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FCC To Hold Hearings On Early Termination Fees
Isaac-Lew sends word of an article in the Washington Post reporting that on June 12 the FCC will hold a hearing regarding cellphone early termination fees. The Commission may look at early termination fees for TV and Internet service as well. The wireless carriers are taking a Bre'r Rabbit approach toward possible FCC regulation of early termination fees — the FCC's intervention would pre-empt a number of class-action lawsuits going forward against Verizon, Sprint, and others. These suits, stemming from state regulations, could cost the carriers billions. "...the carriers have renewed a lobbying effort in recent weeks to persuade the FCC on a legal definition that would stave off the state lawsuits on cancellation fees. On May 6, 2008, Verizon Wireless chief executive Lowell McAdam and the company's chief lobbyist, Tom Tauke, met with [FCC Chairman] Martin, urging him to adopt a federal policy, according to FCC records."
because they left early and everyone had to pay 200 dollars.
Early termination fee's are ridiculous, I can understand an earlier time when the costs of building the cellular network were to be thought of. Now it would seem they like their little cash cow, must help them subsidize the latest shitty phone. It's a shame it's taken this many years for it to finally get some government attention.
I'm sick of following my dreams. I'm just going to ask where they're goin' and hook up with 'em later.
I always buy my phones third party, generally out of the country. Even with a weak dollar, I prefer to buy my phones in Dubai or Asia - they're usually available in the States in a few months, but I like my cell phone toy. My iMate Ultimate has been awesome and hasn't crashed once, unlike almost every telcom-provided PDA phone.
Nonetheless, the subsidized cheap/free phones people want make sense. It's like a simple credit extension by the provider: people get free phones every few years, and the provider gets their money back and then some over the life of the contract.
The FCC has no right to butt into this portion of the market. I'd love to see a "Non-subsidized" contract price, but my company handles all my employees' cell phone accounts, so we already get a nice reduction in our monthly price because we never take their free/cheap cell phone deals. So that option IS there, you just have to negotiate with the right department and not a retail store.
I have never accepted one of their free/reduced priced phones (I prefer to buy online as well, provider selection + disabling of functionality sucks) but you still get forced into a contract. I see no problem with allowing the early termination fees for people that take advantage of free/reduced price phones, you should not be forced into a contract when you bring your own phone though.
Just because you disagree doesn't make it offtopic or flamebait.
It can be either, including "Brer", or just "Buh".
Brier = Br'er
Briar = Bri'r
Brier = Briar
Maybe regulations should be made to change the way phone contracts are signed?
I don't think we should be able to call the FCC and cry about not liking contracts we signed, but maybe there should be rules about having initials next to every item on the contract (like the termination fee
-- lol pwned
I agree whole heartedly.
When a customer ends their contract VERY early, the fee may not even cover the true cost of the phone.
-- lol pwned
And in later news, Martin is still having issues deciding whether to allow the Sirius/XM merger to go through, due to fear that that will become a monopoly capable of taking down the US economy. Exxon/Mobil was good to go though. His only worry is that the cost of services will rise, and as a result people will starve to death if they can't afford their satellite radio.
My only real issue with Cancellation fees are when you AREN'T getting a subsidized phone. I had my Treo for 2.5 years, I changed jobs and suddenly I needed significantly more minutes. I called them up, they had no problems getting me set up with a new more expensive plan, all was well. After 4 months of incorrect billing I called them and they found there was an error in the way my new plan was set up, it was fixed, all was well. Except when they made that change, they restarted my 2 year contract without telling me. So when my 2 years was up and I was moving, I wanted to combine my Cell/TV/ISP/Home phone to get a deal with another company. My current Wireless Provider wanted to charge me $200 per line, as my wife and I each have a cell on this account, to cancel. It should have been over for 2 months, but now they wanted to go by the new date and ruin my plans of consolidation which would have saved me over $100 monthly. Luckily for me I found out on the internet that the company had changed a charge on their bill and this meant they altered the plans and I was allowed to cite this change and cancel the contract w/o paying. I wont ever go back to that carrier. I don't have a major issue with the subsidized phones and the eventual charge if you bail out before your contract has paid up on the phone really, however after that I really cant see any reason other than a cash grab.
