August 15, 2004
What terms did you get on that phone?

Man. I had no idea that people still leased telephones.

Twenty years after the government's breakup of the Bell monopoly, nearly 1 million consumers still lease their telephones from an affiliate of AT&T, paying anywhere from $4.45 a month for an old-style rotary phone with "conventional bell sound" to $20.95 a month for a cordless phone with built-in digital answering machine. The result: Customers spend hundreds or even thousands of dollars on a piece of equipment that can be purchased for as little as $10.

AT&T's Web site touts numerous benefits to leasing, including portability (you can take your phone with you if you move anywhere in the continent) and free accessories like long cords.

But consumer advocates say the program takes advantage of consumers, particularly elderly people, who may be easily confused over their options. According to an AARP survey from 1998, the latest year for which figures are available, 6 percent of people 75 or older leased their phone, compared with 2 percent under 65.

"It is such a rip-off," said Chris Baker of AARP's Public Policy Institute. "It's one of the things older people really depend on, and the fact they get abused is pathetic."

I'm sure the old rotary phone in my grandmother's kitchen was a leased phone. Hell, the thing was probably integral to the structure of the house. For all of the crap I had to deal with the last time we moved phone service, at least I wasn't asked why I didn't want to consider phone repair insurance. I can understand why AT&T still offers the service - it's got to be a cash cow for them - but I'm just boggled that anyone would still take them up on it.

Posted by Charles Kuffner on August 15, 2004 to Bidness | TrackBack

I suspect a lot of people just don't know better.

Many of the folks over 75 probably haven't priced telephones too closely in the last 30-40 years. Like many technologies, plain-vanilla telephones have become dirt cheap, whereas in the 1950s or 1960s they probably cost enough that a $1-$2 monthly rental fee may have been worth paying.

Posted by: Tim on August 15, 2004 3:09 PM

My mother (age 77) returned her leased phone to Verizon earlier this year. She noticed this charge on her bill and found out what she needed to do to get it taken off. I suppose some old folks who've had their apparatus for the last 25 years or so may just not notice; it's not like they need a new phone all that often if their old one just works. Those AT&T land line phones are sturdy suckers.

Posted by: Chris Quinones on August 15, 2004 9:38 PM

Many older people still believe that it is a crime to connect anything to the phone line other than "genuine" phone company equipment. The Carterphone decision of 1968 changed that. Since then, compliant equipment can be connected to the telephone network (and they can quickly sense if the equipment is noncompliant). The Carterphone decision has not completely been accepted by some older folk and may explain a decision to lease.

Posted by: Brenda Helverson on August 16, 2004 12:36 AM

My Dad was still leasing a phone at the time of his death in 1995. He also leased an amplified headset, which is also available for purchase. Of course I promptly remedied the situation after his death, and would have done so sooner if I had realized what he was doing.

Bilking older people seems almost a sport in this country. As one who is not as young as many bloggers, I wonder what frauds await me in the next decade or two as I approach retirement. Happily, I have a goodly dose of suspicion in my makeup, but I don't know if that will save me or not. Time will tell.

And no, I don't lease a phone. I connect every cheap, ill-made kind of phone you can imagine to my phone line... all of it legally. It's the least I can do in Dad's memory.

Posted by: Steve Bates on August 16, 2004 1:53 AM

The Carterphone decision has not completely been accepted by some older folk and may explain a decision to lease.

More likely, they just don't know about it.

Another part of the problem was a deceptive marketing practice employed by AT&T in the late '70s/early '80s. They offered several "specialty" phones, which you could "buy." (I "bought" one of their Telstar phones myself.) What they didn't tell you was that legally, the only thing you were buying was the case - you still leased the "guts" of the phone! (And the price wasn't cheap - if I'd known I was paying over $100 for a case, I'd certainly have told them what to do with their specialty phones.)

After the '84 breakup, many, including myself, were shocked to start getting a separate bill from AT&T for a phone we thought we'd bought! (In my case, it was $2.32 per month, plus "sales" tax.) Amazingly (or perhaps, not so amazingly, considering it was the Reagan administration that presided over the breakup) that little bit of deception was allowed to survive the breakup.

I thought about ripping the case off and returning only the "guts" to my neighborhood AT&T Phone Store, but finally decided the hell with it, and surrendered my case along with their phone.

I haven't been an AT&T customer since. No grudge like an old grudge, I guess.

Posted by: Mathwiz on August 16, 2004 4:50 PM

I had no idea that leasing a telephone was still active. Is there any legal recourse being implemented for this absurd service? You would think that the FCC would be all over this. Should reimbursement be requested? There is not alot of information available so anything would help! Thanks.

Posted by: Sarah on October 22, 2004 1:54 PM