Dec. 2, 2005 at 11:00 AM ET
Cell phones are a bit like the weather. Everyone complains about them, but no one's doing anything.
For cell phones, there's good reason. Getting out of a bum cell phone plan can cost an arm and a leg, no matter how legitimate your reason for escaping. Perhaps the service you buy turns out to be unusable at home or drops calls during your commute. Or maybe you just want one of those swanky new e-mail, Web-browsing phones. It makes no difference. If your plan has 19 months remaining, you are out of luck. The price to get back into the free market for a cell phone is about $200.
There must be a better way. And, in fact, there is. But first, more on the problem.
Escaping from your cell phone contract can be costly -- so costly that about one-third of all cell phone users just give in and don't even try,according to a survey released earlier this year by the Public Interest Research Group (PIRG).
Some 36 percent of America's nearly 200 million cell phone users would consider switching their providers, but don't, because of the cost, according to the research. PIRG also found that 10 percent of cell phone users just sucked it up and paid a cell phone escape fine during the past three years, ringing up some $2.5 billion for telecommunications companies.
These fines, called "early termination fees" -- all the service providers have them -- are an incredible disincentive to switching plans and are ferociously anti-consumer. After all, how can consumers find out which provider offers the best service until they try their options? When two-year contracts are required, there is no room for trial and error. Make a mistake, buy a service that's not really right for you, and there's no get-out-of-cell-phone-jail-free card. You're stuck.
So, many consumers simply put up with inferior service. You'll spot them wandering up and down the block outside their apartments, trying to get a signal -- never imagining that there might be a better way. Well, there just might be.
Sublease your phone
It turns out, while you can't just cancel your cell phone service, you can effectively sublease it. If you can find someone else to take on the remainder of your cell phone plan, you are home-free.
I know what you're thinking -- now there's a way to charm friends and family. "Hey want to take on my bad cell phone service? " But there is an alternative. Pawn your phone off on a stranger.
Enter CellTradeUSA.com, a New Jersey-based start-up with an Internet-age solution. Consider it an online dating service for people who want out of their cell phone plans and for people who don't want to commit two years to a new service provider.
The "get out people," as founder Eric Wurtenberg calls them, post a free ad on the service stating their current monthly fee, minutes and remaining contract period. Usually, they tag onto the ad an offer of a free phone, car adapter and other accessories to sweeten the pot. After all, the phone is most likely useless to them after they get out from under their plan.
The "get in people" can browse the ads for free and can send e-mails to "get out people" for free, too.
And now, the fee comes in. Those trying to rid themselves of a cell phone plan must pay $19.99 to read the e-mails coming from interested parties. But at least they have a chance to see if there is interest before paying the fee.
Is this legal? And legit?
After a match is made, the two private parties must separately settle their affairs with cell phone companies.
But do mobile providers allow cell plan swapping? Generally yes, says Joe Farren, spokesman for CTIA, the mobile phone lobbying group.
"There is language in the contracts that permits it," he said. His group takes no stance -– positive or negative -- on cell phone plan subleasing, he said. But there is nothing standing in the way of firms like CellTradeUSA from profiting off cell phone consumer dissatisfaction and matchmaking.
Cell phone companies do require the new phoneholder in such a transaction to undergo a credit check. But there are no additional sign-up fees or activation fees, according to Sprint and Verizon.
The idea might sound a bit wacky, but it's no wackier than paying for a phone that doesn't really work for another 9 months. And the mere existence of such a Web site points to the severity of the problem, said Ed Mierzwinski, who helped write the PIRG cell phone study.
"They want a captive customer; they don't want customers who can shop around," he said. "People that have problems can't get satisfaction because the company knows if you have a problem, they can frustrate you … because you have no real choice."
PIRG is working to pass cell phone users Bill of Rights laws in states around the country. One such bill did pass last year in California, offering consumers the chance to return a phone for up to 30 days with no termination fee.
The industry has responded by vigorously defending its policies. Farren says early termination fees are necessary because cell phone providers subsidize the cost of handsets and must recover that subsidy if their consumers bail on them. Cell phone firms have asked the Federal Communications Commission to clearly categorize the fees as part of the subscription price, as opposed to a penalty. That would insulate the industry from lawsuits that would challenge the fees as unfair penalties.
Number portability, two-year contracts and clingy companies
But while consumer groups and the powerful telecommunications industry duke it out, Wurtenberg figures he can make some good money by plugging the gaps. After all, paying him $19.99 is a lot cheaper than paying your cell phone company $175.
The site wouldn't have worked two years ago when consumers had to abandon their cell phone numbers if they switched providers. But new FCC rules requiring cell phone portability opened the door for a business like Wurtenberg's. Also, the slow, steady rise in two-year contracts -- much stiffer than than the once-popular one-year pacts -- helps makes the case for subleasing.
It also makes the case for those who criticize cell phone companies and their clinginess. The rise of two-year requirements did seem to correspond neatly with phone number portability, suggesting just as cell phone firms were forced to give consumers more choice, they found other ways to chain them up.
'Get out of your contract' prize
So far, CellTradeUSA.com's offerings are a bit sparse. Wurtenberg says at any given time there are about 5,000 phones being offered. "Get out" people with hot phones seem to fare the best.
"If you are offering a Razr or Treo, you get out in one or two days," he said. He claimed he couldn't say how many deals had been consummated, because consumers actually handle the final steps of the transactions on their own, so he can't track them.
A coming feature might earn the site a bit more attention. Soon, CellTradeUSA will be offering "get out of your contract" prizes -- a sponsored contest in which winners will actually be absolved of their cell phone obligations for free. Advertisers will foot the bill.
"I think people are going to go crazy over this," he said. The fact that people even land on his site proves they've already been driven crazy by their phones.