don't like termination fees? don't sign a contract agreeing to pay them if you leave. duh. it's not like you have some inalienable god-given right to a cell phone. hence the contract.
i don't think this should apply to dropping service if the cell carrier isn't holding up their end of the bargain (crappy coverage, non-functioning hardware, refusal to address issues, etc) - then, by all means, the customer should have full right to leave without ANY penalty. but if the customer is leaving because they want the sweet phone on the other network, or just because they feel like it...maybe they should have thought of that before signing.
the united states is a nation of laws; badly written and randomly enforced -- frank zappa
Just in case there are those who do not know, in canada at least the providers always have a uncontracted phone price. These prices tend not to be advertised much though, and many of the salesmen are comissioned based on contracts not the devices themselves.
Be sure to ask. Repeatedly. And with different agents.
Ice Cream has no bones.
But the contract's early termination fee is NOT just about subsidizing a phone, it is also about being a part of the costs of expanding the network to cover the needs of the customer.
If 10,000 customers sign up in a given area, and the cell provider doesn't have significant coverage in that area, there is a high burden of cost over the time that the customer is signed up: finding land, leasing land, providing towers, maintaining towers, etc. That $200 or so you'd pay is probably close to the realistic guideline of cost+profit for providing service to you, given that you will likely use your phone within a given region more often than not.
That's not to say that $200 goes towards exactly your town or county, but it does defray the costs of expansion and maintenance of the network.
I'm not sure that any major cell provider is making money hand over fist once you consider all the other possible costs. Examples:
1. People will want to call in for customer service. There is a general figure the cell provider has calculated based on how many hours of customer service the average customer will need. When New Customer X signs up, the cell provider must add them to the pool of possible future callers. This means hiring people TODAY to handle a future POSSIBILITY. This is also a fixed cost, correct? YOu can't just keep hiring and firing based on current demand but on expected future demand.
2. People will have an expectation for quality of bandwidth and signal, not just for calling but for text messaging, GPRS/EDGE/3G data, etc. This has a cost at the backend of the network. As more users need more of this bandwidth (or signal quality), there is a higher backend cost. This is also a long term cost based on future expected demand.
Etc, etc.
Why not? I think it's perfectly reasonable when you sign up with a carrier to have a 1 year contract. After that most contracts go month to month, and you only get in trouble if you take advantage of their 'free' phone offers. There are inherent costs associated with acquiring and setting up a new client on a phone network. Why shouldn't the carriers be able to at least ensure that they can make up those costs with an initial contract?
Find coupons in Greeley
I can't get a "no-phone" plan. I don't get a discount because I supply my own phone! But my "plan" is just out of the penalty fee phase. I can't change the plan without getting into ANOTHER penalty fee phase. (certain features can be added or removed, but there are limits -- and my carrier won't tell me what those are).
If I replace my phone, I get into another penalty period. If I don't... I pay the same amount; but without the penalty period. And that's it.
I want to see a "no-phone" rate...
Yes, I would like to sue the provider.
Just another "Cubible(sic) Joe" 2 17 3061
If it becomes illegal to charge a penalty for early termination, I imagine they'll change the scheme to something like this:
- The "free" phone that is given to you in exchange for signing a 3-year contract, instead becomes a "lease"
- You must give a "deposit" in exchange for the lease. The deposit is equal to the cost of the phone that they would sell it for, should you choose to buy it without a contract
- They'll conveniently offer you an instant loan to cover the cost of the lease. So you don't have to shell out those $300 bucks, you just "owe" them to the company.
- Each time you pay your plan, part of the money is used to cover that deposit loan. If you finish your 3-year contract, the owed amount becomes 0, and you get to keep the phone.
- If you leave early, they charge you the remainder of the loan.
They'll just wrap it all in the same kind of contract you sign without reading anyways, and for most customers it won't be any different in how or how much they pay, compared to the current system. But from the legal perspective, it suddenly becomes a whole new ball game.
Like the iphone, for example.
Since WHEN were wireless rates affordable?!?
Prices keep going up and up despite more and more customers every single day! Who ever came up with the idea of supply and demand, neglected the ever present... greed. Gas prices anyone!?!
