Facing fees, 42% of mobile users who want to switch carriers don't

Most consumers are satisfied with their cell phone providers, but early termination fees keep those who are dissatisfied from switching to another carrier, according to a new government report on the wireless industry.

Most consumers are satisfied with their cell phone providers, but early termination fees keep those who are dissatisfied from switching to another carrier, according to a new government report on the wireless industry.

According to a new study (.pdf) by the U.S. Government Accountability Office, 84 percent of respondents were "somewhat" or "very" satisfied with their current wireless carrier.

But 10 percent of mobile users are dissatisfied, according to the report. Out of a total 270 million wireless subscribers in 2008, that amounts to about 27 million Americans.

According to a GAO review of FCC complaints in the last five years:

  1. Billing -- 34 percent reported unexpected charges
  2. Rates -- 31 percent had difficulty understanding their bills
  3. Call quality
  4. Early termination fees
  5. Customer service

But those early termination fees are under scrutiny by Congress, since they affect consumer protection and competition in the wireless industry.

"In the digital age, where technology can change overnight, consumers should not be chained to their wireless provider for years through exorbitant early termination fees," said representative Ed Markey, a Democrat from Massachusetts who led the investigation, in a statement.

While ETFs enforce the service contract that a customer signs with a carrier, they also make it difficult for a consumer who is dissatisfied with the carrier's performance.

According to the report:

"Among wireless users who wanted to switch carriers during this time but did not do so, we estimate that 42 percent did not switch because they did not want to pay an early termination fee."

What's more, those ETFs make a switch difficult for consumers who move to a new location with poor service coverage.

Wireless trade group CTIA issued a statement saying that consumers choose binding contracts themselves.

"There are many choices available for consumers, including options that do not have any early termination fees such as unsubsidized handsets without a contract and a prepaid plan that has no contract. More than 20 percent of American wireless consumers choose these options. After listening to their customers, carriers who serve more than 94 percent of the postpaid market have adopted pro-rated early termination fee policies."

The ETF debate is reaching a fever pitch. Verizon Wireless recently doubled its termination fees on high-end smartphones, drawing the ire of the FCC, while T-Mobile launched its "Even More Plus" plans that avoid a contract altogether.

[via Ars]

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