Cingular Corporate Price Fixing Exposed

AT&T Wireless, despite suffering numerous consumer problems that arguably took down the company, was still revered as one of the most business-friendly companies in the industry. Cingular made no question of this as it was a major reason the company cited by Cingular for the acquisition of AT&T Wireless.

However, evidence has come to light that Cingular may be leveraging the systems purchased from AT&T to fix prices to business customers in a very questionable manner. Read more…

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Before and after the merger, AT&T managed online company purchasing through an online system known as Premier. Before the merger with AT&T, Cingular lacked a reliable means of handling corporate B2B and consumer-liable business orders online. Cingular has since made this their primary means of ordering with any business discount online, and to this day it is still known as Cingular Premier.

Cingular Premier initially gave customers a choice, they could honor their existing agreement with AT&T Wireless and purchase legacy equipment, or, leverage that discount with current Cingular equipment. Cingular touted continuously through the merger that every single company agreement would be honored, and that company employees would continue to get their discounts… which rose to as high as up to 50% discounts on new hardware. These agreements to provide employees deep discounts were brokered generally in exchange for a company choosing Cingular over another carrier.

Recently, however, Cingular has begun to take unscrupulous action to fix Premier, to rig the system to give customers with very different discounts on handsets, exactly the same price. We are not here to question if this is legal or not, simply to present the facts as to how Premier now works, and how it is indeed adjusting prices on-the-fly.

Premier always has had a “business retail” price, something which has always been different from consumer retail, and something which we do not question. Cingular now has ballooned such prices to be very high however, some devices now have a “full retail business price” of well over $1000. Some device, such as the HP iPAQ, could be purchased almost twice-over walking into a Cingular retail store and paying the no-comitment price.

No, it isn’t just you. Cingular is indeed asking for $1129.99 as the base price of that hw6515. The most you will ever pay from HP for a hw6515 is $649.99…

Cingular Premier then takes the business discount, which usually ranges between 15% and 50% from that extremely ballooned price. Finally, Cingular applies a “special discount” which returns the price back to a reasonable range, and generally below the retail price with new 2-year agreement.

But, the key here is that the “special discount” is actually a variable. If someone has a very high per-handset discount, such as 50% off a device, the “special discount” is extremely low. If someone has a low per-handset discount, the discount is higher. The special discount always is changed to ensure that the final price is the same, regardless of per-handset discount. In recent weeks, Cingular has attempted to cover this up, by merging the special-discount and company discount to one figure. This is easy to see through… simply calculate the percent-off and the remainder is the “special discount”.

We confirmed this by gaining access to multiple Foundation Account Numbers (FANs), which enable a customer to log on and view Premier based on their discounts. We attempted to select several devices, and then logged out. We then went to a different computer, logged in with a different FAN, and looked at the same devices. What we found was exactly what we stated above, in most cases the final price with agreement was the same… regardless of what the per-handset discount was supposed to be.

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It is important to note that this is not universal. Not all FANs have exactly the same price. Most from our research however, now do. We suspect this is because human resources employees in these exceptions have complained to Cingular that the discount system had adversely changed and could possibly be a breach of contract between the company and Cingular.

This opens an important question. Cingular (and formerly AT&T Wireless) brokered discounts based on a set business customer price. Cingular is now manipulating that set price to be impossibly high, and is then automating a system of special discounts to nullify those agreements so that if you have a 75% discount, or a 1% discount on phones, you get the same price. If that is not price fixing, legal or not, we don’t know what is.