Utilities provide an all but necessary service. Instead of locking customers into multi-year contracts with stiff early cancellations fees, lets see utilities (all subscription based services) retain customers on the VALUE of the products and services they offer.
It's not an abbreviation/mispronounciation of "briar", it is "brother". The reference is to when Brother Rabbit was caught stuck to Tar Baby, and he begged Brother Fox, "oh, go ahead and eat me, but whatever you do don't pull me out of the tar and throw me in the briar patch". Fox does exactly that, and Brother Rabbit scampers away.
Thus, the cell phone companies are saying "please, just go ahead and sue us all you want, just don't throw us to those nasty mean FCC committees that is all appointed by Republicans and in our pocket".
The point being, this an effort to politically forestall being called to account. Of course, if Americans would quit buying the stupid things, they would fix up their terms or fall to new companies that were more honest.
Is this to decide whether early termination fees need to be abolished or highly regulated, or to determine if they're OK as is? (or could it go either way?)
I could see this hearing poised to set a very good, or a very bad, precedence.
I work for the Department of Redundancy Department.
The US Constittuion gives us an unlimited right to contract.
It also does not allow the federal government to create communications monopolies (except for the post office).
Libertas in infinitum
So you say that I should pay for risks telco takes when I sign contract? Yeaah, that is pretty reasonable. If you are a telco I mean. In every other business it is called BS. Not telling about the fact that nowdays people just roam from network to network. They do not "appear" from thin air. Times of fast grow of telcos are already over. If a customer comes to you - its great. If he/she leaves - probably you are the reason.
Sure, I can buy an unlocked phone and bring it to AT&T.
Assume I bought a $300 phone that would have been $50 with a 2 year contract.
Well, great! No commitment. Just one (big) problem: I don't get any sort of pricing commitment. The whole reason the ridiculous discounts work is because the discounts provided are just put in the cost of plans! If I don't get any sort of discount, why bother?
A further disincentive against buying your own cell phone? The different standards and activation. Sure, AT&T may be GSM as well as TMobile, but Sprint & Verizon are CDMA... and some refuse to let off network cell phones on. Verizon won't activate ESN's that are not from their own phones. If you have no commitment, but you paid $200 more for the phone that you can't use on another network when the service sucks? You'd still probably stick, to get your money's worth out of the phone.
I hope that the FCC forces providers to allow unlocked & unbundled (with service) phones on their network, as it would encourage a better wireless industry for consumers (e.x. lower prices, minutes for incoming calls being free like Europe, incoming texts being free, lower rates, etc.).I also hope that the FCC makes providers offer lower priced plans to people who bring their own phones- or they'll be no incentive to go without a contract...
Hmm. Let's examine this.
http://www.wireless.att.com/cell-phone-service/go-phones/
AT&T Go phone. No contract.
http://www.t-mobile.com/shop/plans/default.aspx?plancategory=4
T-Mobile. No contract.
http://www.verizonwireless.com/b2c/store/controller?item=prepayItem&action=viewINpulsePlanDetail
Verizon. No contract.
http://www.boostmobile.com/
Boost Mobile (owned by Sprint-Nextel). No Contract.
Did I misunderstand you when you said "none of the competitors offer anything w/out a contract." because that ALL of the (major) competitors, and no contracts. There are literally dozens of options for cell service without a contract.
I'm from Canada, but I was under the impression you weren't forced to buy a contract. Sure, you could get a better plan and subsidized phone if you do, but then your making a commitment to the company (i.e. you get rewarded for your loyalty). If you get a regular plan and bring your own phone, there shouldn't be any contract. No contract should mean no cancellation fees.
Is this not how it works? Are you forced to initially sign up for a contract?
- the fee cannot exceed the cost of the phone,
- if the phone is returned in a resalable state, its fair trade-in value can be applied against the fee,
- the fee is prorated based on how much time is left in your contract (if you're halfway through a 2-year contract, you've paid half the subsidy cost so the termination fee should be halved),
- if I bring my own phone, there is no subsidy and hence no early termination fee.
