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A Friendlier Cell Phone Contract

Boot Camp feature for Wednesday, July 5, 2006

A friendlier cell phone contract. Bloomberg Boot Camp, a report on today's technology. Verizon Wireless has become the first of the big mobile carriers to announce plans to end its fixed early termination fee of 175 dollars. Those fees, according to Verizon Wireless CEO Denny Strigle, have been the number one complaint from customers…industry wide. Beginning in the fall…the company will pro-rate termination fees….and will place a fifty dollar limit on charges for replacement phones that are no longer under warranty. At the Yankee Group, senior analyst Andy Castonguay says….

"I think it's an important announcement in the sense that our understanding is that this has been an element of dissatisfaction in the consumer world. Looking to try to tie somebody down in order to guarantee a decent start up price with a plan. Because of the economic penalty, oftentimes they don't have the ability to move on to other types of carriers. What this does is it creates an incentive for not only Verizon to continue to offer better services, but it creates a competitive push to Cingular, Sprint, T-Mobile to also enter this arena."

Making it easier for customers to leave may wind up helping Verizon to gain customers instead of lose them according to Castonguay. He adds, it will put more pressure on the company internally to keep customers happy.