T-Mobile Announces New Approach to Early Termination Fees

Here's some interesting wireless contract news for T-Mobile fans. According to Gizmodo.com, T-Mobile has just announced that they are taking a new approach to the early termination fees for their mobile phone contracts to provide greater flexibility for their customers.

Well, it seems that that ETF's are still a hot issue in the mobile phone industry. This announcement may also be related to AT&T's announcement that they have begun prorating their early termination fees. Here's a statement from Sue Nokes, Chief Customer and Operations Officer, T-Mobile USA, regarding this new approach,

“T-Mobile continues to set the pace in offering customers a number of flexible plans and services that don’t require a contract to help them stay connected to those who matter most. In addition, by providing this flexibility and choice, our hope is that T-Mobile customers will be happy customers for years to come.”

Let's discuss the details of this new T-Mobile early termination fees approach as it may be a bit confusing. T-Mobile wants their customers to know that starting on June 28, 2008, the ETF for customers who choose a one-year or two-year service agreement will decline during the course their contract.

This means that if customers terminate service with 91 to 180 days remaining on their agreement, then the ETF decreases from $200 to $100. It will then decrease again to $50 with fewer than 91 days remaining. Now in the event that a customer want to terminate in the last 30 days of their term, then the ETF is $50 or their standard monthly charge, whichever is less.

Now according to Gizmodo, this new approach to the ETF's of wireless contracts is not the same with pro-rated ETF's because the fee goes down in increments and never touches zero.

I think that this is a positive step towards resolving the wireless contract disputes between the mobile phone carriers and customers. Much of those complaints are focused on ETF's so any move towards reducing it should appease customers. Even the FCC has made proposals to reduce the conflict over early termination fees for cell phone contracts. Perhaps this move by T-Mobile will encourage other carriers to develop their own consumer friendly approach towards ETF's.

Tune in to this blog for more wireless contract news and information.

FCC Plans for Wireless Contract and ETF

In my last post I discussed the struggles that are centered on the controversial ETF or early termination fees that are charged for canceling a wireless contract.

Mobile phone companies usually charge early termination fees that can range from $150 to $225. These fees help them to recover the cost of devices, which they subsidize under long-term wireless contracts. These ETF's also lessens the burden signing up new customers. However, these fees have been assailed because they have curtailed the freedom of customers to shift to another carrier. The imposition of these fees have resulted in class-action lawsuits in several states and legislative proposals.

Now it seems that the FCC has decided to act and laid out some proposals on ETFs. Hopefully, these proposals will solve some of the problems concerning this policy but let us first take a look at the FCC proposals.

Kevin Marti, the current FCC Chairman, expressed that the proposal is similar to an industry plan that was offered by mobile phone carriers headed by Verizon Wireless. He also expressed that the proposal was drafted because ongoing class-action lawsuits would probably not provide an answer to the ongoing issues about the unpopular fees.

Here are the main elements of the proposal:

• the ETF would be related to the actual retail price of the device being purchased so that a $100 handset would have a cheaper ETF than a $300 phone

• ETFs should be prorated and reduced over the length of a cell phone contract

• wireless contracts should only last for a reasonable length of time

• Extended wireless contracts should not necessarily have their ETFs reinstated

• allow class action lawsuits regarding ETFs against certain carriers to move forward

These proposals seems to provide some answers to the problems that are plaguing the mobile phone industry, However, some experts think that the proposal lacks many vital elements. For instance, the proposal did not offer specific information on the government body that would be in charge of monitoring ETFs. The proposal also did not propose any federal program that would preempt state governmental rights.

I guess we have to wait for more updates on this development. Let's hope that the FCC and the mobile phone companies can come up with plans to provide the best service to customers. Tune in to this blog for more wireless contracts news and information.

The Battles Over the ETF Policies of Wireless Contracts

I have often blogged about ETFs or early termination fees in this wireless contract blog. That's no surprise because ETF's are probably the most controversial fees charged by wireless contracts.

