New Bill to Clarify Cellphone Contracts

theorem4 writes to tell us that US Senators today unveiled legislation designed to empower cell phone customers across the nation by providing more protections and guaranteed options. "The Cell Phone Consumer Empowerment Act of 2007 will require wireless service providers to share simple, clear information on their services and charges with customers before they enter into long-term contracts; a thirty-day window in which to exit a contract without early termination fees; and greater flexibility to exit contracts with services that don't meet their needs."

Comments

money

[timmarhy]

watch for the "but we need to make money" argument... which is flawed - you also MUST provide a reasonable level of service to deserve said money

Re:money

[Phoenix Wright]

Nonsense.

If someone is willing to pay an amount for any arbitrary level of service (or even no service), that amount can (and will) be charged.

Businesses will always charge the highest amount people are willing to pay. That's capitalism.

"Must"? "Deserve"? These terms have no meaning when it comes to the free market.

Re:money

[KDR_11k]

That only works when the market is overflowing with "sellers". In a near-monopoly position people can be forced into much, MUCH worse conditions simply because they need the service and they can't get a deal that doesn't require pledging their first-born.

Re:money

[Phoenix Wright]

Technically true, but does not apply to this situation.

Is there a monopoly for cell phones? What is the name of this monopoly carrier? Oh, there's more than one? And they compete against each other? Hmm.

I understand what you are saying, but there is no near-monopoly. It's not super expensive to get into the business band and set up a private repeater (a la, Cricket). I mean, sure, it's not hobbiest-level, but with minimal financial backing you could put a service up for your town, and then charge what you want. Would you have national coverage like the big players? No, is that a requirement?

The current prices are what they are because people pay them. If people wouldn't pay them, they'd be some other price.

And, cell service is very rarely a "need". (In my family, we all earned our ham radio licenses. Even in remote areas, we could often find a repeater or autodialer. Of course, the conversations weren't private, but if there were an emergency, we could call for help. And of course, free to use.)

Re:money

[Phoenix Wright]

No, that's exactly how the textbook examples work.

And if you are paying for cell service, you are contributing to this "problem". If it's still worth it to you to pay these prices for these services, then you are getting what you pay for.

If it isn't, cancel. Go without. A cell phone is not a NEED. FOOD is a need; a cell phone is a WANT.

For the record, two companies don't have to engage in collusion to screw you over on prices. It is entirely likely that they are both trying to screw you on prices independently. Because that's how capitalism WORKS. If you raise prices, and people are still paying, the price was TOO LOW INITIALLY. Prices will rise to meet perceived value. If people, like yourself, see cell phones as absolutely essential, prices will continue to rise absolutely.

Re:money

[CBM]

Markets are more efficient when information flows freely and is accurate.

Cell phone companies apparently obscure the terms of service and costs, and consumers end up being less than ideally informed. Competition in the cell phone industry is also limited since spectrum is a limited resource, and the barriers to entry are high.

For contract phones, the companies tend to compete on features rather than costs, for example number of minutes, "friends and family." For the market segment of consumers that are conscious cost, companies do offer prepaid phones.

Re:money

[KDR_11k]

If it isn't, cancel. Go without. A cell phone is not a NEED. FOOD is a need; a cell phone is a WANT.

Yeah unless your job involves them. You won't be paying directly but since your job pays for them they get money anyway.

Re:money

[Orange Crush]

If it isn't, cancel.

Agreed, except that being in a contract prevents this (or forces you to pay stiff penalties). Requiring more transparency in contracts and giving customers more options to cancel when the service doesn't meet their needs/expectations is fine by me.

Re:money

[jamar0303]

That's odd- that's exactly how the Chinese wireless market is (2 providers, apparently Virgin Mobile was at one time scheduled to enter the market too but it never happened) but you don't see sky-high prices like in America, and prepaid users are treated essentially the same as postpaid users.

For example, China Mobile charges $.02/minute voice, $.01/text, and $.01/3KB. They also have package plans that work by deducting a set amount monthly from your prepaid account. I have one that gives me 20 minutes and 60 texts for $1.30, and another that gives me 50MB of data (tethered or WAP) for $2.30. Compare to AT&T Mobility which charges $.25/minute, $.10-20/text, and $.01/KB for data. Oh, and they had that wonderful (sarcasm here) $10 for 5MB package. The kicker- for text and data it's cheaper to roam in from China Mobile ($.10/text and $.01/2KB) than to get a prepaid SIM from AT&T. And don't give me any of that "apples and oranges" stuff- AT&T certainly doesn't cover all of the US, just like China Mobile doesn't cover the far reaches of China (China Unicom, however, does a great job of that- and they charge essentially the same rates, except that their data package plan gives 100MB for the price that China Mobile charges for 50MB- I don't go with them because they only have GPRS, while China Mobile has EDGE).

