One of the greatest things about this country is the availability of choice. Want a breakfast cereal? You can choose from a multitude at your local grocery store. A loaf of bread? White or wheat no longer cut it--now, the more grains you have the better. 5? 10? 15? The grain sky is the limit. The ability for consumers to choose can be a good thing as long as there is actual choice. However, when we look at certain consumer areas--cell phone providers, for example--the actual ability to choose a specific provider is a limited one.

Sure, there are many prepaid providers popping up along the wireless landscape, but it seems that the prepaid providers are shutting down as quickly as they are starting up. Your main choice of carriers in San Diego is the big four: Verizon, AT&T, Sprint, and T-Mobile. Most offer homogeneous plans for a homogeneous set of phones. Nevertheless, even amongst the big four it can be difficult to change providers. The culprit? The early termination fee.

The early termination fee (ETF) is a lovely little device used by the wireless companies to ensure they make all their profit if you, the consumer, happen to change your mind and want to move to a different provider before your service contract is up. The ETF amount is set at the beginning of your contract term and decreases for every month you are in your contract.

Using Verizon as an example, the ETF at the beginning of your contract is $350 and that amount decreases by $10 for each month of service you complete. The large ETF makes it difficult for anyone other than Warren Buffet to switch providers mid-contract. However, what about situations where consumers are near the end of their contract and want to switch providers, say with only a month left on their contract? Even further, the consumers are willing to adhere to their obligation and pay for the remaining months of service. This way the consumer has made all available payments and the wireless carrier is not wanting for any payment or profit. At this point, shouldn't the wireless carrier allow the consumer to cancel their contract before the end of the two-year term without an ETF? The wireless carriers should allow this, but it is not always the case.

Using Verizon as an example, let us say the customer was on the lowest voice minutes plan with the lowest data package for around $70 a month before taxes ($40 for voice, $30 for data). With one month remaining, the customer had made 23 monthly payments to Verizon. This means the ETF should have decreased by $230 (23 months time $10 a month). With one month to go, this customer's total ETF is $120 ($350 original ETF minus $230 reduction). This is approximately $50 more than the customer's last month's payment.

However, we have found that this is not the case. Wireless providers will hold a consumer to the end of their contracts, even after the consumer has made all payments required under the service contract. We believe that this is another example of the lack of availability of choice for a wireless consumer.

Moreover, along this same vein, we have found that wireless companies have put up more barriers to choice by making the process of cancelling your contract at the end of the term very difficult. Most consumers enter into two-year agreements with a wireless service provider. At the end of the two-year agreement, your service contract automatically rolls into a month-to-month contract. This can be a nice feature because it prevents any disconnection of service.

On the other hand, if you want to cancel your contract at the end of the two-year term to avoid any rollover, you need to call the wireless carrier on the exact day your term ends to cancel. If you call too early, the wireless carrier will not let you cancel and will make you call back on the exact day your term ends. If you call too late--after the two year term ended--you can cancel no problem. All you have to do is pay for the remaining month of service.

Again, using Verizon as an example, you must call on the exact day your contract expires to cancel you contract. If you call too early, there is no mechanism available to set a cancellation date for the future. If you call too late, it is easy enough to cancel. However, your cancellation will not be effective until the end of the next billing cycle. Since Verizon was so nice to put you on a month-to-month agreement, this means the end of the next month's billing cycle. If you call the day after your contract expires, this means that you will have to pay for an entire extra month's service. In addition, there is no proration available--you must pay the entire month's amount whether you used one day or 28 days of service.

A colleague of mine calls this the "two year and one month contract." Since you cannot call ahead to schedule a cancellation, the wireless carriers leave you with a very small window in which you can cancel your wireless service without incurring any additional expenses or fees: one day. If miss that day, another month of service is automatically tacked on to your contract, giving you not a two year contract, but a two year and one month contract.

Are you a victim of these barriers to choice? Did you try to cancel your contract in the last month but were forced to pay an ETF? Did you try to cancel your wireless contract after your two-year term expired? Has a wireless carrier forced you to pay for an entire extra month's service because you missed that one-day window? Let us know in the comments or file an online complaint form.

Free Lunch and Low Cost Internet, sounds like the greatest day of your life right? Well I have some bad news for you. I am neither offering free lunch or low cost internet and I don’t know where to get them either.

However, a hand full of cable providers: BendBroadband, Bright House Networks, Cablevision, Charter, Cox Communications, Eagle Communications, GCI, Insight, Mediacom, Midcontinent, Sjoberg’s Cable, Suddenlink, and Time Warner Cable have all agreed to participate in the Federal Communications Commission's Connect to Compete program.