These fees are very restrictive and expensive. The huge numbers of contract disputes and consumers complaints arising from early termination fees have been documented. All you have to do is to visit consumer rights websites, and you'll see that plenty of consumers are unhappy with these fees and the wireless contract policies that enforce them.

Currently, significant battles or disputes over early termination fees raging in major courts while carriers are being encouraged to make commitments on embracing consumer-friendly practices and opening their networks. The current scenario indicates that the foundation of a decades-old reign of ETF's are under attacked on all sides and it could be on its way out. I'm sure many consumers would like to see the demise of ETF wireless contract policies. Let us explore it more deeply.

Apparently, the mobile phone industry’s long-held argument that ETFs allow carriers to recoup costs associated with subsidized handsets are being undermined by a series of class-action lawsuits in California state court against national cellular carriers. Complainants feel that ETF's have another purpose and they intend to show the ETF was embraced as an arbitrary penalty. Experts say that other suits will use the same line of argument in pending class actions.

The disputes are also being held in the nation's capital. CTIA continues to lobby the Federal Communications Commission to approve a 2005 request to declare ETFs a component of wireless rates and therefore off limits to states. A 1993 law pre-empts state regulation of wireless rates, but reserves limited powers over “terms and conditions” to states. Some senators are also pushing a wireless consumer empowerment bill that would mandate pro-rated ETFs.

Experts are also saying the the impact of these battles over wireless contract ETF policies might be significant. For example, if courts rule in favor of the complaints then carriers may be forced to pay huge amounts of money. Some estimates say that the figures run in the billions.

The disputes over early termination fees might also have a huge impact on churn or the transfer of consumers from one carrier to another. Some carriers may be deeply affected if frequent shifts in subscribership results from the absence of wireless contract ETF policies.

I guess there's nothing we can do but wait. the battles are still raging and there are no clear winners. Tune in to this blog for more updates on wireless contracts, early termination fees and related topics.

More Wireless Contract Complaints

I looked around for some consumer complaints that are directed towards wireless contracts. Some of these complaints are a few years old but it will also be interesting to see if the wireless contracts adapted to cater to those complaints. We may also be able to learn a few things by looking at these wireless contract complaints.

I visited consumeraffairs.com and found numerous wireless contract complaints. here is an example filed by Lonnie of Sullivan IL.

"U.S. Cellular sold me a two year plan in December 2002. They carefully pointed out there was a $150 early cancellation fee if we cancelled before the two years was up. In November 2003 U.S. Cellular lost their ability to use Verizon's tower in our area. Suddenly our phone service tanked. We could not call out many times. During calls we would frequently get dropped. We were often unable to get calls. Our messages never showed up. We gave U.S. Cellular until this month to fix the problem, which is their problem as far as I am concerned. However, the service never improved and I finally cancelled this month. Naturally the customer service representative told me I had to pay the $150 cancellation fee, even though I was cancelling because of their erratic service. As far as I am concerned, U.S. Cellular's much vaunted customer service stinks."

This wireless customer claims that he had no choice but to cancel his wireless contract because of the poor service he was getting. When US Cellular was unable to get service from a Verizon tower in Lonnie's area, the customer began to experience problems like dropped calls and lost messages.

The customer asked the carrier to remedy the problem but there was no response from the network so Lonnie had no choice but to cancel his wireless contract. Unfortunately, Lonnie was asked to pay the early termination fee because he opted to terminate his contract.

This complaint encourage me to look at the coverage policy of US cellular. May the wireless contract has offered a solution or a statement regarding customer getting poor coverage. this is what I found:

You understand that Service may be interrupted or unavailable due to atmospheric or topographical conditions, governmental regulations or orders, or system capacity limitations. Representations of coverage by U.S. Cellular or its agents are not guarantees.

