Mobile Misperceptions: A Research on Wireless Contract Design

Here's an interesting study that delves on how wireless contracts are designed. This research recently attracted the attention of the FCC, which was looking at ways to make the mobile industry more mobile friendly.

Mobile Misperceptions is a study conducted and published by Professor Oren Bar-Gill and Rebecca Stone in 2009. This study looks at consumer confusion regarding cell phone contracts.

According to Mobile Misperceptions, cell phone carriers use knowledge of “systemic mistakes and misperceptions” on the part of subscribers when designing mobile phone and wireless contracts.

The service plans offered by US carriers become burdens because consumers either underestimate their monthly usage, resulting in overage fees, or overestimate the level of service required. These mistakes cost U.S. consumers up to $12 billion a year.

The problem is also fueled by contract lock-ins and the sheer complexity of calling plans.

The significant findings of the Mobile Misperceptions led the Federal Communications Commission to invite Bar-Gill to present the paper’s findings at the FCC on April 9. Bar-Gill also consulted with FCC staff who are drafting new regulations for the cell-phone and other telecommunications service markets.

Well, I have to agree. We have seen numerous wireless contract disputes that originate from consumers failing to grasps all the legalities contained within their service agreements.

I hope that Mobile Misperceptions will contribute to improved and easy to understand wireless contracts.

FCC Abolishes Home Wireless Roaming Rules

Way back in 2007, the FCC enforced rules regulating wireless roaming. A couple of years ago, the commission did not require carriers to offer roaming services to other carriers in areas where they owned spectrum but had not built out network coverage.

However, smaller carriers have argued the existing practice harms consumers since they need roaming agreements while they build out their networks. The FCC at that time was undecided on the issue. This time the commission has decided to overturn its decision.

This means that Wireless network operators will now be required to offer voice roaming services to other carriers in areas where those carriers own spectrum but have yet to build network coverage. Carriers will now be forced to forge reasonable agreements about voice roaming.

The commission will also consider if the same rule will apply to data roaming.

I have to say that this is a good decision. It helps smaller carriers because they will be able to roam on the networks of bigger wireless companies.

That's it for this post on roaming. Tune in to this blog to read about issues on other wireless contract policies and topics.

Top Non-Contract Smartphones for 2010

I've been talking about wireless contract for years in this blog. Well, I think it's refreshing to talk about handsets that do not require a mobile phone contract. Let's do a quick list of the top unlocked on non-contract smartphones for this year.

One can own these handsets without being restricted by a wireless contract. That's right! No ETF's, credit card checks and hidden fees. The drawback? Paying the full and unsubsidized price.

Without further ado here are the top no contract-smartphones:

• Google Nexus One: $529.00
• Nokia N900: $479.00 to $589.99
  
• Nokia E72: $339.99 to $469.99
• Samsung i8910 Omnia HD

If you are looking for a smartphone that's free from the shackles of a service contract, then this quartet should be among your options. The full price for these handsets may seem high but they are worth paying if you want freedom from a wireless contract.

That's it for this post for the best non-contract smartphones in the market. We'll get back to wireless contract matters in my next post.

Wireless Contract Services Losing to Prepaid Offers?

It appears that services requiring a wireless contract are becoming unpopular due to cheaper options such as prepaid plans and devices.

The New Millennium Research Council, a Washington, D.C.-based think tank, conducted a study revealing that new prepaid wireless customers exceeded the number of new wireless contract subscribers that signed up for service in the fourth quarter of 2009.

Apparently, this is the first time that prepaid services have outsold post-paid or contract services.

This trend may be due to the crippling recession as more people are seeking more affordable wireless services.

Jose Guzman, the NMRC project's coordinator stated,

"Thanks to the recession, the U.S. cell phone marketplace continues to undergo fundamental changes that will just get bigger as the economic downturn deepens. What is different from a year ago is the explosion in new 'all-you-can-eat' and unlimited prepaid deals as low as $30 and $45 that will remain attractive to consumers long after the current recession is over."

The prepaid wireless customers have grown steadily in recent years. Estimates indicate that one out of every five of the 285 million cell phone subscribers in the U.S. now use prepaid phone service. On the other hand, wireless contract-based cell phone subscribership grew only 3 percent over the last year.

Is this trend a lasting one or simply an abnormality brought by the poor economic conditions? Well, more study is needed to draw a conclusion. However, this trend may benefit consumers. The rising popularity of prepaid phone services may force big cell phone providers to slash prices on wireless contract service plans to keep consumers from defecting.

That's it for this wireless contract news. Stay tuned for the latest updates and developments from the wireless industry.