When companies make me offers I like to play the "What is the scam?" game. Usually I am not interested in buying but even if I am I make the assumption that the company is trying to screw me over in some way or other; I am rarely wrong in this. It is a fun game to try to sort out what their angle is.
Yesterday the phone company called me up to offer me a new deal. Instead of renting a modem from them for $5 a month they wanted me to pay $50 up front for unlimited modem rental forever including all services, replacements, etc. Since this is Bell I am sure this isn't outright fraud - they will actually let me use the modem forever without paying more. What is the scam?
I initially thought that that they assumed I was going to cancel my service within the next 10 months. Unfortunately for that line of thought I have been with them for years and presumably the average customer isn't swapping around *that* often. I have a better idea now though; I suspect that they are just trying to get the monthly bill down to make it harder on competitors if I do decide to shop around. Once they have me hooked on a bill at $40 Rogers could steal me away at $35 but if I buy into this modem deal Rogers has to come in at $30 to make it worth my while in the long run. Presumably a lot of people who swap companies compare their current monthly bill with the best offer of the competition and this manages to lower that bar just a little.
Bell will clearly lose out on some of their customers who keep their service for years and they will win with a few customers who cancel service before 10 months is up. I guess they figure that they can make up any difference in greater retention given the lower monthly rate. It is unlikely that they actually have good data on what this does to retention long term though so I suppose somebody up high in management decided to take a big bet and hope to earn their bonus before any long term consequences could come back and bite them in the ass.
The other possibility is that Bell is going to phase out the use of modems due to some technological change in the next few years anyway. This would let them get some cash right now and avoid losing out long term because modem charges would be a thing of the past. I have no technical reason to think this is true but it sure would help them hedge their bets.
A big part of me hates that companies spent so much time trying to confuse and bamboozle people out of their money but a small part cheers; playing "What is the Scam?" is a ton of fun.