[Infowarrior] - Why We Love to Hate Our Cell Phone Company

[Richard Forno]

Why We Love to Hate Our Cell Phone Company
Cell phone customers are unhappy with unexpected charges for everything from
roadside assistance to new handsets--and they're calling their lawyers to
complain.
Tom Spring, PC World
Tuesday, September 12, 2006 01:00 AM PDT
http://www.pcworld.com/article/id,126939-pg,1-RSS,RSS/article.html

Maybe it's a $3-a-month charge from Verizon Wireless for Roadside Assistance
that you don't remember requesting. Maybe it's an $18 "upgrade fee" that
Cingular Wireless neglected to mention when you bought that snazzy new
Motorola Razr phone. Or maybe you're just peeved about dropped calls.

Whatever the cause, if you've had it with your cell phone company, you're
not alone. Consumers are mad, and the lawsuits are flying.
Driving Discontent

According to the Better Business Bureau, cell phone companies drew 30,483
consumer complaints last year to become the top-ranked industry for
grievances. The most common complaints: inaccurate bills, inadequate
customer service, and deceptive contract terms. Cell phone companies were
the subject of more complaints than such perennially unpopular businesses as
car dealerships, hotels, retail outlets, and insurance companies, BBB
statistics show.

Experts attribute the rise in customer dissatisfaction to fallout from
mergers and acquisitions in the wireless industry, including the
Cingular-AT&T Wireless and Sprint-Nextel mergers.

Kirk Parsons, senior director of wireless services for J.D. Power and
Associates, says a study by the famed market research firm found that
consumer satisfaction with wireless phone service providers in 2005 was down
10 percent from 2004 levels.

Below are details about some of the most common cell phone complaints, as
lodged in recent lawsuits and filings to the Federal Communications
Commission and the Better Business Bureau.
Roadside Assistance Rage

At least two federal class-action lawsuits have been filed over Roadside
Assistance charges of $2 or $3 a month on Cingular and Verizon Wireless
bills. In separate lawsuits, customers of both carriers say they never
ordered the optional service, which Cingular and Verizon say will provide
emergency service to auto drivers who get stranded on the side of the road.

Cingular's Roadside Assistance is an emergency insurance program for
motorists that Cingular markets on behalf of Asurion Insurance Services.
Should a subscriber have a flat, get locked out of their car, or run out of
gas, they can call a special number on their Cingular handset and someone
will come to their assistance, free of charge.

Michael Gellis sued Verizon in Oakland, California, Circuit Court, while
Cingular Wireless customer Margaret Moffatt filed suit against the firm in
Wayne County, Michigan, Circuit Court. Both customers say that for more than
two years, without their consent, the carriers had added charges for
Roadside Assistance to their monthly bills.

Both suits allege violation of state consumer protection laws, breach of
contract, and "unjust enrichment." Both suits were eventually transferred to
U.S. District Court in Detroit, where attorney Peter Macuga of Macuga and
Liddle is representing both plaintiffs.

Cingular declined to comment on the two pending cases. However, its
representatives said Cingular typically offers a free 60-day trial of the
Roadside Assistance program to customers when they upgrade or change their
plan. If the customer doesn't cancel the service after the trial period
ends, Cingular begins adding the charges to their monthly bill.

Cingular says it never initiates the free Roadside Assistance trial without
the customer's consent, whether in writing at one of the carrier's stores,
verbally over the phone, or by clicking to accept a terms-of-service
agreement online. "If folks have had that on their bill, and they didn't
order it, obviously there is a mistake somewhere and we can correct it,"
says Cingular spokesperson Mark Siegel.

A Verizon Wireless press contact also said that the company doesn't add
services to a customer's calling plan without consent, adding that Verizon
would work to resolve disputes related to any charges. Verizon also declined
to comment on the lawsuits.
Singularly Aggravating

Cingular is facing additional complaints stemming from its merger with AT&T
Wireless in October 2004.

One group of customers--people with older phones that use AT&T or Cingular
analog or TDMA networks--is complaining about Cingular's announced intention
to charge them $5 per month for continued service. Another group--former
AT&T Wireless customers who still use that company's TDMA network--is angry
about what they describe as deteriorating network quality in the wake of the
merger.

Both groups say Cingular is trying to force them to upgrade to more
expensive phones and rate plans on the company's newer GSM/GPRS network.

Cingular says the $5 monthly fee is needed to recoup costs associated with
maintaining the older networks. Currently, 4.7 million subscribers, about 8
percent of Cingular's total, use Cingular's TDMA or analog networks, Siegel
says. Cingular had no comment about the alleged deterioration of service on
the old AT&T TDMA network.
Forced to Switch

Yet another group of angry Cingular customers are former AT&T Wireless
customers who did switch to Cingular's GSM service following the merger--and
found that they not only had to buy a new phone, but had to pay an $18
transfer fee that Cingular charged them simply for switching to Cingular's
GSM network. Those customers also had to pay $18 for the SIM chip that
contains the phone number and other user information that is required by GSM
handsets.

And switching wireless carriers to protest against Cingular was not an
attractive option: People who tried to leave Cingular with time remaining on
their AT&T contract were subject to an early-termination fee of $175.

