Consumer Action airs wireless grievances

Despite all that has been said about how to retain consumers in the midst of an economic recession, wireless operators continue to alienate their postpaid customers with expensive contract-based cell phone service wrought with fees and penalties. It might not get any better in 2009 either, according to San Francisco-based Consumer Action, a national consumer education and advocacy organization, which outlined the emerging cell phone issues for 2009 on a Webinar yesterday. Topping consumers’ grievances were rising text fees, concealed contract end dates, penalties, contract rollovers for lost and damaged phones and calling-card swindles targeting immigrants.

Brought on by lawsuits and the risk of federal regulation, tier-one wireless operators in the United States were forced to relent on early termination fees (ETFs) that range from $150 to $200. Sprint was the last to join AT&T, Verizon and T-Mobile in late October in pro-rating ETF penalties, instituting an initial ETF of $200 and dropping it in $10 increments for each month the consumer continues to honor the contract. After 15 months of this, Sprint claims to offer the lowest ETF in the industry, at $100, and only $50 when the two-year contract actually expires. Regardless, Consumer Action says these pro-rated plans offer little relief in the first year of a contract.

“At other carriers, the ETF savings only really start during the last six months of the term of the contract,” said Sol Carbonell, associate of national priorities at Consumer Action, on the Webinar. “While that might help some consumers who decide to bail out on the very tail end of the contract, many consumers still face the full or nearly full ETF penalties, or they will have to be forced to stick with a carrier they can’t afford to dump.”

When those not subscribed to unlimited calling plans – most consumers today – exceed their minute limit, they are charged 40 cents per minute by Sprint and Verizon and 45 cents a minute by AT&T. Consumer Action recommended using a free service, Over My Minutes, to receive warnings when a consumer nears their monthly ceiling on usage. Text messaging fees, too, have become out of control, according to Consumer Action and at least one state senator, Wisconsin’s Herb Kohl. He wrote the four largest US carriers late last year for an explanation of the sharply rising text messaging rates they were introducing to customers. Many charge more than 20 cents per message, up from 10 cents in 2005, Kohl said in his note, adding that this cost is not justified by rising costs in delivering inexpensive text data files. With all four carriers, AT&T, Verizon, Sprint and T-Mobile, instituting the increase at the same time, Kohl said it was hardly consistent with the vigorous price competition the industry hopes to see in a competitive marketplace.