U.S. Sen. Amy Klobuchar is again calling on the Federal
Communications Commission to take action against the early termination
fees imposed by many wireless carriers.
The Minnesota Democrat, following the results of an FCC-commissioned
survey of 3,000 Americans from April to May, described ETFs as hurting
competition in the marketplace and leaving consumers uncertain about
their options.
“The FCC’s consumer survey confirms what we have known for a long time
— that confusing Early Termination Fees undermine competition and
result in less consumer choice,” Klobuchar said in a statement May 26.
“Nearly two out of three Americans have seriously considered switching
cell phone providers but ultimately decided to stay with their current
provider because of a cancellation fee. Like a rigged carnival game,
wireless providers bury these fees in the fine print and slam consumers
if they try to find better service or save a few bucks in their monthly
bill.”
On May 21, AT&T followed Verizon Wireless in raising the ETF on
several of its popular smartphones, including the Apple iPhone — which Apple is expected to refresh in June.
iPhone and BlackBerry Bold users who look to end their service
agreement in advance of their contract date now face a fee of $325 — up
from $175.
In November 2009, Verizon doubled its ETF, boosting the fee from $175 to $350.
The FCC study found that Americans are generally confused about the
cell phone marketplace. Approximately 30 million Americans — or 17
percent of those surveyed — reported experiencing “bill shock,” a
sudden one-time increase in their bill, “though they had not changed
their calling or texting plans,” states the report. “Overwhelmingly,
these Americans were not contacted by their carriers about the change
in their bill.”
Regarding ETFs directly, nearly 20 percent didn’t know whether their
contract included an ETF, while among those who knew they had an ETF,
as well as the actual amount, 56 percent said the fee was more than
$200.
“ETFs may also play a role in consumer behavior among those who
consider changing their cell phone service provider,” stated the
report. “When asked whether paying an ETF was a factor behind a
decision to keep service — even though they might have seriously
considered switching — a majority (61 percent) of personal cell phone
users said the ETF was at least somewhat influential.”
Forty-three percent named ETFs as the major reason for staying with their cell phone company.
In December 2009, Klobuchar introduced the Cell Phone Early Termination
Fee, Transparency and Fairness Act, which was co-sponsored by Sens.
Russ Feingold, D-Wisc., Jim Webb, D-Va., and Mark Begich, D-Alaska. The
act would require wireless carriers to pro-rate ETFs and clearly notify
customers of the fee at both the time of purchase and during the
duration of their contract.
According to the statement from Klobuchar’s office, “the FCC Consumer
Task Force is currently investigating the impact of [ETFs].”
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