WASHINGTON, D.C., February 10, 2011 — As the Verizon iPhone 4 arrives on store shelves today, Consumers Union, the nonprofit publisher of Consumer Reports, is raising concerns about early-termination fees facing AT&T iPhone customers who want to switch to Verizon and other wireless industry issues in a letter to the Federal Communications Commission (FCC).
“While we are pleased to see Verizon customers have more choices with respect to handsets, we are concerned about broader anti-consumer practices implicated by the availability of the Apple iPhone 4 on the Verizon network,” wrote Parul P. Desai, Consumers Union policy counsel, in a February 10 letter to FCC Chairman Julius Genachowski.
Desai pointed out that early-termination fees for wireless customers continue to limit consumer choice. For example, AT&T iPhone customers who want to terminate their contracts early to go with Verizon will face a penalty of $325, minus $10 for each full month of the contract that the customers completed. Other carriers subject their customers to similar fees.
“Early-termination fees lock customers into lengthy contracts,” Desai said. “They limit the ability of consumers to vote with their feet by leaving a current provider when another provider makes a better offer,” Desai said.
In addition to these fees, AT&T iPhone customers who want to make the switch to Verizon will have to purchase a new handset, which brings up long-standing concerns about the lack of interoperability among wireless networks and industry resistance to letting consumers carry their phones to a new wireless service.
“Interoperability problems and early termination fees are not limited to this instance,” Desai said. “Customers continue to be unable to freely move from one carrier to another if they are unhappy with their current wireless service provider.”
Desai noted that these issues have been raised in a number of proceedings before the FCC, and she urged the Commission to swiftly resolve these proceedings so consumers can benefit from more choice and competition.
“FCC action would help consumers by creating a more robust wireless market, fostering innovation of devices, and holding wireless carriers responsible for sub-par service,” Desai said.
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