The wireless of US Cellular states that many factors can lead to customers having poor coverage or service. Thus the carrier cannot guarantee coverage to customers. Maybe this statement was crafted to discourage customers from continuously complaining about getting bad coverage. Perhaps this statement was meant to inform customers that coverage may not always be available. The important thing is that customers have to remember that US Cellular do not guarantee coverage.

Here is another wireless contract complaint from Keith of Derry NH. This compaint involves warranties.

"I bought phones for me and my two kids. My daughter's phone stopped working and Go Wireless refused to honor the warranty. They have a Verizon Wireless sign bigger than their own sign and represent themselves as Verizon. But when it comes to customer service they did NOTHING. The manager Nathan was rude and unprofessional. When I complained to Verizon Wireless directly, they made it clear that Go Wireless does not speak for Verizon."

This customer claims that Go Wireless representing themselves as Verizon offered a warranty for theuir mpobile phones. However, when the devices failed to perform, the vendor did not honor the warranty. Verizon denied any relationship with Go Wireless and any responsibility for the defective devices.

I scanned the Terms and Conditions of Verizon Wireless for any policy or statement concerning warranties. I found this statement in capital letters:

WE MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE CONCERNING YOUR SERVICE OR YOUR WIRELESS PHONE. WE CAN’T PROMISE UNINTERRUPTED OR ERROR–FREE SERVICE AND DON’T AUTHORIZE ANYONE TO MAKE ANY WARRANTIES ON OUR BEHALF. THIS DOESN’T DEPRIVE YOU OF ANY WARRANTY RIGHTS YOU MAY HAVE AGAINST ANYONE ELSE.

So I guess this disclaimer makes it clear that Verizon Wireless does not authorize any one to claim any warranties on the behalf of the company. Customers must avoid shady dealers who claims that a warranty is backed by the company. This statement from the wireless contract clearly indicates that warranties made by dealers for the company are not genuine.

Well, I guess that's it for today. Reading complaints from consumers can give some feedbacks about a company. You might even find it helpful to post your own complaints in these sites. Perhaps your sentiments may move carriers or law makers into action.

Early Termination Fees of Wireless Phone Contracts

Service industries such as mobile phone phone service and subscription television commonly have termination fees or early termination fees (ETFs) as they are more commonly known. However, the imposition of these fees have been criticized by consumer interest groups. These fees prevent users from migrating to superior services so they are labeled as being anti-competitive.

The process usually works this way. A person purchases cellular phone service from a particular wireless carrier. He or she might be required to sign a two-year contract in order to avail of the service. Now that contract might stipulate a $200 fee in the event that the customer breaks the contract or wants to opt out of it.

The clamor and the disputes about the unfairness of early termination fees in wireless phone contracts have lead to positive changes. Verizon wireless was the first carrier to give in when it announced that it will prorate it's early termination fee. AT&T followed Verizon's lead and other carriers namely, T-Mobile and Sprint, have also decided that they would begin prorating their ETF in the first half of next year.

Now, what does a prorated early termination fee entail? The customer will still have a to pay a fee for ending the contract abruptly. However, the amount will decrease as the decision to end the contract early gets closer to the contract end date. This means that a customer will no longer be forced to pay the original fee if he decides to end the contract.

Here's a list of the current termination fee for each major wireless carrier:

Alltel: $200 per phone line

AT&T: Prorated

Sprint: $200 per phone line (to be prorated next year)

T-Mobile: $200 per phone line (to be prorated next year)

Verizon: Prorated

So far, Alltel has not made any announcements on making it's ETF prorated. However, it may lose customers if it remains as the only carrier to have a non prorated early termination fee next year. It would be logical to assume that the company will also follow the examples of other wireless networks to keep their consumers happy.

Play Dead to Escape your Wireless Phone Contract

If you've signed up for a wireless phone contract and found it inappropriate for your life style, then you would probably want to get rid of it. However, you might be required to cough up a couple of hundred bucks to pay for a contract termination. A man found a simple solution to become free of his wireless contract contract. He simply staged his own death.

