Wireless customers mostly happy, hate contracts

AT&T may be the least liked of major U.S. wireless carriers, but overall, American cell phone users are satisfied with their service providers.

A study by the U.S. Government accountability office, reported by MSNBC, found that 84 percent of customers are very or somewhat satisfied with their wireless providers.

What they don’t like are the early termination fees they must pay to leave a carrier before their contracts expire. Of the customers who wanted to leave their carrier early, 42 percent did not because of the fees, the GAO found.

U.S. Representative Ed Markey, who opposes early termination fees, requested the study from the GAO, which is an independent office. The results come as the Federal Communications Commission looks into the high termination fees charged by carriers such as Verizon Wireless, which recently jacked up its price to $350 for people who want out of their contracts, pro-rated from the date the contract was signed. That inquiry is part of the FCC’s larger investigation into the wireless industry, which also covers exclusive arrangements between phone makers and service providers.

Wireless carriers argue that early termination fees are necessary to keep cell phone prices low. Most phones are offered at a discount in exchange for a two-year contract, and for high-end smartphones, those discounts can be several hundred dollars off the unsubsidized price.

The problem is that under Verizon’s new pricing, even if you wait until the last month of your contract, you still owe $120. It’s hard to argue that this is designed simply to recoup the cost of a subsidy. Wireless carriers might have a better argument if the early termination fee was simply based on the subsidy amount, pro-rated over time. Sure, that’d make it easier for customers to leave, but given that a Consumer Reports survey ranked Verizon first in customer satisfaction, you’d think that wouldn’t be a problem.

The FCC has the power to regulate cellular services rates, the GAO said, but the government hasn’t taken any action yet.

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