Monday, December 21, 2009

Verizon Wireless Defends Increased ETF for Advanced Devices

Verizon's decision to increase the ETF for it's advanced devices have attracted a lot of attention including US senators like Amy Klobuchar. Recently, the FCC has requested the carrier to explain the reasoning behind the increase in early termination fees from $175 to $350 for "advanced devices" (Click here to see the list of Verizon's Advanced Devices).

Well, Verizon Wireless has released a statement in defense of its decision to increase the controversial fees for some of its products. Unfortunately, the carrier released a 77 page response which would be impossible to post here in its entirety.

So let me just give a brief summary of the highlight points of Verizon's defense of the $350 early termination fee for advanced devices.
  • the increased ETF allows the carrier to provide more capable handsets at lower upfront costs, and to reduce its losses if/when a customer chooses to leave their contract early.
  • Verizon claims that the new rules causes the company to lose money when customers who choose to cancel their contracts during the 23rd month, during which time they would still owe $120 ETF.
  • Advertising and marketing collateral are sufficient to make sure customers are informed of these new wireless contract policies.
  • In 2003, the FCC stated that it doesn't support the concept of customers breaking contracts and that carriers have a right to recoup those fees.
  • the additional cost it incurs to procure the devices on its advanced list is greater than the difference between the two ETFs ($175) on average.
  • Advanced devices strains the broadband network up and extra guaranteed revenue is needed to keep the network at optimum performance.
Well, this has certainly turned interesting. I didn't expect the change in wireless contract policy would trigger such reaction from the government. Perhaps the tough economic atmosphere is making the government more aware of possible consumer abuse.

That's it for this wireless contract update. Tune in to this blog for more developments on this important mobile phone contract issue.

Monday, December 14, 2009

Sprint Settles Wireless Contract Dispute in Minnesota

Here's an important wireless contract update that happened last month. Consumers at the state of Minnesota filed a lawsuit against Sprint for having their commitments extended without their consent. This wireless contract dispute has been resolved since Sprint decided to settle with the complainants.

Let's dig deeper into this cell phone contract news.

The consumers, represented by State Attorney General Lori Swanson, filed a complaint against Sprint Nextel in September 2007. The lawsuit claimed that the company extended the contracts of thousands of customers when they made small changes. The extension was enforced without their informed consent.

Consumers who violated the extended contract were forced to pay as much as $200 per line as an early termination fee.

The complaint seeks for restitution and civil penalties of up to $25,000 per incident. More than 439,000 Minnesota residents were asked to pay cancellation penalties between July 1999 and December 2008. Consumers from Minnesota are eligible to file claims if their contracts were extended without their permission.

This time it appears that consumers have gained the upper hand.

Sprint Nextel has decided to settle the mobile phone contract dispute. The carrier has agreed to review claims of improper cancellation penalties and reverse or refunds some of the fees.

The office of State Attorney General Lori Swanson are accepting claims through March 15. Estimates indicate that more than 400,000 Minnesota customers who signed contracts with Sprint Nextel since Sept. 26, 2001 are potentially eligible to benefit from this wireless contract settlement.

Click here to go to the Sprint Settlement Claim Form.

That's it for this post on the wireless contract settlement. Tune in to this blog for the latest news and udpates on cell phone contracts and related matters.

Monday, December 7, 2009

Senators Introduce the Wireless Contract Early Termination Fees Bill

Lat month, I posted about Senator Amy Klobuchar opposing the recent Verizon Wireless ETF increase. She talked about her plan to introduce legislation to oppose this decision and to discourage wireless carriers from unfairly raising penalties on costumers who cancel their contracts early. Well, Klobochar and three of her colleagues have introduced the Cell Phone Early Termination Fees (EFT) bill.

This legislation aims to limit the early termination fees on wireless contracts charged by mobile phone service providers. The Cell Phone Early Termination Fees (EFT) bill would also enforce prorated ETFs

Klobochar's bill also forces carriers to notify customers in a clear way about the fees. Carriers will be required to spell out the EFT instructions at time of purchase and at various times during the duration of contracts.

This new wireless contract bill also prevents cell phone service providers from charging an ETF that is higher than the discount on the cell phone.

Here is Sen. Klobuchar on the introduction of the Cell Phone Early Termination Fees (EFT) bill:
"Changing your wireless provider shouldn't break the bank. "Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive."
The senators who support this wireless contract legislation also include Mark Begich of Alaska, Russ Feingold of Wisconsin, and Jim Webb of Virginia.

That's it for this post. We'll see if this bill can p[ass through congress and be enacted into law. Tune in to this blog for more mobile phone contract news and updates.

Tuesday, December 1, 2009

Wireless Contracts Similar to Forced Marriage

I've read about various complaints on wireless contracts since I've started this blog. Most of the cell phone contract disputes focus on the fees that are imposed on consumers who want to terminate a commitment. I've also found an interesting article expressing that a contract is like forced marriage.

Here's an amusing tidbit from the article. This piece of conversation illustrates a consumer negotiating with a service provider (Vodacom):

"That's longer than a lot of marriages last these days."

"Sorry, two years or nothing."

Apparently it was because Vodacom was "giving" me a "free" phone.

"A friend has given me an old phone, I don't need or want your 'free' phone."

"Sorry, two years or nothing."

The article was written by Ann Crotty from BusinessReport. She was narrating her experience and frustrations while trying to live with a wireless contract. She expresses that it is similar to a forced marriage. However, in some cases the arraigned couple eventually falls in love but she did not grow fond of her wireless contract.

She felt abuse about being charge even in the months that she did not make or receive one call. I'm sure other have felt the same way.

You can read the rest of Crotty's article by clicking this link.

That's it for this story on wireless contracts. Tune in to this blog for more mobile phone contract news and updates.