5 Terrible Cellular Carrier Practices
Cellular Carrier Practices and Consumer Costs
Numerous reports have detailed how cellular providers can impose excessive charges on consumers. These issues range from lengthy and costly contracts to unexpectedly high bills, such as the documented case of a $22,000 roaming data charge.
Interestingly, some of these unfavorable practices are undergoing shifts and modifications.
Canadian Examples as a Benchmark
Many of the cited instances of egregious billing originate in Canada. For individuals residing in the United States or other regions who are dissatisfied with their current cellular service, examining the practices permitted to Canadian carriers can offer a comparative perspective.
Understanding the extent of these issues in Canada may lead to a greater appreciation for the services offered by local providers elsewhere.
Common Areas of Concern
- Contract Lengths: Extended contract terms often lock customers into unfavorable rates.
- Roaming Charges: Data usage while traveling internationally, or even domestically, can result in substantial bills.
- Hidden Fees: Unexpected charges added to monthly bills can significantly increase costs.
These are just a few examples of the ways in which cellular companies can impact consumer finances. Awareness of these practices is the first step towards advocating for fairer and more transparent pricing.
Bring-Your-Own-Device Savings
Related: 8 Ways Your Wireless Carrier is Gouging You
Historically, mobile network operators have implemented a uniform monthly pricing structure for all subscribers. The cost remained consistent regardless of whether a phone was obtained with a subsidy, such as an iPhone for $99, or purchased at full price and brought to the network.
Essentially, all customers were contributing to the cost of subsidized handsets, even if they didn't receive one themselves. Upon the expiration of a two-year service agreement, renewing with another subsidized device was often the most logical course of action.
Failing to do so meant continuing to pay the same monthly fee without the benefit of a new phone.
This paradigm is now undergoing a shift. T-Mobile deviates from the traditional carrier model by not offering subsidized devices. Instead, smartphones are available through installment plans, separating the device cost from the monthly service charge.
Importantly, if a customer chooses not to utilize an installment plan, they avoid those associated fees – a practice mirroring the hidden costs imposed by other carriers.
Furthermore, other providers are beginning to adapt. Even AT&T now provides a bring-your-own-device discount, enabling savings for customers who do not require a new phone.
A significant drawback of the installment plan model is the higher overall cost of the phone compared to an outright purchase. This aligns with the pricing of most other consumer goods.
Few consumers opt for installment plans on items like televisions when a direct purchase is feasible, recognizing the increased long-term expense.
Understanding the Cost Implications
Consider the total cost of ownership. While installment plans offer convenience, they typically result in a greater financial outlay over time.
Choosing to purchase a device outright and utilizing a bring-your-own-device plan can lead to substantial savings.
Here's a breakdown of the benefits:
- Reduced Monthly Bills: Avoid the added expense of installment plan fees.
- Financial Control: Pay a single, upfront cost for your device.
- Flexibility: Upgrade your phone when *you* choose, not when your contract dictates.
The shift towards bring-your-own-device options empowers consumers and promotes greater transparency in mobile pricing.
Exorbitant International Data Roaming Charges
Related: Avoiding Bill Shock: Preventing International Roaming Fees of $22,000 or Higher
Historically, the costs associated with international data roaming have been significantly disconnected from reasonable pricing structures. Numerous accounts exist of US residents traveling to Canada and incurring charges exceeding $11,000 due to data usage, and conversely, Canadian travelers to Mexico facing bills as high as $22,000 – these figures represent roaming fees exclusively within North America!
T-Mobile has recently eliminated international data roaming fees altogether, alongside the introduction of an affordable plan for international voice calls. This allows T-Mobile customers to utilize their devices while traveling abroad without the risk of substantial, unexpected bills. Although AT&T continues to levy charges for international data overages, these are now considerably lower than previous rates.
It is anticipated that other carriers will follow suit, adjusting their pricing to reflect more realistic levels and abandoning the practice of imposing occasional, exceptionally high bills on customers.
The End of Lengthy Wireless Agreements
It may come as a surprise, but until December 2, 2013, three-year contracts for wireless service were standard practice in Canada. These cellular agreements mirrored those previously common in the United States, involving an upfront cost for a device and potentially higher monthly service fees.
However, unlike the two-year contracts elsewhere, Canadian consumers were obligated to remain with their chosen carrier for a full three years. This extended commitment often resulted in overspending on device costs and ultimately left subscribers using outdated technology by the contract’s conclusion.
Fortunately, these extended contracts are now a thing of the past in Canada. This change was driven by governmental intervention, as Canadian cellular providers were unlikely to voluntarily adopt this consumer-friendly practice.
Punitive Early Termination Fees
Compared to the practices of cellular providers in the United States, the situation in Canada can appear even more challenging. Individuals in the US, Canada, and other countries typically encounter early termination or cancellation fees when attempting to exit a cellular contract prematurely. These fees are now generally tied to the actual cost of any phone subsidy that remains unpaid.
This approach is logical and represents a fair practice. However, until recently, Canadian carriers frequently employed early termination fees as a means of imposing penalties.
In mid-November 2013, a resident of Vancouver, British Columbia, fulfilled all financial obligations related to her three-year cellular contract, terminating it two weeks ahead of schedule. Believing she had met all requirements, she was surprised to receive a bill from Rogers Wireless for a $180 early termination fee.
Despite having fully paid her contractual obligations, this fee lacked any justifiable basis; it was simply a punitive measure permitted under the stringent terms of her agreement. When the customer refused to remit payment, Rogers Wireless threatened to negatively impact her credit rating.
The charge was ultimately rescinded following media attention, with Rogers Wireless claiming the fee was issued in error and requesting the situation be dropped. It's unknown how many others have paid similar fees without seeking public recourse. [Source]
Fortunately, these excessively punitive early termination fees are now largely a practice of the past.
Eliminating Tethering Charges: A Current Overview
Related: A guide to tethering your Android phone and distributing its internet connectivity to other devices.
While many mobile carriers continue to impose tethering fees, a notable exception exists with Verizon in the United States. A resolution reached with the Federal Communications Commission (FCC) prevents Verizon from levying supplementary charges for Wi-Fi tethering.
This allows Verizon customers to utilize their existing data allowance without incurring additional costs when tethering. However, this outcome shouldn't be viewed as a universal standard.
The Verizon Precedent
Verizon’s commitment stemmed from adhering to "open access rules" associated with the acquisition of the 700 MHz wireless spectrum. The FCC determined these rules prohibited the blocking of tethering applications and the imposition of extra tethering fees.
These specific regulations are not applicable to other service providers. Nevertheless, T-Mobile currently provides a certain amount of tethering data at no extra cost.
Despite some improvements, many carriers still apply potentially excessive charges. Progress has been made in curbing the most problematic practices, and the situation is demonstrably better than it was in early 2013.
It’s important to remain vigilant and understand your carrier’s policies regarding tethering.
Image Credit: zombieite on Flickr, RJ Schmidt on Flickr, Colleen Lane on Flickr, Morgan on Flickr, Matt Biddulph