Good!

[Phoenix Wright]

I think this is a great idea. I just moved back to the US from Japan. I actually never had a cell phone (gasp!) until I went to Japan. Now that I'm back, I'm looking for a local replacement.

So far, every plan I've seen is incomprehensible or misleading. Or both. As soon as I find a reasonable, understandable plan, I'll jump at it.

Still looking...

Re:Good!

[Seumas]

I don't see what the big deal is with cell phone bills. They don't seem all that complex to me. The problems I've had with phone bills is six straight months where I had to spend hours each month on the phone, because they were double-billing me. Or the many months I had to deal with them where they kept adding services to my account that I specifically refused and asked not to have... and that they would add back again after I spent hours on the phone removing them. Or the two times they turned off my unlimited net access on my phone, causing me to rack up thousands of dollars in bills for what should have been a $20 unlimited fee.

None of these were due to the contract. These were all due to crappy business practices and nothing else.

There shouldn't be anything *deceiving* in a phone bill. I can certainly agree with that. But I don't see why they should be legally bound to make a phone bill read at a fifth grade level like the daily newspaper.

Re:Good!

[zippthorne]

It is not $39.99 + $11.01 in taxes. If you look carefully at your bill, you'll find that there are a few fees that look like they go to the government, and may even have words like "federal" in there somewhere, but if you actually talk to your provider you'll find that they are, in fact,(sometimes federally mandated) costs of doing business.

In other words, they are presenting as fees things that should have been folded into the advertised price.

As an analogy, you wouldn't expect McDonald's to advertise "99 cent hamburgers!" and then charge an extra 18 cents when you buy one as a "State Health Department Cleanliness Fee," would you?

You know what I want?

[evanbd]

I want a $39.95 plan to actually cost $39.95. As in, that's the number at the bottom of the bill that I have to pay each month.

I don't want to pay "regulatory surcharges" or "cost recovery fees" or anything else that isn't included in the advertised price. And this goes for all these sorts of contracts, not just cell phones.

Re:You know what I want?

[frdmfghtr]

WTF are you talking to for 1200 minutes, that's 20 hours a month on the phone??!?

I used to think that as well, until recently when I started burning over 1000 minutes per month, and don't consider myself a phone junkie. 1200 minutes per month is about 40 minutes per day; if your cellphone is your only line, your usage will add up fast, esp. if your family and friends don't use instant messaging.

Much like a nickel here and a dime there adds up to real money over time, cell phone use does the same thing.

Re:You know what I want?

[csnydermvpsoft]

"Fees" aren't the same as taxes. Think about what "regulatory cost recovery charge (as seen on my ATT Wireless bill)" means: the carrier incurred an extra expense to implement something required by the government (emergency service support, rural location service, etc.). Whether you like the regulations or not, the cell phone providers should include them in their base price - they're part of the cost of doing business, after all.

Novel Idea

[eggman9713]

How many people actually read the contracts? I actually read my entire contract and understand it, and have nothing to complain about. People need to actually read and understand their current contracts beofre they can complain about them.

Why even that?

[TheMCP]

I intend to write my senators to oppose the bill, on the basis that it gives a stamp of approval to the whole idea of long term cell contracts: even if my cell provider provides perfectly good service, I should be able to drop them any time I feel like it, just like a landline phone. I can cancel a landline phone any time I want to, and the phone company has to cut the bill off based on the number of days of the month I actually had the phone line active. Why should a cellular provider be able to give me any less generous terms?

Many negative factors about the US cell phone system rely on the lengthy contracts or are caused by them: the US gets only the crappy phones the carriers choose to offer and not all the exciting phones sold in europe and japan, because in the US the carriers sell all the phones, because it's the excuse for the lengthy contracts. Indeed, the only really innovative phone to come along in the US is the iPhone, and even that is contractually tied to a single carrier. Also, in the US we have less technological advancement in the network itself because the carriers know you're locked in and can only use the phones they select, so they have less incentive to upgrade because you can't leave them and there's little competition if you could. Further, all the carriers have reputations for poor customer service and network reliability issues in some locations, and frankly they're also all reputed to not care very much, because they know that any customer churn they suffer will be replaced by incoming competitors fleeing the exact same problems from their "competitors".

If we eliminated the lengthy contracts, cell companies would lose their incentive to offer discounts on phones, and would likely choose to start charging full price for phones. This would likely result in a competitive market for equipment arising, resulting in more consumer choice. Further, carriers would then have to directly compete on plan prices and services, resulting in more consumer choice on plans, likely lower prices, and probably also the companies improving their network speed in an effort to actually compete with each other for a change. And of course, they'd have to start giving a damn about dropped calls instead of just blaming the customer, because the customer can actually drop them on the spot and go to someone else until they find someone who can actually give them reliable service.

