Why do I need to negotiate at all?
The $40 introductory price tag that lures you into signing up with Internet Service Provider (ISP) A is not as simple as one number. The actual pricing structure may look something like this:
- + $105 regular price or MSRP if you will
- – $10 discount for x months
- – $15 discount for x months
- – $40 discount (doesn’t expire)
- =$40, final price
So, after x months (usually one year or two), your $40/month internet suddenly becomes $65/month. To get back the good price, you need to “renegotiate” (a term used by an actual customer service agent I spoke to) with your ISP.
The key to winning the negotiation
So you pick up the phone and after multiple holds and transfers you finally get a human being on the line. You ask for a discount. The agent reviews your account and politely says you are already getting a great price because of the $40 discount, and there is nothing he can do. Now what do you do?
Threat to cancel.
The key tactic to winning the negotiation is to threat to cancel service. As long as your ISP cares about how many customers it has (and they do care), they will not want to lose you as a customer. This is the source of your negotiation power.
Remember that you are allowed to request cancellation/disconnection on a future date. So you don’t need to worry about actually losing Internet access immediately if your ISP won’t budge.
Signing a 2-year contract would take away your negotiation power
You lose negotiation power because you are subject to an often hefty (several hundred dollars) early termination fee (ETF) when you cancel service before the end of your term. Therefore, the key step to prevent ISP from raising prices happens when you sign up for service:
- Do not get into any kinds of contract, i.e. those “2-year agreements”.
Sometimes your new ISP may offer to pay your ETF if you switch to them. But it is not a simple process. The new ISP doesn’t just give you an instant credit or deal with your old ISP directly. You would need to submit your final bill from old ISP showing ETF payment, and the new ISP will only issue credit after it has reviewed that information. Which is reasonable practice, but could take several billing cycles before you are compensated for paying ETF.
But a 2-year agreement guarantees the same price for 2 years. Isn’t that better than haggling with ISP every year?
Aside from the price hike after the promotional period, there are many more reasons you may want to switch/renegotiate before the end of two years, such as:
- Poor network performance
- Poor customer service
- A change in personal financial situation, e.g. your budget no longer allows for $100 monthly expense on Internet/TV
- Better plans and/or price available from the same ISP
- Better plans and/or price available from a competitor ISP
- The threat to cancel is only credible when there is a second ISP (that doesn’t suck) to choose from at all. That is not the case for many consumers in the US.