The program offers 1 Mbps cable  Internet service for $9.95 per month as well as a free rental or low-cost purchase of cable modem to households with children in school (k-12) who qualify for free lunch under the National School Lunch Program. The program is designed to help address the concern of cost in providing broadband internet to those who claim that they do not have it because they cannot afford it. The public events surrounding this issue are awash with antidotes of parents driving their school aged children to libraries after hours to sit in the parking lot and utilize the free Wi-Fi so the children can complete their homework.

It is a reminder of how important access to the Internet can be particularly a fast connection in the home. Some of you will be sure to point out that I left Comcast off the list. Comcast has already started offering this service as part of its Internet Essentials program. Unlike the other cable providers on this list, Comcast began offering its service as a condition of being able to acquire NBC Universal. So we list Comcast separately because the other cable providers did not require acquisition of a media company to begin offering this low cost service. One wonders why the FCC would have made this a condition of the merger when so many other cable providers readily agreed to the program.

Regardless, a low-cost option with a decent broadband speed is a step in the right direction even if it is limited to National School Lunch Program participants. Everyone needs access to the Internet and this program is, hopefully, a step in the right direction. 

As you may have seen in my blog post the other day, Verizon changed some of its privacy policies. However, to combat this, you have the ability to opt-out of sending Verizon your sensitive and personal information. One of our eagle-eyed members sent in this story from Yahoo Tech that gives you the steps on how to opt out of the marketing reports. It's fairly simple, as all you need to do is log in to Verizon's Privacy Center with your Verizon online credentials and select the option for "Don't use my information for aggregate reports." I just did it on my account and it worked like a charm!

While you are in there, you might as well tell Verizon not to share your CPNI information and not to use your demographic info for banner ads. It's your information, so you should have the choice on whether to let Verizon use it for its own purposes.

Thanks for the tip, member!

In 2010, when the FCC began discussing government mandates that would allow consumers to avoid overages, Verizon said they had it under control.  There have been a slew of reports on the internet lately about Verizon customers receiving overage charges without receiving an alert from Verizon.  Verizon lobbyists filed comments specifically stating that customers receive alerts on the 20^th day of their billing cycle if they are set to go over their allowances for that month.

However, there’s been a recent slew of backlash on the internet from customers who have, in fact, NOT received these alerts.  Most notably was Consumer Reports writer Jeff Blyskal, who incurred $70 in overage charges without so much as a peep from Verizon, if you are going to pick and choose who you send your alerts to, an employee of the biggest organization dedicated to consumer protection is not a good account to skip.

We’ve had consumers tell us they are experiencing similar problems, especially with international roaming.  Just a few days ago we were contacted by a gentleman who incurred a $500 international roaming bill.  Verizon alleges they sent him text alerts, but he reports that he never received them.

Failing to send promised alerts is bad enough, but we’re also questioning the efficacy of a text message alert system.  Is it sufficient to alert customers of overage charges? 

Specifically in the case of international data roaming, a text alert doesn’t make much sense.  The horror story we usually here is the of the customer that dutifully buries his smart phone away in his luggage, for fear of accidentally placing a call or reading a text and receiving a roaming charge.  Little does he know that his smartphone is accessing data and updating without his knowledge or intent. 

In cases like this, where customers see opening their phone as anathema, is it useful to send them a text message?  How about an email alert instead?  This same customer that ignores his phone while abroad is probably still checking his email through an internet café or through a wifi connection on his laptop.

UPDATE: After hashing out a few of the most egregious overage issues with Verizon, we're finding an interesting trend. When aggreived customers reach the first one or two tiers of customer service, they are being offered paltry credits of 15% to 30% off the fees. That may seem like an okay resolution at first glance, but when you're looking at $1500 in fees, knocking $300 off still leaves you with a crippling bill to pay. However, once escalataed to the highest levels of customer service, companies like Verizon and T-Mobile get considerably more generous - - we're seeing 100% credits for cases where customers couldn't access the notifications and made a legitimate effort to not use the network. Even on iffy cases where customers saw the alerts and didn't change their behavior, executive customer service is willing to fork over a 50% credit.

It's good that escalated cases are getting refunds, but it's troubling that wireless companies are forcing consumers to go to these lengths for credits. For the time being, if you're bowled over with overage bill shock and getting nowhere with customer service, get that bill escalated. The easiest way to do so? File a online complaint with your state's public utilities commission or with the Federal Communications Commission. It's the quickest way to get your issue up to the wireless company's top dogs.

Have you incurred overage charges at home or abroad without an alert from Verizon?  If so, we want to know.  Fill out our online complaint form and we’ll investigate on your behalf.

Source: http://news.consumerreports.org/electronics/2011/09/verizon-wirelesss-ph...