Archives: Phones & Cell Phones

A consumer's ability to get better deals on the price and quality of cell phones is at stake in today's cell phone market.  That's because competition is not as robust as it could be. Recent "mega-mergers" mean there are two fewer national service providers.  In 2003, consumers finally won the right to keep their cell phone number when switching companies, but they are still forced to invest in new phones when making a switch. Policymakers have not done enough to prevent anti-competitive practices that limit consumer choice and freedom of movement between companies. 

Shrinking Service Options

Cingular’s take over of AT&T created the nation's largest wireless phone company.  Now Sprint and Nextel have also joined to form a powerful number three. We've already seen that as local wireline phone companies merged, competition all but dried up, with prices on the rise and customer service on the decline. Industry analysts predict that this wireless company merger will be followed by others. Fewer competitors in the market means fewer choices for consumers. 

Consumers Union and Consumer Federation of America opposed the Cingular-AT&T Wireless merger for its anti-competitive effects. Consolidating the nation's second and third largest cell phone companies is anticipated to result in higher prices because there will be fewer national cell phone companies competing for consumers' business.  The Sprint-Nextel merger is more of the same.

AT&T, Cingular and Sprint do not have stellar customer service records—the question remains whether the new giants will improve on that score, or if consumers will experience diminished quality of service in the wireless market, as larger companies try less hard to keep customers satisfied.  Sprint-Nextel operate incompatible networks, causing another potential headache for consumers.  Before signing a contract, read Consumer Tips.

Consumers Union and Consumer Federation of America warned about potential service problems in a July 2004 report. Consumers Union also released an FAQ for consumers shortly after the announcement.

Wireless mergers could affect competition in other telephone markets as well. The combined Cingular-AT&T Wireless (owned by local phone giants SBC and Bell South) is the dominant cell phone company in virtually every one of the markets in which their wireline parents are the dominant local phone company. 

That eliminates a major competitor of traditional telephone service at the same time these local wireline companies are pressuring lawmakers to remove price caps and give them free reign to raise local phone rates.  Consumer Federation of America and Consumers Union published a paper on these issues.  "Remonopolizing Local Telephone Markets: Is Wireless Next?" details the dangers of local phone giants also dominating the wireless phone market.

Take Your Number, But Not Your Phone

Today, many consumers would like to be able to keep their cell phone handset or multi-functional handheld computer (PDA) when they switch to a new cell phone service using a compatible network.  Letting consumers re-use handsets, another term for cell phone, saves money—and saves the environment by keeping otherwise usable handsets out of landfills.  But a cell phone company practice that prevents consumers from keeping their phones when switching carriers is called "handset locking."  This software lock prevents consumers from using their cell phone on another compatible network.  Consumers Union's EscapeCellHell project explains which phones could work on with a new carrier. 

Consumers Union is calling on the FCC to prohibit this anti-competitive practice (PDF). Prohibiting cell phone companies from locking cell handsets will give consumers even more freedom to change service plans, with the additional benefit of reducing toxic waste caused by discarded cell phones (PDF).

The Foundation for Taxpayer and Consumer Rights in California petitioned a California Superior Court to block handset locking.