So, I intend to write to my senators and tell them that if they really want to do any good in the cellular phone market, they should ban all cell phone contracts... or at least, ban all fees for breaking the contract, which would have essentially the same effect.

Re:Why even that?

[Skater]

Uh, I believe you can get cellphone service without a contract. Buy the phone outright then go monthly. Or get a prepaid cellular phone.

Re:Why even that?

[Skapare]

I have to disagree with you. Contracts should not be banned. Some people even like those. They can get a new phone every couple years without paying a lot up front. These are the same people that lease cars and trade up every 2 or 3 years.

Cell phone contracts used to be the only way the majority of people could afford a cell phone. This practice emerged from the days of mobile phones before cellular technology, which existed at least as far back as the 1950's although I don't know what all the terms were then. The first one I ever saw even used tubes (not transistors) inside a pair of large boxes installed in the trunk of a car. When cellular technology emerged, the phones were still fairly large and also expensive due to lack of economy of scale. That, of course, eventually changed.

The problem is, of course, the cell phone service providers still like the term contracts for many reasons I'm sure you are aware of. They try to make it hard for people to get phone service, or even phones, any other way.

But you can buy an unlocked cell phone even in the USA, and then sign up with the carrier of your choice. A friend of mine who works for a major cell phone service provider based on GSM technology in the customer service inbound call center has told me that a fraction of a percent of customers are in fact monthly no-term customers using unlocked phones. They are trained not to offer such services, but do know how to sign people up if someone wants it. He also told me that it is a full price service that way, about as costly as a pre-paid phone.

You can find unlocked phones easily. For example at Amazon.Com, look at the left side of the home page under "Consumer Electronics" and click on that link. From that page of cell phones, on the left side find a whole subsection of links for unlocked phones. Be sure you get 850/1900 MHz phones for use in the USA and a few other countries in the Americas. If you want a phone good for international use, get a triband (850/1800/1900 for both USA bands) or quadband phone.

These phones are apparently overseas phones that may or may not come with a USA warranty. That's one of the problems in the USA is that the manufacturers are not selling directly to retailers here that I can find. It could help if we get wording added to this law change that requires the manufacturers to make their phones available to resellers that want to sell them a full price as no contract unlocked phones. Then people can have a choice.

Some other places to look for unlocked phones are here, here, here, here, and here.

Re:Why even that?

[Belial6]

I agree with you to an extent, but I take exception to the "QUIT BEING CHEAP AMERICA!" Statement. It should be "QUIT BEING STUPID AMERICA!". The fact is, the argument that the phone companies need to recoup their costs, and thus put you under contract that requires you pay for the full price of the phone over time means that IT IS NOT A FEE PHONE. Thats right. If you are contractually obliged to pay for the whole phone through a service contract. It is not free.

The first thing that needs to be done is require companies to stop their blatant false advertising, and lying in contracts. They should require the companies to state that the phone is "financed" instead of allowing them to call it "free". Of course, it would be nice if the music and movie industry were required to say "license" instead of "buy" as well, and music downloads should be requried to be called "rentals".

Until the NewSpeak is stopped, we will continue to have these kinds of problems.

Re:Why even that?

[JoelKatz]

"Why should a cellular provider be able to give me any less generous terms?"

You don't have to accept any terms you don't like. So what you are asking is, "why should I be allowed to accept bad terms?" And the answer is that you are a responsible adult who can make their own decisions. You don't need anyone else to protect you from your own stupidity because you aren't stupid.

If you want to accept some level of lock-in in exchange for a lower price, why should someone else prevent you from doing so?

That said, there are providers that use deception and, in some cases, outright fraud. *That* should not be allowed. But it makes no sense to prohibit deals agreeable to both sides where both sides understand all the details of the deal just because third parties think it's not a particularly good deal.

Re:Advice Requested

[JackHoffman]

All providers do it that way. It only happens if you use conditional call diversion: You're in a foreign country, your cellphone rings and you don't answer it (or you reject the call or the phone is off), the call is diverted (back) to your mailbox, you pay roaming charges for "receiving" the call in the foreign country and for diverting the call back to your home country. Yes, it's a trap. It's particularly dangerous for people who live close to a border where the phone often switches to the foreign network based on reception strength.

How about a REAL bill?

[retro128]

How about we make cell branding and locking illegal?
How about exclusive contracts cell manufacturers and service providers illegal?
How about we make disabling features on the cell phone you paid for unless you ransom it back from your service provider illegal? (Verizon Bluetooth OBEX transfer, anyone? Using your phone as a DUN connection for your laptop?)

The reason the North American cell industry sucks so much is because manufacturers and service providers are working too closely together and nerfing our phones for the purpose of shaking more change out of our pockets. Implementing the above would bring us in line with how everyone else in the world does things. The bill in TFA is a joke. Congress is stroking it, as usual.