What to know before you sign up for a cellphone plan
When the Council of Better Business Bureaus made a list of the industries that received the most complaints in 2005, the usual suspects appeared – new car dealers, auto mechanics, and Internet providers.
The industry at the top – or the bottom, depending on your point of view – will come as no surprise to anyone who's been socked with an unexpected $150 invoice or stuck with a signal-less phone in the middle of nowhere. BBB affiliates received nearly 32,000 complaints about cellphone products and services, more than any other type of business.
Ben Popken knows the drill. He's editor of consumerist.com, a blog that recently told readers how to use a temporary loophole to cancel Sprint plans before their contracts expired. It didn't take long for dozens of people to bombard Mr. Popken with their stories of success – or failure – at trying out this newfound exit strategy.
"I could write about cellphones all day long and people would be happy," he says. "Oftentimes, it seems like cellphone companies have arrayed themselves against the consumer to prevent them from getting the best deal they can."
Despite legions of frustrated customers, cellphones remain extraordinarily popular. CTIA-The Wireless Association, an industry group, estimates that there are 225.8 million cell subscribers in the United States, paying an average of $49.30 a month. And it's easier than ever to change plans because customers can now keep their phone numbers when they switch.
If you're shopping for a plan, here are a few suggestions from the experts:
1. Know thyself. Regardless of whether you're buying a cellphone plan for the first time or simply trying to get a better deal, first spend a few minutes figuring out how you use the telephone.
Do you make calls mainly during daytime or during evening and weekend hours? Do you call long distance or while on the road? Will you ever need to use your phone to send text messages, look at photos, or access the Internet?
"You have to really think long and hard about who you are and how you use your phone before you ever even make a sales call or go surfing around the Internet," says Linda Sherry, spokesperson for Consumer Action (www.consumer-action.org), a nonprofit consumer education and advocacy organization in San Francisco. "Most people skip that first practical step of looking at some old bills and seeing how they've used the phone in the past."
Once you've figured out your needs, find a resource that compares different plans. One good place to start is the January 2006 issue of Consumer Reports. (Find it at your local library or you can access it for $4.95 – which includes a one-month access to the magazine's online archives – at: www.consumerreports.org).
2. Watch out for extra fees. Cellphone bills are chock-full of fees and taxes. "It's likely that the $39.95 plan will cost over $50 a month, even if you don't get any extras," says Edgar Dworsky, founder of consumerworld.org, which helps consumers find resources and deals on a variety of products. He advises customers to ask company representatives what the full cost will be.
Or you can simply count on adding about 15 percent to the pretax cost, Ms. Sherry says.
3. Avoid contracts if possible. Service providers love to lock customers into multiyear contracts, and they often dangle the carrot of a free upgrade to a new phone after a certain period.
But in some cases, the phones don't last even two years, Sherry says, and the companies try to extend the contract if you get a new phone. Providers may even lengthen your contract if you find that you need to upgrade to a plan with more minutes.
The penalty for ending a contract early can be hefty – $150, $200 or more.
4. Save the phone for last. Search for the best plans first. "Once you narrow it down to one or two companies, you can start looking at what kinds of phones that company offers," says Mr. Dworsky.
Don't be intimidated by the bells and whistles on cellphones if you don't need frills. There are simple phones on the shelves, although it might take a while to find them.
And make sure to check the reputation of the phones you consider. Dworsky suggests that customers simply type the model of their phone and the word "review" into the Google search engine.
5. Return to sender, if necessary. Although many customers may not realize it, you're not stuck with a contract from the moment you buy a plan. Often, you can cancel the plan and return your phone in a certain amount of time, typically 14 days or a month.
There's a cost – you'll still pay for the service you used – but the standard cancellation fee won't apply.
6. Teach your children well. A chatty teen who makes lots of calls and sends out hundreds of text messages can easily rack up a monthly bill of hundreds of dollars. And don't assume the provider will give you a heads-up.
"A cell costs a lot more than a landline," Dworsky says. "You have to teach them that talking isn't free."
And that's not a bad lesson for anyone.
Understanding your phone usage patterns is key before signing up for a cellphone plan. Here are three common types of cellphone consumers and what they should watch out for:
The emergency-only user (1 to 2 hours a month) – Consider a prepaid plan that allows you to buy a small number of minutes. You won't be stuck with a lengthy contract.
Caution: Minutes on prepaid plans may expire after a few weeks or months, forcing you to buy new minutes before you've used the previous ones. Or you might have to use the phone regularly to keep your plan alive.
The frequent user (2 hours a week) – Look for a plan that provides 500 or more minutes a month with a short contract or none at all.
Caution: Nighttime and weekend usage may be unlimited, but make sure you know when those minutes begin: 7 p.m.? 9 p.m.?
The talkative teenager (15 or more hours per week) – Plans with 1,000 "anytime" minutes and unlimited night/weekend use per month can cost $80 or more. Check if your teen's friends use the same company; those with the same plan often can call each other without using minutes.
Caution: If your teen loves to send text messages, look for plans that shut off that service if charges reach a certain point.