This solution seems logical enough. Wireless phone contracts will release a signer in the event of his or her own death. Apparently this person had experienced a lot of dropped and defective calls over the years. After paying large sums of money he wanted to close his contract without paying more money. He crafted a fake death certificate and asked a friend to fax it to his service provider's customer service. Unfortunately, the plan failed because the company caught on the forgery. The company decide to close his contract after they forced forced him to pay the termination fee.

Frustration and dissatisfaction can often be experience by those who sign long term contracts. they often feel that carriers do not provide top quality services and products. They are also unhappy with the fact that they are hooked to a service that no longer satisfies them and are required to pay a termination if they want to end their service. As a result, weird ideas may form in some subscribers minds.

In the past few years, unhappy contract subscribers have filed increasing about their lon term contracts. There have even been hearing s in congress to address these complains and any possible abuse form wireless service providers. A bill was also proposed to protect consumers from possible abuse from wireless contracts. In response to these hearings and complaints, the wireless companies have started to make changes.

The tight competition between them triggered the development of programs that would provide the best customer satisfaction. customer satisfaction is a great attraction for consumers who are bombarded by different wireless product offers.

Wireless companies have also made their contracts flexible and have allowed consumers to change their contract or pay a pro-rated termination fee instead of the fixed fee. A couple of top wireless service providers have also made announcement to open their networks to outside devices. Perhaps if these changes become more come, unsatisfied costumers will no longer come up with crazy ideas to escape their wireless contracts.

Do You Want to Swap Your Phone?

Do you have problems with your cell phone plan? That's certainly understandable since many people feel dissatisfied or too restricted with their wireless phone contract. You can choose to drop your contract by paying a termination that may be prorated depending on the carrier or provider. However, if you don't think that it's practical to pay a couple hundred bucks to be released from your cellphone contract then you should think about swapping your contract.

There are now plenty of online websites that offer this kind of service.The idea behind cellphone contract swapping is simple. Those who want to get rid of their contracts and plans would post them on a website for a small fee. Those who are interested in these plans can then browse over posted offers in the site after a free registration.

Of course, you still have to make sure that the swap is allowed by your carrier before you commit to swap your plan. If you are lucky your carrier may be able to switch you to a cheaper one without a charge. Some carriers are also not opposed to the whole cell phone contract swapping idea. For example, one carrier only require both parties to fill out the paperwork, and an account is in good standing to allow the swap. Some carriers may require the person picking up the account may still have to complete a credit report before the transfer can be completed.

It's not difficult to find people who may be interested to take your plan or swap them with you. Since an take over a contract with maybe five months or four months left on a contract instead of a year or two year plan, people like these deals. It would allow them to get a free phone or may not be force to pay for an activation fee.

Like most quick solutions, cellphone contract swapping can also present some problems for both parties. There are cell phone contracts that prohibits the signer from participating in the swapping process. And even if you are permitted to swap your plan, your carrier may still come after you if the new customer falls behind in his or her payments.

It would be best then to exercise caution and to do plenty of research when engaging in Cellphone contract swapping deals. You have to check all the aspects of the deal before you finalize it. If you go through the process quickly with going through the proper channels or with securing all the bases, then the deal might backfire on you.

Wireless Contract Changes and Congress

U.S. Congressional hearings were recently held to decide if it was best to legislate more consumer-friendly practice among wireless cell phone carriers. Perhaps rumors about this hearings prompted wireless companies, Verizon and AT&T to loosen their restrictions on wireless contract changes.

