Cellphone breakups hard to do

Yet consumer advocates argue the fee is exorbitant, given that the cost of handsets has fallen considerably over the past five years.

Indeed, 70 percent of cellphone owners buy models that cost the carriers between $85 and $100 – about $75 less than carriers' cancellation fees, according to In-Stat MDR analyst Neil Strother.

Mr. Strother adds that the fee also helps cover the cost carriers pay to attract new customers – about $300: "If they lose you, it costs them a lot to get you back."

The free phones lure most consumers to accept carriers' strict contracts. Cingular, for example, offers a free Motorola 120T handset to those who sign a two-year contract and make a $20 donation to the Special Olympics. The same phone costs $180 on Motorola's website.

But heavily discounted phones can become useless when consumers switch carriers. Handsets are often designed to work only on specific carrier networks. Consumers are often surprised to find that their cellphone no longer works with a new carrier, experts say.

Even customers who use the same carrier in a different part of the country often must pay an "unlocking fee" to adjust their handset to work properly. The price is usually more than a new phone, says Mr. Hilliard.

To avoid paying a penalty, consumers who break a cellphone contract must cite special circumstances, such as military service. But consumers with mundane complaints report some success haggling. Keith Jaros persuaded Cingular to waive its cancellation fee after he experienced spotty reception at home. "Sometimes they're lenient, depending on what you say," says Mr. Jaros, a software salesman in Acton, Mass.

Six months into her contract, Lee Hieb placed 10 phone calls and wrote six letters before her cellphone company agreed to waive its $200 cancellation fee. "I had a pile of correspondence three inches thick," says the Yuma, Ariz., physician, who was prompted by consistent billing errors to switch services.

To avoid such hassles, consumers can bypass contracts altogether. Those who do must buy their phones separately – often a cost of $100 or more compared with the price under a standard plan. They must also pay for service month by month. Because the carrier has no guarantee that the user will stick with it long term, the plan costs a bit more. Customers without a contract can also buy a phone and prepay for a bucket of minutes per month at a similar price.

More cellphone users will likely choose to not sign contracts, experts say, when they are able to carry the same phone number from one carrier to another.

The FCC's decision to delay implementation of "number portability" until November 2003 came partly in response to carriers' complaints that the policy would cause them to lose customers.

Indeed, 52 percent of cellular users say number portability would make them more likely to switch carriers, according to a survey by In-Stat MDR

Most experts believe the portability policy will go into effect next year. At that point, they say, customers will gain greater flexibility, but face higher monthly bills. The FCC will let carriers tack a new fee at the bottom of customers' bills. "They're probably going to pass on fees in the neighborhood of between 50 cents and a buck," says Mr. Hyers.

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