it's fair. If you signed a contract and the OTHER party terminated, you would likely be out of pocket. If the average consumer who grizzles about these ETF's actually considered anyone but themselves at any point (I know, consumers don't generally do that), they would understand that contracts exist to give TWO parties certainty about the items being contracted.

a consumer grade ISP contract really only benefits one side, that's the ISP, they have exclusions like "speeds up to......", "we can vary the terms and conditions......."

In this case, the ISP, and Upline Provider (Chorus, Enable etc), use it to forecast profits, demand for support services so they can hire adequate staff to support the subscribers, maintenance, protect cashflow, investment in future infrastructure, capacity planning etc etc. There are about a hundred other things that suffer if people break contracts as well, but I can't be bothered listing them.

MANY contracts have penalties for noncompletion which may or may not be beyond the actual cost of the items provided for this reason. It's not specific to the telecommunications industry.

at the end of the day if the ISP is under preforming it's not very difficult to get out of the contract without exit fees, the Fair Trading Act and the Consumer guarantees act work well. But if you want to move on because it's not such a good deal or you saw a better deal then it's tuff luck.

networkn

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#1676983 24-Nov-2016 20:17

gregmcc:

a consumer grade ISP contract really only benefits one side, that's the ISP, they have exclusions like "speeds up to......", "we can vary the terms and conditions......."

What rubbish. Lots of contracts have xbox's, 24/7 support, free modems etc. None of those things are truly free.

at the end of the day if the ISP is under preforming it's not very difficult to get out of the contract without exit fees, the Fair Trading Act and the Consumer guarantees act work well. But if you want to move on because it's not such a good deal or you saw a better deal then it's tuff luck.

This we agree on.

tdgeek

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#1676984 24-Nov-2016 20:20

gregmcc:

a consumer grade ISP contract really only benefits one side, that's the ISP, they have exclusions like "speeds up to......", "we can vary the terms and conditions......."

at the end of the day if the ISP is under preforming it's not very difficult to get out of the contract without exit fees, the Fair Trading Act and the Consumer guarantees act work well. But if you want to move on because it's not such a good deal or you saw a better deal then it's tuff luck.

If an RSP says speeds will be 100/20 and they are not, thats not workable.

The ETF is not about those issues, its about standard practices

dejadeadnz

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#1676987 24-Nov-2016 20:32

networkn:

Of course it's fair. If you signed a contract and the OTHER party terminated, you would likely be out of pocket. If the average consumer who grizzles about these ETF's actually considered anyone but themselves at any point (I know, consumers don't generally do that), they would understand that contracts exist to give TWO parties certainty about the items being contracted.

In this case, the ISP, and Upline Provider (Chorus, Enable etc), use it to forecast profits, demand for support services so they can hire adequate staff to support the subscribers, maintenance, protect cashflow, investment in future infrastructure, capacity planning etc etc. There are about a hundred other things that suffer if people break contracts as well, but I can't be bothered listing them.

MANY contracts have penalties for noncompletion which may or may not be beyond the actual cost of the items provided for this reason. It's not specific to the telecommunications industry.

Shouting with caps doesn't make you right. I've previously addressed this issue pretty comprehensively and even cited the actual legal authorities for people who care to look. There is no way that anybody with any kind of awareness of the law and business ethics can declare ipso facto that all ISP termination fees are fair. To repeat: what parties are entitled to set as a pre-determined early termination fee is a legitimate, reasonable estimate of the actual loss suffered by the party subject to the termination. It does not have to mirror 1:1 the exact, actual loss ultimately determined to have been suffered by the party but it has to be a reasonable, good faith estimate.

And, no, contracts don't have penalties for non-completion. Penalty clauses are per se unenforceable in law -- penalties imply the ability to extract more than actual or reasonable loss and has a retributive quality. Instead of complaining that you're being targeted again or that I am playing semantics, think about why we as a society wouldn't want one private individual being able to impose penalties on other people.

networkn

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#1677046 24-Nov-2016 21:57

dejadeadnz:

networkn:

Of course it's fair. If you signed a contract and the OTHER party terminated, you would likely be out of pocket. If the average consumer who grizzles about these ETF's actually considered anyone but themselves at any point (I know, consumers don't generally do that), they would understand that contracts exist to give TWO parties certainty about the items being contracted.

In this case, the ISP, and Upline Provider (Chorus, Enable etc), use it to forecast profits, demand for support services so they can hire adequate staff to support the subscribers, maintenance, protect cashflow, investment in future infrastructure, capacity planning etc etc. There are about a hundred other things that suffer if people break contracts as well, but I can't be bothered listing them.

MANY contracts have penalties for noncompletion which may or may not be beyond the actual cost of the items provided for this reason. It's not specific to the telecommunications industry.

Shouting with caps doesn't make you right. I've previously addressed this issue pretty comprehensively and even cited the actual legal authorities for people who care to look. There is no way that anybody with any kind of awareness of the law and business ethics can declare ipso facto that all ISP termination fees are fair. To repeat: what parties are entitled to set as a pre-determined early termination fee is a legitimate, reasonable estimate of the actual loss suffered by the party subject to the termination. It does not have to mirror 1:1 the exact, actual loss ultimately determined to have been suffered by the party but it has to be a reasonable, good faith estimate.

And, no, contracts don't have penalties for non-completion. Penalty clauses are per se unenforceable in law -- penalties imply the ability to extract more than actual or reasonable loss and has a retributive quality. Instead of complaining that you're being targeted again or that I am playing semantics, think about why we as a society wouldn't want one private individual being able to impose penalties on other people.

Caps can be used for emphasis, it's not exclusively a shouting thing. This was the reason for it.

I wasn't aware that penalty clauses were not a thing, it's certainly talked about a fair bit (Though probably more historically), but maybe people mistakenly used the wrong terminology. I don't consider an early termination fee to be unreasonable, esp if it's $200 ish over 24 months. Obviously, again it would depend somewhat on where inside that contract you were terminating. Contracts wouldn't seem to have much benefit if they aren't enforceable.

gzt

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#1677090 24-Nov-2016 22:30

Conventionally, italics are used for emphasis. Caps do come across a bit differently.

Geekzone does not support markdown but the markdown for italics is star. Ie; *emphasis* and that is used often even where markdown is not supported.

Another convention for italics is /emphasis/. I don't recall where that one comes from.

Edit: BBcode supported by Geekzone has italics, like any BBcode it's another eight characters to type. Rich editor probably supports it I rarely use that.

Edit: Edit: Markdown for bold is double star **emphasis**. That is also common.

Dratsab

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#1677095 24-Nov-2016 22:54

I think they're probably 'fair' at the onset of a contract but should be pro-rata'd downwards as the contract proceeds. For instance if an ETF is set at $300 at the beginning of a 24 month contract and you want to break it at the 23 month mark the ISP is likely to still try and extract $300 from you even though $300 spread over 24 months is only $12.50/month.

tdgeek

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#1677104 24-Nov-2016 23:47

Dratsab:

I think they're probably 'fair' at the onset of a contract but should be pro-rata'd downwards as the contract proceeds. For instance if an ETF is set at $300 at the beginning of a 24 month contract and you want to break it at the 23 month mark the ISP is likely to still try and extract $300 from you even though $300 spread over 24 months is only $12.50/month.

I think you will find many ETF's pro rate.