| 25th January - At any given time,
most Americans are in mobile phone prison. You know the feeling. You talk
to a friend with a snazzy new handset that does amazing things. Or you see an
advertisement for a great deal on a monthly plan. Then what do you do? You
sigh, wistfully wishing you could shop for a new phone. If you are really on top
of things, you call your provider and ask when your current cell phone contract
expires. And then you wait. One thing you don’t do: You don’t act
like a rational consumer in a normal, functioning market economy. You don’t
go buy the new phone, or get the cheap new plan. You don’t reward the more
efficient company with your business. You can’t. You’re in prison.Imagine
if you couldn’t switch coffee shops or grocery stores without paying hundreds
of dollars in penalties. Preposterous? No — not in the world of cell phones.
From the start, wireless providers have worked hard to lock you up into
losing situations, constructing walls with cancellation fees, service-specific
phones, and the loss of your phone number. Worse yet — cell phone
companies can, and do, change their side of the contract unilaterally. Consumers
seemingly have no options to decline the higher prices. In other words, they can
raise prices, and you can’t quit. Consider this note of complaint, filed
with the Pennsylvania Public Interest Research Group by a consumer named Kerry: I’m
currently in the middle of a two-year contract with Verizon Wireless. They just
notified me that they are dramatically increasing the charges I pay for receiving
each text message from 2 cents to 10 cents. When I called to complain, they
left me with a few choices, and I was unhappy with all of them. I could simply
accept the increase in charges. Alternatively, I could sign up for an unlimited
text messaging plan for another $5/month, but only if I renew with Verizon for
another two years. Or, I could end my contract and pay an early termination fee
of $175. If I don’t pay the fee and change my plan to get the best
rate for text messaging, then I'm locked in with Verizon for even longer than
I originally would have been had they just kept the rates the same. And since
the new plan also has an early termination fee, I’ll face the same problem
if they decide, without my agreement, to change the plan again to suit their needs. Make
no mistake about it — like Kerry, most cell phone users are captives. In
2005, IPSOS North America surveyed 1,000 U.S. adults and found that 47 percent
would consider switching services if termination fees were eliminated. Fully 36
percent said fees already had forced them to stay in a higher-priced plan against
their will. This, it should be obvious, is economic lunacy. And it certainly
explains why U.S. residents suffer from what is remarkably among the world’s
least reliable cell phone services. After all, what’s the incentive to fix
the U.S. network? NBC Nightly News anchor Brian Williams, on his personal blog,
mentioned wistfully once that he often enjoys “crystal clear, uninterrupted”
cell phone conference calls to New York while on the road in faraway, “middle
of nowhere” places like the highway from Amman, Jordan to the Dead Sea. But
on his daily commute into New York City? That’s another matter. In fact,
cross-country drivers on the main east-west highway in the northern U.S., Interstate
90, will find this sorry fact: they can’t make a reliable phone call all
the way from Chicago to Seattle. It’s an embarrassment, but it’s
completely predictable. Captive consumers are bad for everyone, consumers and
businesses alike. Why would anyone start a new cell phone company in this environment?
Why would anyone invest in customer satisfaction? Consumers have managed
to tear down one wall in this jail. In 1996, the FCC ruled that consumers who
switched providers didn’t have to surrender their phone numbers, mandating
what’s called number portability. Of course, it took nearly 8 years of legal
battles to force wireless carriers to play along, but finally, in November 2003,
consumers were allowed to switch carriers without switching numbers. There
was an immediate impact. About 367,000 consumers abandoned AT&T Wireless in
the first quarter of 2004, an incredible number given that cell phone carriers
were enjoying unprecedented subscriber growth at the time. Like dogs suddenly
let off their leash, consumers began a mass exodus from the notoriously unreliable
provider as soon as they could. The exodus eventually brought the company to its
knees, and it was forced to sell out to Cingular. Competition works. That’s
capitalism. Bad companies don’t deserve to be propped up by bad regulations
or supportive government agencies. The wireless providers who watched the demise
of AT&T learned quickly; and the wall that was knocked down — number
portability — was rebuilt even taller. In 2004, most carriers extended typical
contracts from one year to two years. Nothing portable about that! By 2006, cell
phone jail was more fortified than ever.And in the ultimate irony, cell phone
firms found a way to profit handsomely off number portability. Beginning about
a year before portability kicked in, cell phone firms began charging roughly $1
per month per customer for number portability — at one point collecting nearly
$100 million per month, according to the Center for Public Integrity! The fees
were hard to spot, often lumped into a line item called “federal recovery
fee,” or something similar. Collectively, the industry took in more than
$1 billion before the practice was curbed. Source:
MSNBC Back
to News Reports | 