In response to these complaints, Cingular in July 2005 began waiving the
transfer fee for former AT&T Wireless customers who migrate to a Cingular
plan. Cingular subsequently also waived the charge for its own customers who
buy new phones to switch from older networks to GSM service. However, these
concessions came too late to pacify some customers.

Several consumer advocacy groups headed by the Santa Monica,
California-based Foundation for Taxpayer and Consumer Rights filed a federal
suit in Seattle, alleging that following its acquisition of AT&T Wireless,
Cingular intentionally degraded service on legacy AT&T networks in hopes of
driving AT&T's customers to Cingular's GSM network. The suit also accuses
Cingular of charging AT&T customers unfair fees to make the switch.
One State's Fee Fine

Meanwhile, Cingular's business practices in California have drawn the ire of
state authorities. In July, a state appeals court upheld a $12.1 million
fine imposed on the carrier in 2004 by the California Public Utilities
Commission. The judges agreed with CPUC regulators who said Cingular
knowingly signed up more customers than its network could handle, while at
the same time charging early-termination fees--sometimes amounting to
hundreds of dollars--to customers who cancelled their service.

The CPUC also said Cingular failed to provide customers with an adequate
trial period and ordered Cingular to refund early termination fees charged
to customers who cancelled their contracts between January 2000 and May
2002, refunds that could cost the company millions of dollars.

Cingular has since extended its trial period from 15 days to 30 days.

Consumer organizations such as the U.S. Public Interest Research Group have
applauded California's efforts to combat unreasonable early termination
fees. "Early termination fees make it easy for companies to deliver bad
service," says Ed Mierzwinski, USPIRG's consumer program director. Such fees
give customers little recourse if service deteriorates midway through a
contract, he explains.
Fees for Phone Upgrades

Cingular's transfer fees aren't the only ancillary charges frustrating
wireless customers. Leading carriers routinely charge an upgrade fee simply
for switching to a new phone. Sprint Nextel charges customers $18 when they
upgrade to a different handset. Cingular charges a similar upgrade fee of
$18. Verizon Wireless customers who buy new handsets within 22 months of
signing up for service (or of a previous handset upgrade) are subject to an
upgrade fee of $20.

In posts on gripe sites such as My3Cents.com and Planet Feedback, some
customers say they were never told about these fees at the time of purchase
and were surprised to see them on their phone bill, typically two months
after purchase. By then, the window for cancellation of the purchase without
termination fees had expired.

People are particularly aggravated to see the fee after purchasing a phone
that the carrier had marketed as being "free" after rebate, or during an
"instant savings" promotion that's supposed to refund the cost of the phone.
These promotions are common with all the major carriers.

Sprint and Cingular officials say these fees cover service and
administrative costs associated with upgrading customers to a new handset.
The officials also say their sales representatives and Web sites make all
fees clear to customers when they purchase a new phone.
The Biggest Gripe

Wireless industry experts including J.D. Power and Associates' Parsons say
that much of the frustration experienced by Cingular, AT&T Wireless, Sprint,
and Nextel customers stems from the complexities involved in merging the
technologies and billing processes of huge networks.

Parsons adds that consumer expectations have risen as the cell phone
industry has matured. "Today's cell phone users have zero tolerance for
dropped calls," Parsons says.

However, dropped calls don't top the list of cell phone gripes. Instead,
billing issues account for three times as many complaints as service
quality, according to the FCC's May 2006 Quarterly Report on Informal
Consumer Inquiries and Complaints.

Billing issues have prompted several state-level initiatives by consumer
groups attempting to change the way wireless carriers do business.

In New York state, the AARP and other consumer groups are backing
legislation that would force cell phone companies to make their bills easier
to understand and allow customers to cancel service contracts without
penalties. Similar initiatives are in the works in California and Minnesota.
Who Should Regulate?

These state-level campaigns underscore a larger battle over whether the
federal government or the states should have the authority to regulate the
cell phone industry. Wireless carriers would rather be regulated by a single
federal agency (the FCC) than by the states, which are trying to gain more
control over cell phone services to their residents.

In August, the cell phone industry suffered a setback when a federal court
of appeals in Atlanta ruled that the FCC overstepped its authority by
telling state regulators they couldn't require or prohibit line items on
bills for wireless services.

The ruling means that states will be able to dictate how cell phone bills
are presented to customers. The CTIA, a wireless telecommunications industry
trade association, has complained that the ruling will force wireless
providers to establish a different process for each state. "Complying with
disparate regulatory regimes will only increase consumer costs and slow
innovation," CTIA president and chief executive Steve Largent said in a
statement.

But the U.S. Public Interest Group's Mierzwinski says the ruling is good
news for consumers because it will give state regulators the muscle to ban
deceptive cell phone billing practices.

"The states are doing a much better job these days to protect consumers than
the FCC [is]," Mierzwinski says.

Nevertheless, for any cell phone customer, it pays to remember that your
best strategy is not to depend on government agencies, but to police your
own bill. Watch it like a hawk, read the fine print, and ask lots of
questions.