Cell Phone Relief

by Fred Lee on 21 May 2008 7 comments
Photo: Per Hardestam

If you watch TV or listen to the radio, you’ve probably heard your fair share cell phone advertisements, which are ubiquitous. What I’ve always found interesting about them is how the coyly squeeze in all that legal jargon at the end of the commercial, either by displaying it in illegible fine print or by a quickly worded addendum that the average human could never comprehend, or for that matter, would even make the slightest effort to try to understand.

Well, it just so happens that part of that message relates to what are known as early termination fees. These fees, as everyone who has a cell phone is well aware of, are a penalty that the service providers charge if you back out of, or sometimes even simply change, your original agreement.

The reasons for why you might want to do this could be as simple as the phone being too expensive or the realization that maybe you didn’t actually need one in the first place. Whatever the conclusion, once you lock into a phone plan, you’re in it for the duration of the agreement, which usually ranges anywhere from one to three years. If you do want to change, the penalties are steep, often running into the hundreds of dollars.

The cell phone companies claim the fees are necessary because they help subsidize the cost of the cell phones, while consumers argue that the fees are unreasonable and are simply a ploy by the cell phone providers to lock customers into their service.

Well, now the government is trying to do something about it. Under an FCC proposal , lawmakers want to eliminate cancellation fees for up to 30 days after a customer signs a contract or ten days after they receive their first bill. They also want to cap fees and make them more representative of the costs incurred by the phone company while also prorating the penalties over the course of the contract.

Too good to be true? Well, of course there’s a reason behind it, and as hard as it may be to believe, it is not entirely altruistic. It should be mentioned that this proposal was submitted to the FCC by the phone companies, which pretty much says all that need be said.

It turns out that the cell phone companies are currently embroiled in a series of class action lawsuits by angry customers who are trying to recoup billions of dollars of late fees in the state courts. If the FCC approves this bill, it would exempt the phone companies not only from these lawsuits, but also from any further state regulation of these charges. As it stands today, federal law prohibits the states from overseeing wireless rates but gives them some authority over contractual terms and conditions.

Regardless of the outcome, people with cell phones should do their homework and choose a plan responsibly. And remember to take some time to sort through the legal jargon that is sequestered in the fine print of your contract. It could spare you a lot of pain and suffering, not to mention expense, in the future.

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Guest's picture
Guest

I used this site:

http://cellphones.about.com/od/prepaid_phones/qt/plan_chooser.htm

When I was looking for a phone about a year ago.

It helped me narrow things down quickly.

Guest's picture
Guest

I'd encourage budget conscious folks (or even people who just think the cell phone companies are engaging in price gouging to consider pay-as-you-go phones. I have one through T-Mobile but AT&T and Virgin also have plans. I switched to a pay-as-you-go no-contract plan last year. I was a little worried at first, but I *love* it--in 10 months I have spent under $100 compared to $40 per month with the plan I had. It has changed the way I use the cell phone--now I only use it for quick convenience related calls, not to chat for hours on end--but I haven't found that a negative factor at all, despite thinking that I'd really miss that.

Fred Lee's picture

I have to confess, we're still living in the dark ages and don't have a cell phone, though we've toyed with the idea on several occasions. Haven't take the plunge, yet. I don't like the idea of locking into a plan, kind of reminds me of being in debt, with yet another bill to pay, and probably explains why we didn't buy a house until last year. Our first.

Maybe the pay as you go/no contract plan is the way to go. I'll have to look into that. Thanks for the tip.

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Claire7676

This is good advice, but my early termination fee happened after I changed the way I used my cell phone. My cell phone had been on a really cheap plan and I carried it with me in case of car emergencies. I rarely used the phone. However, when I had to move and realized I didn't need a home phone and a cell phone, I upped my cell contract so that it could be my only phone. It was only after a few months of this that I realized what a crappy carrier I had. Since I was relying on the cell to be my only method of phone, I couldn't deal with the bad service and switched to a much more reliable carrier for my area. But I did have a hefty early term fee from my original carrier.

If you're not sure if you do or don't want a cell phone and want to try it, I would definitely recommend using a pay-as-you-go first before making a big commitment.

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mykie

Contracts just the carrier's method of financing the subsidy they place on your phone when you get it at a reduced price.

Do you really think the "free" phone is free? The truth is, the phone might actually be a $200 phone, that they're using to rope you into the contract.

Here's the trick: if you don't want to get into the contract, buy the phone for full price. The carrier may squirm, but you can establish service without a commitment this way, and you can change your plan at any time without penalty (make sure you aren't getting slammed into a contract when you do this!), or even suspend your plan if you aren't going to use it.

And most reputable carriers offer a 30-day money back guarantee so you can get used to your new phone and service without risk.

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Cindy M

and seldom use one. My AT&T limited home line is $16 a month, and I hate even paying for that. I do have a Tracfone that I only turn on when babysitting the grandnephews; the niece does not have a house phone, of course, but I'll get rid of that, probably, when the babysitting is done. I'm old school and don't understand why people feel the need to be running around like maniacs doing their errands yet having to constantly check up on what everybody else is up to. Sad, I think, what things have come to. I'm real glad I can live a simpler lifestyle.

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ender_x

I'm sorry, but Americans need some sort of wake up call. I feel no sympathy for anyone charged with a termination charge. You signed a contract. If you didn't read it, then you're stupid. If you get a termination fee, also, you're stupid. It's 100% avoidable. Stop playing the victims. If you don't want to sign a contract, THEN DON'T. Pay for the phone full price.