WASHINGTON-A major lobbying/consumer group last week called on states to enact laws that would allow customers to cancel contracts for mobile-phone service within 60 days of signing up.
“These contracts lock in consumers who can face hundreds of dollars in early termination fees for switching to other companies,” said Christopher Baker, senior policy adviser with AARP’s Public Policy Institute, noting that many carriers require long-term contracts for up to two years and consumers appear reluctant to incur the costs that might be required to switch carriers.
Baker was the author of an AARP-sponsored study that examined results from a phone survey of more than 3,000 people-1,530 subscribers and 1,555 non-subscribers-conducted last year by Market Facts Inc. of Arlington Heights, Ill.
The study was reviewed by Carl Hilliard, president of the Wireless Consumers Alliance, and David Furth, senior legal adviser to Thomas Sugrue, chief of the FCC’s Wireless Telecommunications Bureau.
“It is important to note that not all cell phones come with long-term contracts. We have prepaid, month-to-month, short-term and long-term contracts. This is a competitive industry. We think the intense competition is good for consumers with many opportunities to comparison shop,” said Travis Larson, spokesman for the Cellular Telecommunications & Internet Association.
AARP said only 16 percent of the subscribers had changed service providers to find a better deal. This compares with 62 percent of consumers who switch their long-distance service providers looking for a better deal.
“Wireless use has skyrocketed in recent years, but the fact is that shoppers lack crucial information to help them select or change their service,” said Baker.
AARP said the wireless and long-distance industries are comparatively competitive, but that wireless long-term contracts make it more difficult for consumers to switch providers when a better deal comes along.
States should also conduct consumer-education campaigns about not only the various cost plans-and AARP says there can be as many as 100 competing plans in an urban area-but also about the differing technologies to make consumers aware that their phone may not always work.
“An uninformed wireless user may be literally left out in the cold in an emergency when their phone does not work because of technological limitations,” said Baker.
States could require carriers to pay for such a campaign, AARP said.
The FCC is not left out. The FCC should publish a study of the complaints it receives about wireless phone use, AARP says.
A majority of the survey respondents (51 percent) that subscribe to wireless service fall into the group for which AARP lobbies-those 50 and older. This goes against the conventional wisdom that mobile-phone use is a youth craze and that older folks are reluctant to try new technologies.
