Thursday, July 15, 2010

Here's why AT&T iPhone-4 customers don't just return it.

With all the ongoing controversy regarding the iPhone-4 antenna design flaw (yes, that's what it is), not to mention the absurd PR disaster, some pundits have blithely suggested that it's much ado about nothing... customers must be happy or they would just return the phone.

After reading this morning's San Jose Mercury News, I was struck by the thought myself.. "why don't customers just return the iPhone-4"? According to the story by John Boudreau...
The antenna problem is upsetting iPhone 4 owners like Ceci, a 40-year-old nurse from San Jose who would give only her first name when approached at the Apple Store at Valley Fair mall. She said she has had reception problems with her new iPhone and that if she weren't already locked into a contract with AT&T, she would buy some other smartphone.
Since the iPhone-4 was released less than 30 days ago, couldn't Ceci just return it for another AT&T smartphone.. like say the HTC Aria? Is she confused about being "locked in"?

I think cell phone contracts are very confusing, so I decided to check out what would happen if I wanted to return a new iPhone-4. I had a little chat with one of AT&Ts online customer support agents.

Here's how that conversation went.
Chat Information> You are now chatting with 'Kelly'
Kelly: Welcome to AT&T Premier online sales. How may I assist you with placing your order today?
Mike: Hi.. I just have a question regarding return/exchange policy on a new iPhone-4.
Kelly: I will be happy to help you with this. What can I do for you?
Mike: with all the problems people are talking about.. if I get an iPhone-4 and want to return/exchange.. what is the policy?
Kelly: For the 30-day, risk-free trial, if you are not completely satisfied you can return your undamaged phone for a refund in the first 30-days and pay only for airtime and usage charges; prorated monthly service charges apply.
Mike: I see.. and then I could switch to another smartphone.. like the HTC Aria, at no extra charge?
Kelly: There would be a restocking fee, and if there is a price difference you would have to pay that but there would not be a second activation fee.
Mike: and what happens after 30 days?
Kelly: Then you are bound to the service agreement.
Mike: ok.. so with the 30-day risk-free trial.. I would be better off canceling my AT&T service altogether?
Kelly: Do you mean if you don't like the phone?
Mike: Yes, assuming I got a new iPhone-4 and wanted to return it within 30 days.. I have to pay restocking fee to switch but nothing if I quit?
Kelly: Correct. You just walk away if you are completely displeased with us.
Mike: Does that seem odd to you? I need to pay to stay?
Kelly: For the restocking fee you mean?
Mike: Yes
Kelly: I wish that could be waived but it is policy that I have no control over.
Mike: OK, thank you very much for explaining your policy.
Kelly: I'm sorry that I can't waive that. I had to pay it myself. But I love the coverage and the phones we have!
Mike: Great! You have been very helpful. Thanks.
Kelly: Can I do any more for you today?
Mike: That answers all my questions. I appreciate your help.
Kelly: It was my pleasure.
Kelly: Thank you for choosing AT&T! We appreciate your business.
OK, so a new AT&T customer could just switch to Verizon if they are not happy within the 1st 30 days of their contract. But it could be that, with all the legalese in these contracts,  consumers are intimidated by these 2-year commitments.

Then there is the issue of bundled discounts. How many consumers are taking advantage of 2-way home/mobile phone service discounts, or 3-way home/mobile/TV (as my wife and I have)?  This can create further disincentive to switch.  Would AT&T really rather have customers leave their service altogether than provide a free exchange?

It will be very interesting to see if this comes up at the Apple press conference on Friday.

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