Business contracts are supposed to have consideration to be legally binding; that means that both sides have to get something out of the deal. An early termination fee that does not meet the above criteria would seem to be lacking in consideration.I use sprint, and I brought my own phone - with no contract. Just took alot of chatting with the representatives (and a lot of call backs to get a good rep).
In fact, I now regularly get offers to reduce my bill 5-10% if I will lock in to a 1/2 year contract. Perfectly reasonable offer, IMHO, but the fact I had to jump through so many hoops to be in such a situation is egregious.
Most of the people i know here in canada fit what you describe there.....until they end up in a situation where the phone fails or is lost or stolen. Cellphone theft is the biggest cash cow in terms of the devices market for the providers.
Do they not have insurance in Canada? Mine is 2.99 a month and covers loss, theft, or virtually any type of damage. I've used it three times and it's painless and simple.
An early termination fee makes sense when they give you a free (or reduced cost phone). You have the phone, they get something like the money they would have made back over the life of the contract. However, when I leave, they get to keep their new infrastructure. And the resources I was using are freed for someone else to use. The early termination only makes sense in the context of repayment for a free/reduced price phone.
Congratulations, business involves risks. As risks go, this is fairly minor and can be absorbed by a national company easily. The cost of signing a customer up is low, on average - the burden is mostly based on current demand, which is fairly stable over time.
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
Where do you list your $10/month cheaper plan that doesn't have this tied in? Quoting from the Smithsonian's National Zoological Park: 250,000 tons of toxic material have been dumped in to landfills by 700 million "retired" cell phones in the U.S. alone. In addition, mining the coltan used to coat components in then, has devastated lowland gorilla and African elephant populations.
My phone's about to come out of its two year contract. It's still perfectly functional and will likely see me through several more years just fine. I'm guessing a lot of others are in the same boat. As it stands, with no discount for already having a phone making a lie of the cost reclamation argument, most people are likely to get a new one that they consider "free," tossing their old one. Were they able to save that $10/month, how many more would be tempted to save money and, even unintentionally, end up saving a lot of damage to the environment?
http://plans.boostmobile.com/unlimited.aspx
Check that out. TBH, it's an extremely good deal at $55 a month for unlimited talk, text and wireless web. Definitely not gouging.
When you terminate doesn't matter to the provider. You're tied to a 12 or 18 month minimum contract (I believe in the US you have 2 year ones as well).
Take this N95 deal - free N95, 12 month contract, £17.50/mo for first 5 months, £35/mo for the the other 7. Total cost of contract £332.50 (calculations from dialaphone - haven't verified them).
No matter when you terminate O2 get exactly the same amount of money out of you. The phone is probably worth about £250 of that and the rest is network profit.
If you bring your own phone, not only should you not have to agree to a contract, but you should also get a discount on the monthly fee. After all, some percent of the monthly fee is being used to pay back that subsidized phone that you never received.
Just ask for a sim-only contract. They're usually quite cheap and have no miminum contract. I have one - £15/mo with reasonable number of minutes and unlimited texts. I can't imagine you can't get the same where you are.
They make up their cost of acquisition via the "activation fees", wouldn't you agree?
Which almost makes sense, except that they're charging you $200 not to provide service. It's a "termination" fee, not an "activation" fee (which they also charge you when you establish service.)
The US free market: two halves of a government-granted duopoly are free to set the market price.
That's all well and good in theory, but that isn't even remotely how things happen in practice. Cell phone companies actually use these plans to protect themselves from free market competitive forces and to secretly overcharge people for services and products they've already paid for. I can (and will) back that assertion up with examples in the next few paragraphs, but let me say first I hope those lawsuits suck tens of billions of dollars out of these cell phone companies, because they've easilly gotten billions in ill-gotten gain. On to the examples:
When my wife and I got married December 2006, I was three months away from a new phone and and ending a two year contract. We went to Verizon and asked to consolidate our two phones into one family plan. They did this, but then without telling us extended our contract by a full year. All we wanted was consolidated billing: we kept our same phones, our same numbers, etc. Nothing changed. But they extended our contract by a year, and suddenly I'm continuing to pay off my already paid off phone, I didn't get a new one, I'm told leaving will cost me a 200 dollar termination fee (for what, I might ask, since my phone is paid off), and getting a new phone will cause them to extend my contract by two years.
