View Full Version : 12 months contract
telfordcable
11-04-2009, 19:03
Just wondering why is virgin kept renewal in a 12 months contract if you upgrade, downgrade or add new service as it rather silly to be honest.
Just wondering why is virgin kept renewal in a 12 months contract if you upgrade, downgrade or add new service as it rather silly to be honest.
Another superb telford post, why do they have a 12 month contract?
Well it's simple, they are guaranteed (unless there are changes to policy/price then you can obviously drop out) a customer for another 12 months.
:)
AndyCambs
11-04-2009, 20:00
unlike BT who look for an eighteen month contract term... (presumably that's more silly?)
WHISTLED
11-04-2009, 20:31
Just wondering why is virgin kept renewal in a 12 months contract if you upgrade, downgrade or add new service as it rather silly to be honest. Because it takes about 6 of them to break even, sales costs, install etc etc
Because it takes about 6 of them to break even, sales costs, install etc etc
Surely not for all changes? In the case of some upgrades, that require new hardware or an engineer's visit, that sounds perfectly plausible; but some service changes only require somebody at the other end of the phone to push a button. Either VM have amazingly low profit margins, or they're paying those guys in India a hell of a lot more than I'd assumed. :)
I can see how it could put some people off making amendments to their service. In the case of downgrades that's not a bad thing (from VM's point of view at least). In terms of service upgrades it doesn't seem too clever.
Ed
broadbandking
11-04-2009, 23:37
Its because the offer is less than the standard cos of the upgrade so if VM can hold you for 12 months they get there monies out of you
Just wondering why is virgin kept renewal in a 12 months contract if you upgrade, downgrade or add new service as it rather silly to be honest.
Not actually true.
You CAN upgrade within your package then downgrade without entering a new contract as long as you don't go below the level of service for a particular component of your package.
Say you started from a bundle containing BB L, TV L and Phone M, you could upgrade BB to XL, TV to XL, etc and subsequently downgrade without entering a new contract. The upgrade additional charges would simply be the difference between the new and old services list price. For example, upgrade BB L to BB XL, extra 37-25=12.
What happens, however, is that you get offered a new bundle which gives you this upgrade for a total services charge which is less than the cost of the upgrade and you are then entering a new bundle with a new contract but at a price cheaper than otherwise. You benefit from a cheaper price and in return commit to a new 12 month contract.
What isn't done is a clear explanation of all this (which this isn't!).
AndyCambs
12-04-2009, 10:05
Surely not for all changes? In the case of some upgrades, that require new hardware or an engineer's visit, that sounds perfectly plausible; but some service changes only require somebody at the other end of the phone to push a button. Either VM have amazingly low profit margins, or they're paying those guys in India a hell of a lot more than I'd assumed. :)
I can see how it could put some people off making amendments to their service. In the case of downgrades that's not a bad thing (from VM's point of view at least). In terms of service upgrades it doesn't seem too clever.
Ed
And no different to the mobile phone companies which offer you an upgrade to your handset and then tie you in for another eighteen months.
Ignitionnet
12-04-2009, 10:10
And no different to the mobile phone companies which offer you an upgrade to your handset and then tie you in for another eighteen months.
With the minor issue that VM don't give you a brand new handset, nor indeed any CPE it remains their property so it is quite different. Mobile contracts are primarily to recoup the cost of the handset hence the availability of month-to-month SIM only deals which are a far better comparison.
It seems to me that the answer to the original question is "because it benefits VM, and because they can get away with it"...
Ed.
AndyCambs
12-04-2009, 14:21
With the minor issue that VM don't give you a brand new handset, nor indeed any CPE it remains their property so it is quite different. Mobile contracts are primarily to recoup the cost of the handset hence the availability of month-to-month SIM only deals which are a far better comparison.
No but as the phone companies give you a free handset, then VM "give" you a free television decoder for use. These things ain't free!
---------- Post added at 14:21 ---------- Previous post was at 14:20 ----------
It seems to me that the answer to the original question is "because it benefits VM, and because they can get away with it"...
Ed.
As in my earlier post - neither can BT with its eighteen month contract then, nor phone companies with their tied in contracts.
VM's contract at 12 months is probably one of the shorter ones around now with most going sticking at 18 months.
Ignitionnet
12-04-2009, 15:45
No but as the phone companies give you a free handset, then VM "give" you a free television decoder for use. These things ain't free!
They lease it and the rental is paid for as part of the service charge so I still don't get your point. Lot of difference between giving something which you will not get back and leasing it. Giving CPE to the customer means you need to cover its' full cost during the lifetime of that single customer, leasing it means that you need to get the value back through the functional life of the CPE not the customer. Should that customer leave you get the CPE back and move it to the next customer - you don't need to get back the full value of the CPE on each and every customer that uses it.
The cable modems are a total non-issue. They cost less than a month of a la carte M service.
Would be good if there were a non-contract option though. Quite a few cable companies offer options both on minimum contract and on a month to month contract, with either additional startup costs or a small monthly increment on the month to month deal.
The original reason for the contracts was, of course, to recover the costs of installation which was initially not cheap, however it could be asked what they are there to recover now and why VM can't offer a month to month option where customer pays extra for install, modem purchase or monthly fees
The answer is of course that it would potentially look bad on their churn figures. VM aren't stupid when it comes to parting us from our money ;)
---------- Post added at 15:45 ---------- Previous post was at 15:38 ----------
As in my earlier post - neither can BT with its eighteen month contract then, nor phone companies with their tied in contracts.
VM's contract at 12 months is probably one of the shorter ones around now with most going sticking at 18 months.
BT's contract period is not 18 months mandatorily, if you agree to that you get discounts but it can be as short as 3 months. Mobile phone companies as I said are a non-issue as they use contracts to pay for the handset they provide and if you don't want a long contract you can take a SIM only deal from a number of them which has a monthly contract.
Sky give CPE so can't be compared. Many other providers absorb certain other charges when they sign customers up to their service such as free activation or migration, TalkTalk for example have to pay BT for Wholesale Line Rental.
VM are indeed somewhat unique and their contract is, for most things, probably considerably longer than required to cover their costs.
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