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Smart Money just released an article on the five different ways cellphone companies hit people up to squeeze out those extra bits of spare change. For people investing in companies like Verizon Communications (NYSE:VZ), AT&T, Inc.'s Cingular (NYSE:T), and Alltell Corporation (NYSE:AT), these may seem like great ways to sneak in a few extra dollars. But pay attention to which company is the fairest to its customers. Over time customers will realize who treats them the best. Too many attempts to treat customers with contempt could cost a company in the long run.
JD Power and Associates does yearly surveys of customer satisfaction with wireless companies, and Verizon Wireless and T-Mobile are the top scorers. But even these companies use a lot of the tricks described in the Smart Money article to get extra change out of their customers.
The first one, new handset fees, is a particularly annoying dinosaur and one I'll bet a lot of new customers are surprised by. Fortunately only two of the providers have a setup fee, Cingular and Sprint/Nextel (and those people planning on getting an Apple iPhone will have to add Cingular's $18 into their final iPhone price). It's a holdover from the old cellular days, and it's surprising to see that it's still being tacked onto customer's bills. This really should be a freebie in this day and age, setting up a new phone doesn't take nearly as much effort as it used to when cellphones first appeared. Companies that bill for this are being slightly excessive.
Premium content fees are for things like text messages and checking out videos. Customers should know if they're going to surf the net and message people that they need to go ahead and get a plan that figures these extras in, or they will get hit with a huge bill. Everyone knows of parents who get hit with several hundred dollar cellphone bills because their kids assumed that all those features came with the phone. Not a pretty sight. But for all of the above companies these are big money makers, and consumers should monitor their use. You can't blame a cellphone company when a customer goes crazy with the extras.
The third item Smart Money looks at, early termination fees, are something for consumers to get really upset about. One has to walk over coals to get a cellphone contract terminated for just about any reason, but the article points out that these companies do build in the cost of an early termination into what you are paying, so consumers shouldn't feel guilty about trying to get out of the several hundred dollars a company tries to charge you to leave early. Particularly if the reason you're leaving is dissatisfaction. The fact that the companies build the price in should reassure investors that the companies are thinking ahead on this point. Early termination fees are pure profit. But are they worth the cost in harassment?
The last item, roaming charges, has been something consumers are wary enough about that I'm surprised to see it on the list. However it goes without saying, there are lots of spots where your phone may not be covered, but will still be usable. It will just cost you. Consumers should be careful and pay attention to their phone's indicators when traveling outside of their usual range, and wait to place calls if possible. For smaller cellphone companies, it's the best way of offering national coverage charges, as they're piggybacking on another cellphone company's network.
Premium content fees are for things like text messages and checking out videos. Customers should know if they're going to surf the net and message people that they need to go ahead and get a plan that figures these extras in, or they will get hit with a huge bill. Everyone knows of parents who get hit with several hundred dollar cellphone bills because their kids assumed that all those features came with the phone. Not a pretty sight. But for all of the above companies these are big money makers, and consumers should monitor their use. You can't blame a cellphone company when a customer goes crazy with the extras.
The third item Smart Money looks at, early termination fees, are something for consumers to get really upset about. One has to walk over coals to get a cellphone contract terminated for just about any reason, but the article points out that these companies do build in the cost of an early termination into what you are paying, so consumers shouldn't feel guilty about trying to get out of the several hundred dollars a company tries to charge you to leave early. Particularly if the reason you're leaving is dissatisfaction. The fact that the companies build the price in should reassure investors that the companies are thinking ahead on this point. Early termination fees are pure profit. But are they worth the cost in harassment?
The last item, roaming charges, has been something consumers are wary enough about that I'm surprised to see it on the list. However it goes without saying, there are lots of spots where your phone may not be covered, but will still be usable. It will just cost you. Consumers should be careful and pay attention to their phone's indicators when traveling outside of their usual range, and wait to place calls if possible. For smaller cellphone companies, it's the best way of offering national coverage charges, as they're piggybacking on another cellphone company's network.
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