But it gets better than that. My wife and I found we weren't using all that many cell phone minutes, so we went back a few months later to lower the minutes on our plan. They secretly extended our contract again without telling us. Meaning once again I'm paying for a paid off old crappy phone, I still didn't have a new one, and I was going to get charged an early termination fee (for no justifiable reason) if I quit.
So that's how these things really work in practice. They do nothing but screw over the consumer in what really is an entirely illegal way. Obviously, if I had known in either case my contract was going to be extended, I would have said no way (I didn't find out about those secret extensions until months after the second incident). What it comes down to is this: I was unknowingly placed by Verizon into a contract I never agreed to, and then was charged an early termination fee quitting it! That is the definition of unethical, I'm not the only one they did this to, and the judge can't take away enough billions from them to satisfy us (or make up for what all these cell phone companies have done to American consumers).
Beware of bugs in the above code; I have only proved it correct, not tried it.
Tony
Even though I am in London right now (for the next week), my home base is Canada (Toronto). My carrier does NOT offer that service -- they would much rather I buy a phone from them. I don't have much choice for carriers; the "competition" doesn't even offer sim card support for their phones.
Completely disgusting.
I am looking for service at £50/mo with reasonable minutes, unlimited web access, email delivery and send. I don't want to be locked into a "contract" with a £200 penalty. Based on a sim card so I can replace the phone (on my own dime). Really, am I asking too much?
I envy the situation in the UK...
Just another "Cubible(sic) Joe" 2 17 3061
Ya know, I was on Tmobile a couple years ago. I had my phone unlocked.
I called up AT&T Cingular, went into their stores, went online.
I told them I had my own phone and I wanted service from them with no contract.
There was no way to get that from them. It was impossible. If I ported my number, got a new number, whatever.
There was a 2 year contract.
I asked "Why, not like you are giving me a subsidized phone?" They had no answer.
There was no way to establish service with ATT without a 2 year contract.
Nope. It couldn't be done.
I was told that on the phone, by email and in person.
The idea the contract is *just to pay for the free phone* is just preposterous, at least at the time. Maybe it's different now.
Hopefully after the government gets done it *will* be possible to get cellular service with no equipment purchase, no free equipment and no contract. It should be possible, shouldn't it?
One thing I did find out about ATT post-IPhone.
The way to get an IPhone is to go into the ATT store, get a free phone and a new contract.
After that buy your IPhone. There is no further 2 year contract for you buying the IPhone, it's the same.
So you DO get a free Samsung Blackjack or whatever. For absolutely nothing.
.
Why not? I think it's perfectly reasonable when you sign up with a carrier to have a 1 year contract. After that most contracts go month to month, and you only get in trouble if you take advantage of their 'free' phone offers
Unfortunately, that's not the case. Sprint claimed I had a 2 year contract after I bought a phone full price, and then switched to Cingular.
Of course, they're not willing to document why they think I have a 2 year contract, and I'm not willing to pay them the $150 fee until they do.
So they sent it to collections. Yay! Down goes my credit rating, and they don't care.
Coming soon - pyrogyra
What about when they want to put you under an 1 or 2 year agreement when you change your calling plan?(no new phone, no account setup, all that was done when you started with them) Is that still reasonable?
I actually spent a year living in Italy. That also happens to be the only time in my life I've had a cell phone not provided by a company.
I spent about 80 Euro for a cheap but functional phone.
I had no monthly charge.
Incoming calls/text messages were free.
I put 25 or 50 Euro on the phone whenever I wanted. I was charged per call or text SENT. This amount of money never expired.
You can have a cell phone in Europe and receive text messages/calls for free.
No contract, no monthly fee, no early termination crap.
The cost for point #1 depends on the contract they have worked out with the outsourced call centers. Some are service based some are # of bodies based, some are per call. And turnover in phone support is high enough that yes, you can have a remarkably large fluctuation in agents in an amazingly short time for most industries.