This is Verizon Wireless' policy on their right to change their contract:

UNLESS OTHERWISE PROHIBITED BY LAW, WE CAN ALSO CHANGE PRICES AND ANY OTHER CONDITIONS IN THIS AGREEMENT AT ANY TIME BY SENDING YOU WRITTEN NOTICE PRIOR TO THE BILLING PERIOD IN WHICH THE CHANGES WOULD GO INTO EFFECT. IF YOU CHOOSE TO USE YOUR SERVICE AFTER THAT POINT, YOU'RE ACCEPTING THE CHANGES. IF THE CHANGES HAVE A MATERIAL ADVERSE EFFECT ON YOU, HOWEVER, YOU CAN END THE AFFECTED SERVICE, WITHOUT ANY EARLY TERMINATION FEE, JUST BY CALLING US WITHIN 60 DAYS AFTER WE SEND NOTICE OF THE CHANGE.

And this is AT&T's policy on terms and condition changes:

These terms and conditions may be changed from time-to-time. AT&T will post the most current version of these terms and conditions at att.com/MediaTerms or other appropriate location. Please check these regularly to inform yourself about changes to the terms and conditions.

Sen. Amy Klobluchar introduced a bill that would require wireless providers to prorate fees charged to customers who cancel cell phone contracts. A two-year contract usually requires a $200 fee if a customer wants to cancel the wireless service before the contract expires. Another facet of the Sen. Klobuchar's bill demands that customers will not be forced to sign up for a contract extension if they want to make changes to their calling plans.

Verizon and AT&T have already removed the contract-extension stipulation and their customers can now change their plans without signing a new contract. Here is a statement from Verizon Wireless contract on contract-extension:

Except as explicitly permitted by this agreement, you're agreeing to maintain service with us for your minimum term. (Periods of suspension of service don't count towards fulfillment of your minimum term.) After that, you'll become a month-to-month customer under this agreement. AN EARLY TERMINATION FEE WILL APPLY IF YOU CHOOSE TO END YOUR SERVICE BEFORE BECOMING A MONTH-TO-MONTH CUSTOMER, OR IF WE TERMINATE IT EARLY FOR GOOD CAUSE. FOR SERVICE ACTIVATED PRIOR TO 11/16/06, THE EARLY TERMINATION FEE IS $175 PER WIRELESS PHONE NUMBER. FOR SERVICE ACTIVATED ON OR AFTER 11/16/06, OR FOR LINES OF SERVICE WITH MINIMUM TERMS EXTENDED ON OR AFTER 11/16/06, THE EARLY TERMINATION FEE IS $175, WHICH WILL BE REDUCED BY $5 FOR EACH FULL MONTH TOWARD YOUR MINIMUM TERM THAT YOU COMPLETE. (The Early Termination Fee applies only to the extent permitted by law. If you buy your wireless phone from an authorized agent or third-party vendor, you should check to see if they charge a separate termination fee.) If you terminate your service as of the end of your minimum term, you won't be responsible for any remaining part of your monthly billing cycle. Otherwise, all terminations by you during a monthly billing cycle become effective on the last day of that billing cycle. You'll remain responsible for all fees and charges incurred until then and won't be entitled to any partial month credits or refunds. You may be able to take, or "port," your current wireless phone number to another service provider. If you request your new service provider to port a number from us, and we receive your request from that new service provider, we'll treat it as notice from you to terminate our service for that number upon successful completion of porting. After the porting is completed, you won't be able to use our service for that number. You'll remain responsible for any Early Termination Fee, and for all fees and charges through the end of that billing cycle, just like any other termination. If you're porting a phone number to us from another company, we may not be able to provide you some services, such as 911 location services, immediately.

Some experts see the loosening up of wireless contracts as peace offerings so Congress will not see a need for regulating the business of wireless cell phone companies. Well, only time will tell if lawmakers will agree with that notion. Many consumers have filed more complaints with Better Business Bureau about the wireless industry so maybe the recent changes are a move in the right direction. As a wireless customer, I have to agree with that.

Some Consumer Contract Complains

I have gather some consumer contract complaints from the Internet. These are complaints on the contracts of various wireless carriers, I will also publish links to these carrier's customer service so that you can contact them if you have similar complaints. I will not mention the carriers names to show that I am not favoring any particular carrier.


