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August 1949 Radio-Electronics
 [Table of Contents]
Wax nostalgic about and learn from the history of early electronics.
See articles from Radio-Electronics,
published 1930-1988. All copyrights hereby acknowledged.
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The byline of this article
from a 1949 issue of Radio-Electronics magazine says, "The Editors," which
included of course Hugo Gernsback, Fred Shunaman, M. Harvey Gernsback (brother
of Hugo), and a few others listed on the
Table of Contents
page. The situation for electronics service technicians and shop owners had evidently
gotten pretty bad regarding the financial burden placed on them because of low-cost
comprehensive service warranties being issued by sales establishments. As licensed
manufacturer service providers, shops were required to honor the warranties that
included not only service on faulty equipment, but also initial installation that
often included antenna mounting and lead-in wire. Salesmen and retailers were having
a profit windfall while the service industry was going bankrupt. The state of New
York - always quick to institute new laws and taxes - was in the process of requiring
service providers to carry expensive insurance assuring that they were financially
capable of supporting the warranties.
... New legislation threatens the television service contractors
...
By The Editors
The radio service technician's bed has never been strewn with roses; and of late
the situation has been worsening to such an extent that it threatens to get entirely
out of hand.
Latest development comes from New York State, where the Attorney General's office
may take action which could strike a mortal blow to the independent television installation
and maintenance man. The proposition is to declare that television service contracts
come under the existing insurance laws, and that all organizations handling service
should therefore be licensed under the State insurance law. This means that firms
taking television service contracts would have to prove they were financially stable,
and would have to put a required sum of money into a trust fund to insure that television
set owners would get the service they are entitled to under their contracts.
The real cause, of course, is that television maintenance contracts have been
set at a price which has made it impossible for the service contractor to carry
them out. His costs have been so much higher than the contract fees that he has
been forced into bankruptcy, in many cases watching the savings of a lifetime disappear
with the funds he received for his television contracts.
Tragic as this has been for the service technician who has been forced to close
up his business, the customer has been hurt as well. He has paid his money for a
year's service. Three months after the contract is signed, his receiver may develop
a fault. He finds that the company with which he signed the contract is no longer
in existence. The dealer who sold him the television set and contracted for its
installation through an intermediary service firm is not interested in his plight.
Neither is the manufacturer of the set, in spite of the fact that one of his models
may have been the cause of the customer's dilemma and the contractor's bankruptcy.
As we go to press no final decision has been taken by New York State on this
proposal, and it is hoped that no unfavorable decision will be made. New York State
is by far the country's biggest television market, and if such an adverse action
were taken in that state, many other states would certainly follow the example.
The New York State Insurance Department contacted many of the larger television
manufacturers in an endeavor to have the makers themselves guarantee the service
contracts. With the exception of several large television set makers who have their
own service setups, the manufacturers declined to have anything to do with the proposition.
They insisted that maintenance was the dealers' and distributors' job, and felt
that if the manufacturers were made responsible they might become involved in lawsuits
and other difficulties.
What then is wrong with the entire setup? How can the trouble be cured? The main
difficulty is obviously that the rates paid for television installation and maintenance
are so low as to drive the service concerns out of business. The cure is obviously
to remove this trouble, not to make the present difficulty an excuse to channel
television servicing, installation, and maintenance into the hands of large concerns
who - given a near-monopoly on the business - can then raise the contract rate to
a figure that will assure them a profit under the most unfavorable circumstances.
This will react into higher cost to the customer, and eventually the manufacturer
and dealer will pay for it in the form of fewer television set sales.
Why are present service contract rates so low? There are three main reasons.
First, it is in the dealer's interest to make the price for installation and service
as low as possible, since he does not intend to do this work himself. But because
of the novelty of the business, would-be contractors had no means of knowing what
their costs would be, and in many cases were sold these "suicide" contracts.
Probably the greatest single cause of loss-producing contracts is the "sour"
television model. We have had these models since the beginning of broadcast radio.
Every manufacturer makes such a set occasionally, and the complications of television
render the chances of putting on the market a model with latent defects that much
greater. Such a model may call for twice as many service calls as the average televiser,
and the maintenance technician who has contracts for a large number of them is slated
for certain economic destruction.
The nature of the contract itself it partly to blame. Only a term of service,
with no restriction on the number of calls, is usually specified. The customer therefore
feels it good business to call up the service technician any time if something out
of the ordinary appears on the screen. Many maintenance men report that half their
calls are of the "nuisance" variety, in which nothing is actually wrong with .the
set, and the customer requires only an explanation of what he has seen.
How can we remove these causes?
Obviously The Unlimited Maintenance Contract" Must Go! The manufacturer must
be responsible for calls due to defects in his receiver. All calls - after the manufacturers'
guarantee period - should be paid for by the customer. An ideal installation and
maintenance contract would call for a fixed fee for installation and a specified
number of calls during the "work-in" period of the receiver. All calls thereafter
would be paid for at a stated rate per call. This system would prevent the maintenance
technician from going bankrupt.
For - make no mistake about it - the small two- or three-man shop is the most
efficient service organization ever devised. We went through this same children's
disease in the infancy of broadcast radio in the early '20's. More than one manufacturer
wished to assure good repairs by "factory service" and sets were shipped back to
the factory when they broke down. But it was soon found that factory repair departments
could not break even without charging from three to five times as much as would
the local repairman for an equivalent job.
The final answer-for manufacturer, dealer, service technician and set owner -
is not a system that will add to the expense of television maintenance by sqeezing
the smaller service technicians and installation firms out of business, but common
sense that will take the "gimmicks" out of the present setup and thereby make it
possible for them to stay on the job.
Far-seeing television manufacturers cannot fail to be impressed with this situation.
We are faced with a shrinking economy in this country and the public cannot be placed
in a position where it hesitates to buy television receivers, for fear of having
to pay twice for television servicing. Neither can the manufacturer profit from
a system that would result in fewer and fewer technicians being left in the field
to service the growing number of sets. It is up to them to help the service technicians
stay in business if they do not want to lose money in the end.
Posted October 1, 2021
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