Dealing with telecom contracts.
"Your service sucks, and I'm canceling everything!" Tina Aldatz-Norris screamed into her phone. She hung up before the customer service representative could reply. The sound of her voice carried through the office of Foot Petals, her Long Beach, California -- based maker of women's shoe insoles. Concerned employees approached her office. "Tina, is everything OK?" they asked. No, it wasn't. "I know it wasn't professional, but I was just so frustrated," says Aldatz-Norris.
She still feels trapped. Because many of her employees travel frequently for business, Foot Petals bought eight of its 14 workers cell phones through a corporate account with Sprint (NYSE:S). In July, Aldatz-Norris paid full price to upgrade the phones to new BlackBerrys, a move that extended all the contracts for another two years. Since then, she says she has been overwhelmed by coverage problems, stringent contract policies, and long customer service hold times. "It's been increasingly difficult to get a live person on the phone," she says. Sprint says it is taking steps to improve service. "We have recently hired thousands of care representatives in order to provide quicker and more efficient service to our customers, as well as improved our automated response system," says Roni Singleton, a Sprint spokeswoman. Still, after so many headaches, Aldatz-Norris is ready to bail. The problem is, canceling now would mean paying about $1,600 in early termination fees.
Most business owners have been frustrated at some point with their phone service. In part that's because they typically don't get the same level of customer service that large corporations receive. Pending legislation will make it easier for consumers and small companies to part with their cell phone providers early. But until new laws get passed, your best bet is to read contracts intently and then make your demands. Some hints:
Before the contract is signed, even a small company has leverage. The best thing you can do to protect yourself is to negotiate or shop for a contract that allows "termination for convenience," says law professor Eric Goldman, who directs the High Tech Law Institute at Santa Clara University School of Law in California. Simply put, that means you can walk away for any reason. The next best option is "termination for cause," which means you can call it quits if the vendor fails to provide an agreed-upon level of service.
If you have a choice between an inflexible and a flexible contract, pay more for the flexible one. Goldman likens the notion to the homeowner deciding between a mortgage with a hefty prepayment penalty and a slightly more expensive mortgage that allows for refinancing without a penalty. The smart buyer will spend more to retain the flexibility to save money later. Pay-as-you-go contracts, for example, are usually a smarter bet than prepaid contracts, even if the monthly fees are higher, because you can walk away if problems aren't fixed. You may get better customer service, too, because your vendor knows you can leave.
Look for a provider that will give you a single point of contact. Many companies won't give you an account rep until you employ at least 25 people. But some will provide a single point of contact for groups as small as five. If that's not an option, ask about special customer service programs for small businesses. Sprint, for example, recently extended a free service to all its business customers this year called Sprint Business Premier (go to businesspremier.sprint.com for more information). The program includes Sprint's Premier Care, a customer service department for business customers with fewer than 25 phones. It even has its own toll-free number: 877-639-8351.
Pay special attention to early termination fees and automatic contract renewals. Many cellular carriers have recently changed their policies in reaction to cries of outrage. Last September, Senator Amy Klobuchar of Minnesota introduced a bill that would make it illegal for wireless operators to extend contracts automatically when consumers and businesses change rate plans. It would also require providers to prorate early termination fees.
Telecom companies seem to be getting the message. Verizon (NYSE:VZ) Wireless and AT&T (NYSE:T) now prorate early termination fees. T-Mobile and Sprint have announced they will begin to do so sometime this year. Several carriers have also recently abandoned their practices of renewing contracts automatically when customers switch rate plans. But buying a new phone still often prompts a contract extension. So, too, can taking advantage of special promotions.
And keep in mind that customers can occasionally escape contracts without paying early termination fees when a provider changes its pricing. According to The Consumerist, a consumer advocacy blog, when Verizon recently raised text-messaging rates from 15 cents a message to 20 cents, some customers were able to end their contracts without paying early termination fees, because the new rate constituted a "materially adverse change" to the contract.
Only 36 percent of all wireless customers found their carrier's customer service departments very helpful, according to a recent survey by Consumer Reports. If you're getting the runaround from your phone company's customer service department, file a complaint with your state public utility commission, advises Consumers Union, the organization that publishes Consumer Reports. The organization also recommends contacting your local consumer advocate. (The National Association of State Utility Consumer Advocates publishes a directory of them at nasuca.org The Federal Communications Commission and your state attorney general can be powerful advocates, too.
Not getting anywhere with customer service? The Consumerist, a consumer advocacy blog, posts a directory of telecom executives' contact information in its guide to "fighting back." You can find a link to the guide at http://www.inc.com/keyword/apr08. To file a complaint with the Federal Communications Commission, go to fcc.gov/cgb/complaints.html.