Required Modem--Extra 16.3% - 32.5% Per Month?

[Guest]

my sonic dsl intro fee contract expires next month so yesterday i started checking; i'm told by sonic that i can use my present modem/router but they prefer i use the pace 4111n...i've not been told about the $6.50 rental fee or the cost of buying their preferred modem...i see it on ebay and amazon; reading this entire forum has kind of turned me off at sonic's direction et al; at&t is doing away with dsl and only u-verse is available; after the introductory period it's $38 a month; the router/modem is $100 but they are currently giving it back to you in the form of a $100 gift card; i have no interest in the phone service and features which comes with fusion, but you have no choice; i can't get faster than 1.5 dsl speed anyplace; apparently no way of getting faster internet speed , which is all I want, without fusion or u-verse or cable,comcast etc. currently getting calif. lifeline phone service and finding my options costing a lot more than I want; can't get a straight answer from sonic so far re: total costs; my friend using fusion gets pretty fast speeds using their required modem/router of before pace time; i can't get an answer as to expected speeds ...oy! what's a gal to do?

[km6xu]

Wow, I just read through eight pages of forums just to get an answer to my question (why we can't buy our modems):

...removing barriers to sale (a high up-front cost), allowing for ongoing support and advanced replacement, etc.

And that is it! I've been with Sonic for a decade, and this is the first time that I've seen them make a significant mistake.

Please, let me decide whether or not "a high up-front cost" is a barrier, and let me buy Sonic's preferred modem. The old Two-Wire box that I bought ($100) for another (non-Fusion) location is celebrating its tenth birthday next month. At $6.50 a month, that would be $780 by now. It's like the old days when we had to lease our phones from Ma Bell. We are going backwards!

This episode has been embarrassing for me as well. I have long been an ardent advocate for Sonic, particularly with its Fusion offering. One person who I convinced to switch came back to me a couple of months ago complaining about "those hidden costs," and I stupidly dismissed him, thinking that he had had Sonic do the install. Today, I agreed to handle all of the installation details for another (after bragging to him about the $40/month plus taxes and fees that I pay), and I ran into this headache.

Sonic, you have been great for the last decade. Even the best of us, including you folks, can make a mistake. The best thing to do is to take ownership of it, fix it, and move on. Please let us buy our modems without a lot of claptrap.

Thanks -- Mark

[Guest]

Mark:

Absolutely!! Complete and succinct and dead-on.

Dane:

Man, you are on the wrong side of this.

All well and good that you're here, I guess, but clearly you're not here to listen - you're here because you're convinced you're right, and, gee, why can't we see it?

Your customers - even those who (currently) aren't even affected by this so-called "rental program", as well as those who collectively have sent many many customers your way over the years, and now even those who are deciding NOT to become customers in the first place - all are telling you something. They - don't - like - it. You're not listening.

And no, it's not about whether voice is included, as one or two have complained about - don't glom onto that as some welcome diversion to address instead. Most of us understand and want what Fusion is, and chose it, gladly.

You simply cannot convince people there's any logic or advantage to them in paying more over time than a unit is worth. And you aren't. Your attempted justifications are arcane at best. Let 'em buy the thing outright.

When, in the end, you're reduced to saying, well, Comcast and AT&T are doing it this way - isn't that just what people WHO GOT RID OF Comcast and AT&T want to hear from the supposed alternative, an alternative not just in pricing, but in attitude and receptiveness. The latter two are what got & kept a lot of us here in the first place, back in the days of dial-up (which, frankly, became overpriced).

You'll stick to your guns. "It is what it is". Nothing to take seriously here, these people don't understand The Model, it'll all blow over. You may have already calculated that the inevitable and certainly real cost in goodwill and customer alienation is worth it, or at the least inconsequential.

9 pages and counting.

[dane]

Guest,

I hear you! And I'll concede it's an effective price increase. And, I must admit, I'm surprised by the blowback we have seen in regards to this change in the offering for new customers.

I believe that separation of equipment costs into a discrete line item is a good long term decision. We are sticking with it, and we will see how things go as the marketplace evolves over time.

[jeffg1]

I hear you! And I'll concede it's an effective price increase. And, I must admit, I'm surprised by the blowback we have seen in regards to this change in the offering for new customers.

I have some sympathy for the ethical dilemmas faced by businesses, especially in what seems to be the new perpetually depressed economy. The problem, of course, is that once a business demonstrates that it is not above a little deception ("$39.95/mo, NOT an intro price!") nothing that it says from that point on can ever be believed. You have embraced the slippery slope. You've become "just another company."

The real irony here is that, if you had taken the high road and been totally honest, it's likely that most folks would have completely understood your need to raise rates. No blowback, and your formerly evangalistic user base would still be spreading the good word about what a great company Sonic was.

[dane]

I have some sympathy for the ethical dilemmas faced by businesses, especially in what seems to be the new perpetually depressed economy. The problem, of course, is that once a business demonstrates that it is not above a little deception ("$39.95/mo, NOT an intro price!") nothing that it says from that point on can ever be believed. You have embraced the slippery slope. You've become "just another company."

The real irony here is that, if you had taken the high road and been totally honest, it's likely that most folks would have completely understood your need to raise rates. No blowback, and your formerly evangalistic user base would still be spreading the good word about what a great company Sonic was.

The challenge in that is competing with U-verse, which has a similar equipment fee, which is not part of the advertised price. (As does Comcast, though customers can supply their own.) We felt it was impossible to compete, allowing for price comparison, if we didn't follow suit.

