Since we’re on a pretty big cell phone kick here lately with the MMM traffic, I’m going to pander shamelessly to what the people want: more wireless service talk!
Today, we’re going to talk about the ugliness of contracts with the major players. I know some of you are afraid to change over to a cheaper cell plan because of the things, and some of the contract penalties can be intimidating, but don’t give up hope! There’s more options than you likely know and it might be cheaper to get out sooner than you think if you actually do the math.
The Price On Your Head
First, let’s examine what the ETF fees to break your contract by carrier are (as of published date):
AT&T’s Early Termination Fees are a monthly pro-rated affair, as are most of the others. They have a baseline of $325 per device minus $10 for every completed month of the contract for their advanced devices (smartphones, netbooks, notebooks and tablets), and a baseline of $150 per device minus $4 for each full month completed for their non-advanced devices (feature phones, mobile hotspots, USB modems). If you’ve just started a contract, you have 14 days to cancel the contract without penalty, but you’ll have to return the device, pay a $35 restocking fee (or 10% for Apple devices, tablets and accessories over $199) and any charges incurred on the account. This realistically places your real-world ETFs somewhere between $325-95 per smartphone and $150-58 per feature phone.
Verizon’s Early Termination Fees run nearly identical to AT&T, and by identical, I mean $25 more expensive. Their baselines are $350 per advanced device minus $10 per month completed (smartphones, netbooks, and tablets), and $175 per non-advanced devices minus $5 per month completed (feature phones, hotspots, USB modems). You have 14 days to cancel new contracts without penalty and the devices returned, with a $35 restocking fee for phones and $70 for tablets and netbooks plus incurred charges. This puts your ETFs with Verizon between $350-120 per smartphone and $175-60 per feature phone.
Sprint’s Early Termination Fees run as a monthly pro-rated deal as well, but it’s both a bit simpler and more complicated than AT&T and Verizon’s policies. The ETF fee is calculated as $20 for advanced devices multiplied by the remaining months under contract, with a fee no greater than $350 and no less than $100. Non-advanced devices are calculated as $10 per device multiplied by the remaining months under contract, with a fee no greater than $200 and no less than $50. Effectively, this means that the first four-to-six months (depending on device) and last six months of your contract are flat fees. The good news is, with Sprint’s 14 day cancel and return policy, there’s no restocking fees for early quitters, just the plan usage!
T-Mobile’s Early Termination Fees are device agnostic and flat through the first year and a half. The ETF fee schedule is a straight forward $200 fee for any contract balance over 180 days (first 1½ years), $100 between 91-180 days (last four to six months), $50 between 31-90 days (last two to three months), and the lesser of $50 or your monthly plan fees for the last 30 days. The 14 day cancellation policy leaves restocking fees up to the seller with you paying for service used.
U.S. Cellular’s Early Termination Fees seem relatively straight forward, the best I can tell. The ETF starts at $350 for advanced devices and $150 for non-advanced devices, with the deduction rates apparently variable and outlined(?) within your contracts. (Any U.S. Cellular customers out there who can clarify this or provide solid numbers beyond the initial price?) They provide a 15 day satisfaction policy as well, with full refund and a bill only for the time used.
As you can tell, these things are designed to be steep and convince you that breaking your contract will be more inconvenient to do or cost more than just staying with them, and it works because consumers suck at math. Those “great deals” on those “cheap” smartphones aren’t near the bargain you thought once you know the fine print and factor in the real costs of your plan and getting out of that contract. Now that you know this though, and you’re about to be provided with easy tools to do most of the heavy math lifting for you, you can proceed without fear as a knowledgeable and empowered customer! No more excuses! No more fear! Let’s get crunching on numbers!
The Cost of Sweet Freedom
If you’ve been following along so far, you’ll know that nobody really needs unlimited anything. This is going to be your first step towards finding freedom from the enslavement of your wireless bill as you should have already sat down and figured out what you actually need out of your wireless service. The next step is figuring out what it’s actually going to cost to implement this savings change.
I’m going to be honest here… the numbers that will set you free might shock you, and it’s possible that some of you are so hopelessly upside down in your contracts with multiple lines and subsidized devices that it will literally cost you less to ride the contract out, but that’s okay. If you want to be free, you need to know what the price is on your head. You may have put that price there yourself not knowing what you were doing, but you know now and you should keep your eye on the prize: The money you’ll save every month/year/decade going with a prepaid MVNO for the services you’ll be using over going with a postpaid MNO account could be substantial, and you can switch providers or drop the service entirely any time you want! TRUE WIRELESS FREEDOM!
Now, let’s get the tools together.
First, you’ll need a calculator to figure out what breaking your contract is going to cost. Until I have the opportunity to put one together myself (it’s on the to-do list), the calculators over at MyRatePlan will have to suffice for now. (I cannot vouch for how accurate they really are – but they do seem relatively accurate, and they’re going to try and appeal to your consumerist tendencies.)
Then you’re going to need to find your alternate carrier, the plan you want, and find out what it’s going to cost to get the hardware together to make the switch. For those of you going GSM or to a CDMA carrier that allows BYOD and you’ll need a new handset, don’t forget that it’s always cheaper to purchase used or refurbished phones that are carrier unlocked or have a clean ESN – not to mention more environmentally friendly!
Once you’ve got all those relatively easy numbers to obtain, it’s just a matter of plugging it all into the handy dandy Wireless Plan Calculator to find out how quickly the true cost of that freedom can be obtained:
Voilà! Now you’re well informed and ready to save some money!
A Life Preserver for the Drowning
Finally, I want to close with some tips for you folks upside down and provide hope for possibly breaking free sooner. First, don’t forget that you can always scale back the service on that plan to the barest minimum available to save some cash. Turn off the data and texting options if they’ll let you and scale back to the smallest minute package available. Also, it doesn’t happen too often, but for those of you upside down in your contracts? You may get an out before the end. All you have to do is diligently keep an eye on your monthly statement for notice of a change to your Terms of Service contract. These are your Get Out of Jail FREE cards, because all you have to do is call up and inform them that you do not accept the new terms. Now, you’ll probably have to be prepared to lose your phone numbers under this situation as they usually pull the plug on your account then and there, and you probably won’t be able to port your device over to the new carrier if it’s a CDMA device or a carrier locked GSM phone, but this shouldn’t come as a surprise. After all, even with this, your freedom is going to come at a price.
Alternately (and this goes for anyone), you can sometimes force an out on a contract through lemon laws by buying deliberately crappy phones, constantly complaining to the FTC and BBB about how terrible your service is, trying to nail them on technicalities by forcing them to provide a signed contract on the off-chance they don’t have it, horse trading your plan away, moving somewhere where they don’t provide service, or even killing* the person who signed the contract… but they aren’t exactly the most dignified ways out, and some might even be more expensive than the savings gained or a scosh illegal to do in and of themselves.
Keep in mind that these are valid outs for anyone as a means to just save money, but I’m always a fan of meeting your obligations as its the ethical thing to do. Nobody threatened you with bodily harm to get into these plans, you did so of your own free will. As such, you should face the consequences with class and dignity by doing the right thing and making good on what you promised to, even if the company you’re doing business with does not. By taking the high road, you’re not just earning your freedom… you’re earning your freedom with and unspoken strength and your noble head held high.
Be noble and free, gentle readers!
*Note, my lawyers are forcing me to tell you that I am NOT actually advocating murder as a means to break your contract. It’s just a tasteless joke, folks! Life is precious, and I promise you that murder is never the answer.
Photo by Jon Díez Supat and licensed under Creative Commons Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).