I've been beating up on cable companies this week, but let's look at mobile phones. Here's a thought: if the only way you can keep customers is with handcuffs, something's wrong.
Cellphone companies do not make it easy to break two-year contracts. But it can be done through shrewd negotiating or by turning to the innovators on the Internet who match contract sellers with people who want to assume the contract.
Early termination fees are intended to compensate phone companies for the discount they gave on the phone upfront. Most mobile phone companies charge the full fee no matter when the contract is scheduled to expire. Verizon Wireless recently decided to prorate the fee, and some of the other companies do that in certain cities.
The companies will waive the early termination fee if you die. Pretending to be dead, however, does not work well as a way to break a contract. Sprint Nextel, Verizon and Cingular, for example, may ask for a death certificate. T-Mobile says it does not. “They want to take people at their word,” said Graham Crow, a spokesman for the company.
Here's a hint: hang on to those contracts!
But then the Verizon service representative threw her a curve ball. They wanted her to fax her contract so they could see the clause she was referring to. She dug through her papers and found an old one — she had been with Verizon almost 10 years — and after a few more transfers to call center supervisors, they let her out. “Obviously, they had a copy of the contract,” Ms. Tremblay said.
I understand mobile operators wanted to be compensated for that discounted telephone they gave you if you want to leave early. But it seems that now your contract is automatically extended every time you change a plan, talk to a sales rep, or pass within 100 feet of one of their stores.
I went through this a few years ago with the old, pre-Cingular, AT&T Wireless. I moved to Texas and changed my number to a Texas number. Nobody mentioned that this meant extending my contract... but a month or so later, I received a notice in the mail asking me to sign a piece of paper acknowledging that it had been extended.
I threw it out and called them and asked when my contract was up. They gave me a date two years in the future. I told them that was wrong. We went back and forth for a while, and I was actually about the cancel the service on principle (and tell them I'd pay the fee when they could send me the new contract I'd signed), but then they got bought by Cingular, I switched to a Cingular plan (much better rates) and wound up with a new contract anyway.
Here's the right way to do it: have a contract to cover the phone costs, and when it's up, there's no more contract. Period. Customers aren't going to change providers frequently just for fun.
If you think you need to bully people to keep them as customers, you have bigger problems to be worrying about.