[geogriffin]

buying a modem is not necessarily a good alternative. i had to buy a modem for $100 from at&t (motorola NVG510).. theres no way it would work with sonic since it's walled in to AT&T. lets not forget the worse things the competitors are up to.

except for the fact that it had a very lazy vulnerability in the web ui which allows one to ssh in and mess with its internals

[Guest]

I hear you! And I'll concede it's an effective price increase. And, I must admit, I'm surprised by the blowback we have seen in regards to this change in the offering for new customers.

I have some sympathy for the ethical dilemmas faced by businesses, especially in what seems to be the new perpetually depressed economy. The problem, of course, is that once a business demonstrates that it is not above a little deception ("$39.95/mo, NOT an intro price!") nothing that it says from that point on can ever be believed. You have embraced the slippery slope. You've become "just another company."

The real irony here is that, if you had taken the high road and been totally honest, it's likely that most folks would have completely understood your need to raise rates. No blowback, and your formerly evangalistic user base would still be spreading the good word about what a great company Sonic was.

I'm a recent subscriber who had strong initial reservations because of this issue. This is my post about it:

viewtopic.php?f=5&t=736

But I did sign up because it was a better deal than I had with ATT. From a purely economic point of view it was the right thing to do. But ethically, it stinks.

Because by signing up it reinforces the view that people are not smart enough to see the inherent hypocrisy and deception of the price schedule. I see it, and I think that others do too - hence the forum backlash. I think that generally Sonic customers are more aware than most ATT/Comcast customers. That's why they came to Sonic in the first place.

The modem rental and the Sonic-determined "Federal Subscriber Line Charge" fee adds a mandatory $13 to the monthly charge above the "$39.95" monthly rate. Suddenly the 39.95 monthly rate is 33% higher before the required federal, state and local taxes kick in.

Dane, you say you are surprised by the blowback from the charges to new subscribers, but I see that a fair chunk of the comments are current subscribers responding to this issue. Some of them are saying they now have problems recommending Sonic to their friends. I'm surprised that you are surprised. As CEO, I would think you would be ahead of the client curve.

As the above poster says, it's a slippery slope. Perhaps I signed on at just the moment Sonic moved to emulate the model of the companies it was competing against. But the posts and research I did before I signed on indicated it was a different company - one that existing customers would highly recommend to their friends.

Now I see a company that looks like the others, lowballing the initial price and then adding fees that don't relate to the cost of supplying service. It's still a better deal for me at the moment, but that could change at any time, since the name Sonic doesn't seem to add any real value anymore.

Honesty in business does have an economic value. Maybe just not as much as the soft deceit of your current pricing structure.

[Guest]

The challenge in that is competing with U-verse, which has a similar equipment fee, which is not part of the advertised price. (As does Comcast, though customers can supply their own.) We felt it was impossible to compete, allowing for price comparison, if we didn't follow suit.

I wonder if a representative 3 column (Fusion, U-verse, Comcast) table on one of the Fusion pages would help?
Showing the up front costs and sample monthly bill with all the line items broken out.

Or perhaps a link from the '$39.35 NOT an intro price' to the full disclosure and competitor costs comparison table?

[dane]

Dane, you say you are surprised by the blowback from the charges to new subscribers, but I see that a fair chunk of the comments are current subscribers responding to this issue. Some of them are saying they now have problems recommending Sonic to their friends. I'm surprised that you are surprised. As CEO, I would think you would be ahead of the client curve.

As the above poster says, it's a slippery slope. Perhaps I signed on at just the moment Sonic moved to emulate the model of the companies it was competing against. But the posts and research I did before I signed on indicated it was a different company - one that existing customers would highly recommend to their friends.

Now I see a company that looks like the others, lowballing the initial price and then adding fees that don't relate to the cost of supplying service. It's still a better deal for me at the moment, but that could change at any time, since the name Sonic doesn't seem to add any real value anymore.

Honesty in business does have an economic value. Maybe just not as much as the soft deceit of your current pricing structure.

Guest,

No, I meant that I didn't expect the negative reaction from existing customers, who are not affected by the equipment rental program. I perhaps naively assumed that because they had no obligation to take equipment, they wouldn't care - but they do care, a lot - about us, as a company, our ethics and business model.

Among new customers, we haven't seen much feedback about equipment rental, and folks are still signing up every day at about the same pace.

Honesty in business is clearly critical. And, it is challenging to compete in an industry where deception is standard practice.

Introductory pricing and "save" re-rates are a insidious and frustrating example of this. When a consumer sees an ad for Internet at $19.95/mo - and compares is to a product that costs twice as much, do they do the calculus around what will happen after a year, or two, or three, the the post-intro rate is actually higher than the offer which looks more expensive initially? But is introductory pricing actually dishonest? Well, yes - it's designed to create the impression of a lower price than the long term reality. What about "save" re-rates, where a customer who threatens to cancel gets a lower rate than someone who does not? These practices (and in particular this latter one) really frustrate me.

But, how do we compete, when introductory pricing is standard in our sector? If you don't participate, you lose, and if you do, are you being honest?

Equipment fees are the same case. Our two primary competitors now collection a substantial amount of revenue from equipment rental fees, and that revenue supports their ability to offer apparently lower pricing. How can we compete effectively if we do not follow the same model?

Our goal is to deliver a well priced product, with a growing array of free features, no usage caps or overage fees, and strong privacy policies and customer protection practices. I hope that we can continue to win the love of our existing and potential new customers, despite equipment cost now being a separate line item.