Darelen of Brooks Lane, NC complained that her wireless carrier is,

"charging me for service I have cancelled six months ago. I am no longer under contract but they refuse to cancel my cell phone account. I joined under a family plan with my brother and they say he needs to sign me off the account (the bill comes under my name to my address) but refuse to send him the paperwork. He has directly requested this from them twice to my knowledge."

Alina of Secaucus NJ complained that her carrier,

"sent a bill for $746.52 (!) saying that the contract had expired a month ago, and all calls were billed at 60 c/min afterward. They have not notified me in advance that they were going to do that. It is responsibility of (Wireless Carrier) to communicate any changes to the customer clearly and unambiguously. I have never been contacted directly and would have never agreed to any change in rates if I had, much less for a 15-fold hike.

I have tried to resolve it several times with(Wireless Carrier) customer service. I was offered to sign up for another year of service with them and then they promised to clear this charge! I'm seeking to have all calls rebilled at the agreed rate, which should bring the bill down to $49.99 The said they do it to everybody as a matter of business practice. I believe that (Wireless Carrier) wireless tries to coerce customers to use their service and I wish more people knew about it."

Ken Chan complained that,

"On the last day of my contract (March 31), I called to terminate the service. I was told that it can be terminated it as it is the end of the contract. Today I received another bill charging me for the April usage. I called their representative, I was told that I can only terminate at the end of the billing cycle (not the end of the contract), which is from March 28 to April 27. First of all, I don't quite understand that why the billing cycle started two days before the starting date of the contract. If one has to terminate at the end of this billing cycle, then effectively the contract was extended to 1 year and 1 month (that was not the original agreement, which is one year).

I had been looking forward to the termination of the contract, as the cell phone did not work at my office in NYC at all (no coverage). It's essentially a piece of junk. For the past year I have used perhaps less than a hour in total. I have complained about the reception problem many times. What makes it even more absurd is that I can not even terminate after the end of the contract. Is the usual billing cycle set up as a trap? The representative I called refuse to cancel the charge of the additional month's service. This is totally unacceptable and completely unexpected."

From an anonymous consumer,

"My brother passed away suddenly in December. I have been dealing with his estate since. Most creditors have been easy to deal with and have even offered their condolences. (Wireless Carrier) is an exception.

I contacted (Wireless Carrier) to cancel his cell phone service. I spent over forty minutes on the phone. First I went through fifteen minutes of being on hold. Then I spoke with Alex. He was a bit gruff with me and didn't understand why I did not have the account phone number memorized. I told him I called him and he should have the number. I also explained I had not received a bill from (Wireless Carrier) since his passing in mid-December. I had to look his number up on my own cell phone.

Eventually Alex passed me off to another department, staffed by the lovely Marie. Marie would not cancel the account either and when I started explaining how an $80 bill was not worth (Wireless Carrier) time going after my brother's estate in probate court she claimed she could not hear me, repeatedly. I told her it must the the (Wireless Carrier) network quality service. I live in a major city and had full bars.

Marie's claims of hearing impediment led me to ask for her manager. I spoke with Kevin. He eventually asked to call me back on a land line. I told him to call me back on my brother's phone. In the end, all he would do was put the account on "vacation", still charging $5.95 per month. I still do not understand why he would not cancel it since I had all the passwords they wanted. (Wireless Carrier) will not get a payment from the estate unless they pursue it in probate. They will spend more money on the paperwork."

Now that you have read the contract complaints here are the customer service information of major wireless carrier's:

• Click here for Sprint customer service.
• Click here for AT&T customer service.
  
• Click here for T-Mobile customer service.
• Click here for Verizon Wireless customer service.
• Click here for Cricket customer service.
• Click here for Alltell customer service.

I hope that this post will be able to help solve your wireless contract complaints and problems.