ADSL2 + phone plan relocation

Connection issues, drop outs or speed related faults for ADSL and ADSL2+ services
CoreyPlover
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Re: ADSL2 + phone plan relocation

Post by CoreyPlover » Wed May 20, 2009 1:54 pm

Lonx wrote: I am not disputing the paying of fees, but don't really understand the reason why a disconnection fee of $100 is applied
These fees are simply passed onwards from the Carrier.

The full reasoning would likely be that carriers incur costs in activating any service (brand new one, relocated one, etc). These costs are usually greater than the initial activation fee and the intention is that the profit stream from operating the service over a 12 months period makes up the difference and provides the supplier with acceptable profit. If that profit stream is interrupted (by a cancellation, or a move) then there is a shortfall; hence the early termination fee. This shortfall arises regardless of whether the service continues on a new contract or leaves because each new 12 month service is priced in a similar way and the new activation cost shortfall still needs to be recouped independently.

Lonx
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Joined: Wed May 21, 2008 1:44 pm
Location: Central Coast, NSW

Re: ADSL2 + phone plan relocation

Post by Lonx » Wed May 20, 2009 2:22 pm

Hmm you raise a fair point there. While I was wondering that Exetel would be nowhere but better off in this situation (theoretically locking my service in for another 12months+), I didn't think the disconnection fee from their supplier would be quite as much. As far as I know they usually work on pro-rata for early termination however I realise their profit margin is generally nothing on the connection side, so it's not excessive - just doesn't look right initially.

CoreyPlover
Volunteer Site Admin
Posts: 5922
Joined: Sat Nov 04, 2006 2:24 pm
Location: Melbourne, VIC

Re: ADSL2 + phone plan relocation

Post by CoreyPlover » Wed May 20, 2009 2:36 pm

Lonx wrote:As far as I know they usually work on pro-rata for early termination...
Yes, it would be more transparent and aligned to profit emergence if early termination fees were $x per month outstanding, but again, I am fairly confident that the flat nature of the termination fee is simply passed on from the Carrier. It is relatively common for suppliers to opt for simplicity in contractual charges and just average costs over all their aggregate experience

This does introduce apparent inequality (and administrative headaches) when users have only one month to go but are still subject to the full $100 cancellation. In these circumstances, the contractual obligations prevent you from paying out the service early, even though this would cost less than the termination fee.

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