Wireless Contracts Ironclad but Starting to Rust

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monitor.jpgThe Washington Post reported that Corey Taylor of Chicago was sick of his wireless provider’s poor service. He didn’t want to pay the $175 early termination fee so Taylor’s sickness became terminal. With the help of a friend, his mobile phone provider received a forged death certificate. “I thought, ‘What have I got to lose, besides a cell phone I despise?’” The ruse didn’t work, and Taylor had to pay the $175.

“In the end, I forked over the money,” Taylor said. “But I bet I sent a definite message about how much people hate being strapped to a cell phone that doesn’t work.”

Many mobile phone contracts have a two year duration. If a customer wants out of the contract, a fee of up to $250 is required for termination. This is generally cheaper than a strait breach of contract payment, which would force consumers to pay the remainder of the contract price after the breach. Some contracts do take into account the length of time the consumer has honored the contract, and will pro rate termination fees accordingly.

Many people are unhappy with their current mobile phone service. Poor connections are often sited as the reason for dissatisfaction. Some people learn that other carriers provide more mobile applications, and want to switch. The American Consumer Satisfaction Index shows that the wireless industry ranks below fast-food restaurants and airlines. According to the CFI Group, poor customer service is the main reason people switch to another carrier.

Lawsuits challenging termination fees have been filed in California and Florida. The suits claim that the fees are illegal because they punish customers for moving to another provider. To get around this, wireless carriers have asked the FCC to regard termination fees not as penalties but as rates companies can charge for service. Congress is looking at the issue, and legislation may be introduced this fall that would give states more authority to regulate wireless fees.

I would hate to see the Federal Government get into the job of regulating cell phone costs and contracts. At the same time, I want to get the best mobile connectivity I can get for the least amount of money. The wireless industry is so competitive these days, I would think that in the near future cancellation fees will be lowered or outright done away with. The bad faith such fees cause a customer will drive that person away from the offending company forever. Service providers need to stop thinking about short-term profits, and consider doing the things that will keep someone with their brand of service for a long time.

“Cellphone Contracts” [Washington Post]

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