10 Ways, ATandT, Verizon, Other Mobile Carriers Gouge Customers

By Don Reisinger  |  Posted 2010-01-25

10 Ways, ATandT, Verizon, Other Mobile Carriers Gouge Customers

When Verizon Wireless and AT&T announced recently that they were dropping the price of their unlimited talk plans from $99.99 to $69.99 for single plans and $119.99 for family users, some were hopeful that things were changing.  

Instead of gouging customers with plans and fees that practically ensure users will be forced to stay in contracts, some thought that carriers were finally realizing that in order for them to enjoy greater success into the next decade, they need to improve their relationships with individual and corporate customers.

Just a little over a week later, that hope might already be gone. There is some concern in the industry that mobile carriers are considering increasing the amount that they charge for data plans in an attempt to capitalize on the growing number of people who are using data on their smartphones.  

Worst of all, netbooks are selling extremely well in the marketplace. Most of those devices come bundled with available 3G networking. Since customers are required to pay a monthly data fee for access to 3G carrier networks, carriers ostensibly believe that they're raising rates at precisely the right time.

But what about the customers? It seems that more often than not, those people lose in carrier relationships. In order to start changing that for the better, more awareness is needed to fully understand just how troublesome carriers have become. So without further ado, let's take a look at 10 serious problems with major mobile carriers.

1. Customers can't get out

One of the worst aspects of any mobile phone contract is the termination clause. Rather than allow customers out of their contracts, carriers charge exorbitant fees to ensure that customers don't capitalize on a subsidized price and jump to another carrier after getting the phone they want. Charging a fee for breaking a contract is fine. But the fact that customers are charged hundreds of dollars to walk away from a bad carrier is ridiculous. Worst of all, those rates are on the rise.

2. Give and take

It seems that whenever a carrier makes a step in the right direction by dropping the price of a plan or offering solid deals on good phones, they move to increase revenue by an even greater amount in another area of their business. Both Verizon Wireless and AT&T have decided to drop the rates of their unlimited plans. That's great. But if they decide to increase rates on data plans, it seems to fall in line with what carriers have been doing forever: giving a little and taking even more in return.

3. Subsidized pricing models

Subsidized pricing models ensure that the phone a customer really wants is more affordable than it would be if it were unlocked. At face value, that might seem like a good deal. But consider the fact that all those subsidized prices are offered with a two-year plan and customers won't be able to get a new phone at that subsidized rate until their plan is up and it becomes clear that not all deals are what they seem to be. Carriers lure customers with cheaper phones only to levy a hefty fee on them over the next two years.

4. The enterprise loses badly

One of the biggest losers in the world of mobile phones is the enterprise customer. Unlike consumers who can easily get out of a contract if they're willing to pay up, corporate customers aren't so lucky.  

Cards Stacked in Mobile Carriers Favor


In many cases, enterprise users enter into multi-year deals that feature a slew of provisions, practically ensuring that regardless of how badly a company wants out of a contract, they probably won't follow through. That limitation on freedom only hurts the business world. But unfortunately, it likely won't change anytime soon.

5. They're all bad

Make no mistake, Verizon Wireless, AT&T, Sprint, and all the others are just as bad as any other carrier on the market. There just isn't an enlightened carrier that is truly looking out for the interests of the consumer. Inevitably, choosing a carrier comes down to phone choices and coverage in a particular area. That's a shame.

6. They resist change

Carriers are notorious for resisting change. When data became a requirement in the marketplace, carriers were slow to get their data networks up and running, worrying that it could have a negative impact on their business. When the iPhone hit store shelves exclusively on AT&T's network, carriers were concerned that it would drastically change the marketplace. And now that Google is offering the Nexus One unlocked, they're concerned that that business model could change how they do business. Carriers want to keep things the way they are. Let's be thankful that companies like Google and Apple are trying to change that. 

7. They capitalize on everything

As much as carriers resist change, they have a knack for capitalizing on that change when they can't turn a blind eye any longer. Rather than improve the availability of 3G, carriers are looking to charge more for access to data. It's sad, but in the mobile market, growing trends become revenue opportunities. All the while, it's the customer that suffers.

8. 3G availability is abysmal

Although more smartphones support 3G and netbooks are making it a key component in their value proposition, 3G availability is still abysmal in many places around the U.S. Aside from major cities, like New York or San Francisco, 3G is hard to find. Why should carriers be charging more for 3G when it's still so hard to come by? More importantly, why should customers even consider paying for a service that has a long way to go before it's worth its high price tag?

9. Where's the competition?

There might be several companies in the mobile space, but how much they really compete against each other is up for debate. Sprint has done a better job in the past year of offering unique services to consumers, but the other companies in the space are still toeing the line. Right now, AT&T and Verizon Wireless pricing on all their respective plans is exactly the same. Phone pricing is identical on multi-network devices. Competition means a company attempts to beat another by offering a unique value proposition. That's not happening in the mobile space.

10. Customer service is poor

Customer service leaves much to be desired in the mobile space. When Google's Nexus One smartphone was first offered, customers had some issues with the device. When they called their respective carrier, more often than not, they were told that it wasn't a carrier problem, but a phone problem. When they called HTC, the company that built the phone, they were told it was a carrier issue. Either way, carriers should be more willing to help out. Their past has been littered with notable customer-service issues that they've yet to address. When will they start?

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