I have always felt strongly against Early Termination Fees. The wired telephone industry doesn't force you to pay up when you decide you can do better with another company, and why should the cellular companies. It's draconian. It serves one purpose . . . to keep you locked into their services (even if they are not providing the services they advertized, or if they simply have poor customer support) instead of being able to do the American thing. Switch carrier. It's a great incentive for them to keep customers happy when you can't hold something like a $200.00 ETF per phone over our heads. The same can be said for the cable and satellite industry. I switch carriers despite the ETF. I have no intention of paying anything to anyone when they suck. When I get enough things of this nature on my credit history I bail and file bankruptcy, wait a few years for my credit to clear again, then restart the cycle. I refuse to pander to any company when it comes to immoral fees.
The only purpose these class action suits do is make lawyers richer. And the consumer usually gets about $3 back . I'm all for companies being gotten by the government for ridiculous contractual terms but quit letting the lawyers get rich off of it. Ultimately it only takes money from the hands of corps (then they charge us consumers more) and putting it in the hands of already rich lawyers whose only purpose quite often is to be a parasite to society. Notice I'm not talking about all lawyers, just 95% of the ones who do these class action lawsuits in the first place.
At least, not in a lump sum up front.
How many phones does the typical person have in a drawer, locked to some provider they had a falling out from?
This may be the end of locked phones. Pick up a phone that you like, not just what they push this week, and pick up a SIM card from your favorite carrier. This iPhone dilemma of nice phone, carrier sucks would end. Service would improve to reduce churn.
You are no longer forced to buy a new phone to change carriers. Why is this a bad thing? As a trend this way, one of the cell stores has a sidewalk sign board advertising unlocked phones for sale. This may be the beginning of a good thing.
The truth shall set you free!
I just read Slashdot for the articles.
I paid for my phone up front. It cost 89 bucks. So why should I be forced to a two year contract to pay for a phone? This is what the phone company's are saying in that article. So why didn't I get a better deal? I shouldn't of been forced to a 2 year contract. I think their reasons are rubbish. Unless I am paying for someone else's cellphone.
No, he might referring to the fact that in many European countries, one service possibility is that your phone provider gives you a GSM sim, and you are able to stick into any standard GSM phone. So he might even be using a ten-year-old phone (if such a monster exists) or a phone which someone else gave him for free (e.g., after buying a better one).
OTOH,
> It sounds more likely that these contracts exist in at least some parts of Europe.
> Is this the case?
Yes. In addition to the other possibilities (of which "provide your own phone " is one) which seem to be lacking in the States.
> hundreds of dollars?
Where I live I can buy a totally-no-frills new GSM phone for the equivalent of $70.
Every major US carrier has a monthly plan. They're generally not well-advertised, and are primarily intended for those with poor credit, but they're available.
The problem is the sheeple who honestly think that a mid-market cellphone costs US$50. They're the ones who buy that US$250 phone for US$50 (along with a 2-year contract!), the next day drop it in water / drive a truck over it / simply lose it, and then get infuriated when their carrier declines to sell them another US$250 phone for $50 (and doesn't offer a 4-year contract!).
So the industry is stuck with a customer-base who only hate one thing more then 2-year contracts, and that is paying full price for phones!
I don't read ACs: If a post isn't worth so much as a nom de plume to its author then I wont bother either.
Wrong, I got exactly the same phone I previously had, a Samsung Blackjack. After I traded up, I had to have my Blackjack 2 replaced as well. You are simply wrong.
And it was Cingular, so either you're lying or just making shit up, but either way you're wrong. And no, I didn't have to threaten or scream, the policy explicitly states you'll be receiving the same model phone as you previously had.
You simply have no idea what you're talking about.
Providers charge 50-80 dollars for phones you can get from Wal-Mart for 20-40 dollars. These devices, unless they're particularly advanced or particularly new, are not very expensive to produce or buy wholesale. They're just ripping us off.
Sprint overcharged my small (US) company for over $50,000.00. We caught them doing it and now they refuse to refund the over-payments. You can read the full story at http://www.sprint-really-sucks.com/ I also wrote an open letter to Dan Hesse the Chairman and CEO of Sprint Nextel. It is a good read so please consider reading the letter. http://www.sprint-really-sucks.com/open-letter-dan-hesse.aspx
Allen Harkleroad - www.fivemilliondots.com