Effective March 15, 2007, Verizon Wireless increased its $0.40 administrative charge to $0.70 per line. Due to a clause in the Verizon Customer Agreement, customers may be able to use the fee increase to terminate their service and avoid the usual $175 cancellation fee. The relevant clause is excerpted below:

Our Right To Make Changes Your service is subject to our business policies, practices, and procedures, which we can change without notice. UNLESS OTHERWISE PROHIBITED BY LAW, WE CAN ALSO CHANGE PRICES AND ANY OTHER CONDITIONS IN THIS AGREEMENT AT ANY TIME BY SENDING YOU WRITTEN NOTICE PRIOR TO THE BILLING PERIOD IN WHICH THE CHANGES WOULD GO INTO EFFECT. IF YOU CHOOSE TO USE YOUR SERVICE AFTER THAT POINT, YOU'RE ACCEPTING THE CHANGES. IF THE CHANGES HAVE A MATERIAL ADVERSE EFFECT ON YOU, HOWEVER, YOU CAN END THE AFFECTED SERVICE, WITHOUT ANY EARLY TERMINATION FEE, JUST BY CALLING US WITHIN 60 DAYS AFTER WE SEND NOTICE OF THE CHANGE. (emphasis added)

There is debate over a couple of phrases. First, what constitutes "material adverse"? We've heard stories of consumers successfully arguing that a $0.40 increase in monthly charges represents a material adverse effect and canceling their contract without penalty. (Likewise, we've had cases in which customers argued a $0.10 to $0.15 per text message increase constituted a material adverse effect ended up with free unlimited text message plans). However, the argument depends greatly on the particular customer service representative handling your call and your own ability to be convincing. The official Verizon line is that the fee increase does not have a material adverse effect on its customers and that customers are not entitled to a penalty free cancellation, but what else are they going to say?

Verizon can claim that the $0.40 increase does not have a "material adverse effect" and is likely training its customer reps to say as much as this is being written. But until someone tests this clause in a court, nothing is for sure. Another suspicious phrase concerns the acceptance of contract changes by simply using your service. What Verizon wants to argue is that if you use your service after you are notified of the $0.40 increase, you accept the change. But the section also gives customers the ability to cancel their service "within 60 days after [Verizon] send[s] notice of the change." So which one is it? Again, the answer will depend on how well you can make your case.

Verizon's administrative fee increase may help a small number of disgruntled customers escape early termination fees, but the opportunity it brings to all customers should not be overlooked. For the most part, wireless providers hold the cards. Sure every year or two you may be able to switch providers, or, threaten to switch providers and get some freebies from those omnipotent customer retention specialists. Other than that it usually goes like this: Rep - "No problem sir, we'll just upgrade your plan to $$$$ more a month and extend your contract for another 2 years (without telling you)." Customer - "Please sir may I have another."

Outside of contract fee increases are one of the few bargaining chips available to wireless consumers. You may not be dissatisfied with your contract, or at least not to the point that would lead you to cancel, but even the threat of cancellation could bag you an upgrade or two. It just takes a little persistence and an undeserved sense of entitlement.

See Verizon's Customer Agreement at Telenforcers.org

Visit The Consumerist for user comments chronicling the success and failure of various fee increase arguments