Cell phone fees part 1
It should come as no surprise that the cell phone industry has a lot of people in Washington, D.C., looking after it. Granted, lobbyists haven’t been too popular lately with the public thanks to Jack Abramoff, but that hasn’t stopped industry organizations such as CTIA from representing the interests of carrier and manufacturers. Last week, I spoke with CTIA CEO and President Steve Largent and Executive Vice President Bobby Franklin. We spent much of our meeting discussing early-termination fees (ETFs). I’m not a fan of ETFs–and I’m certain my readers agree–but they’ll be around for a long time if the industry gets its way.
I’d bet that cell phone users who favor early-termination fees are like travelers who always choose the middle seat on airplanes: They simply don’t exist. It doesn’t take a brain surgeon to see why ETFs are the bane of most mobile users. They lock customers into a carrier for two long years and penalize them as much as $200 when they try to switch. But here I go telling you something you already know, so let’s look at how the industry views them instead.
The CTIA contends that ETFs benefit consumers because they allow carriers to offer phones and plans at a lower monthly price. “ETFs are a means of holding customers to the ‘bargain’ they made with their carrier,” said a recent CTIA position paper. “They allow carriers to offer their most attractive rate plans to their customers who commit to a specific term.” The paper also pointed out that ETFs are “a common practice in many industries.”
While I dismiss the “everyone is doing it so why can’t we?” argument immediately, I have to admit the first point isn’t so cut and dry. Consumers may hate ETFs, but I think many don’t realize ETFs (and contracts) are one reason why they’re able to get a free phone in the first place. Personally, I’d rather pay more for a phone than be locked into a contract, but I’m not so sure every other cell phone owner would concur. Largent admitted that many consumers don’t see cell phone carriers for what they are: for-profit companies competing to make the most money rather than a public utility providing service because they have to. “People don’t understand we are not a utility,” he said. “We’re a highly competitive industry.” Yet I think there has to be some give from both sides. Yes, the carriers have the right to make money, but they also need to provide friendlier practices that allow more freedom. And yes, consumers should be able to switch providers more frequently, but they may have to say goodbye to free phones. So can we have our cake and eat it, too? Here’s how carriers and consumers can help.
