If you are considering buying a new BlackBerry, Android phone, or Netbook from Verizon Wireless, you better make sure you won't want to break your contract early, as the penalty for ditching your service before the end of the contract has just gotten a lot steeper.
But what does Verizon's move to increase early-termination fees mean for the rest of the wireless industry? That's a good question.
Verizon Wireless recently doubled its early-termination fee for what it calls 'advanced devices.'
(Credit: Verizon Wireless )Early-termination fees are not new to the wireless industry. For as long as wireless operators have been selling and subsidizing cell phones, they've required customers to sign contracts. And they've penalized them for canceling their contracts early.
The phone companies say they must charge a fee to recover the cost if a customer quits his or her service early. These fees have angered many customers. Several class action lawsuits have been filed against cell phone carriers and some customers have won. Congress and the Federal Communications Commission have challenged the industry on this practice.
While it's very unlikely these fees will ever go away, as of mid-2008, all four of the major wireless carriers in the U.S. have been prorating their early-termination fees, so that customers near their end of their contracts don't pay the same fee as those just starting their contracts.
But now Verizon Wireless has shocked consumers and the industry by doubling its early-termination fee. Verizon representatives say it only makes sense that Verizon would raise this fee since it is subsidizing far more of the cost of sophisticated devices, such as smartphones.
In an effort to help consumers better understand these changes and to understand how other national wireless operators stack up, CNET has put together this FAQ.
How much is Verizon's new early-termination fee?
The new fee has been increased to $350 from $175.
Does this fee apply to all Verizon phones?
No, it only applies to contracts associated with the purchase of what Verizon calls an advanced device, such as a smartphone or Netbook at a reduced price. This change only applies to new contracts that started on or after November 15. For customers who signed a contract before November 15, the old $175 early-termination fee applies when they choose to end their contract early. This means that new Droid customers who bought their phones the first weekend it launched will not be required to pay the $350 ETF if they terminate service early.
Verizon and the three other major phone companies have been prorating their early-termination fees. Will this fee be prorated?
Yes, Verizon will continue to prorate the early-termination fee over the life of the contract. The rate will decrease by $10 each month of the contract. Verizon's previous prorate rate was $5 per month.
What about for non-smartphones or feature phones that run on Verizon's network? What is the early-termination fee for those devices?
The fee for non-smartphones will remain the same, $175. And the rate will decline by $5 a month during the contract.
Why is Verizon changing its policy now? It seems like it is just being stingy.
The company says that the $175 early-termination fee was set long before people were walking around with expensive, sophisticated, mini-computers in their pockets. The new early-termination fee more fairly reflects higher costs associated with advanced devices due to their more complex chip sets, microprocessors, and licensed software that perform more functions than other phones, the company claims.
Is there any way to avoid an early-termination fee or contract?
Yes. First, early-termination fees only apply if you cancel your service before the contract ends. But you also don't need to sign a contract if you'd rather not. But without a contract, customers will pay full retail price for the devices.
Verizon says it offers the option to purchase all its phones with either a two-year contract, one-year contract, or month to month, which requires people to pay full retail price for the phone. For example, the new BlackBerry Storm 2 is $179 with a two-year contract. But the phone would cost $539 without a contract. The new Motorola Droid is $199 after a rebate with a two-year contract. And it is $559 without a contract at the full retail price.
Verizon also offers prepaid wireless phones and service, which allow customers to buy their phones and add minutes of use in advance.
What about other national wireless operators? Have any of them announced they are following Verizon's lead?
So far neither AT&T, nor Sprint Nextel, nor T-Mobile USA have said they plan to raise the early-termination fees on their smartphone devices. An AT&T spokesman said he couldn't speculate on what the company might do in the future, but for now, the company is sticking with its current fee.
T-Mobile USA's spokesman didn't elaborate, but simply said the company has no plans to raise its rate right now.
Sprint Nextel also said it wouldn't raise its early-termination fees, and it criticized Verizon for doing it.
"We have no intention of matching Verizon's new ETF," said Sprint spokesman John Taylor. "We think the decision to double the early-termination fee just on smartphones doesn't make much sense. Why is Verizon trying to disincentive people from buying smartphones? We want people buying smartphones and using more data."
How much do these other national wireless operators charge for their early-termination fees?
Sprint 's early-termination fee is $200. The company reduces that fee beginning in the fifth month of the contract. Then the fee goes down $10 a month until it reaches $50.
AT&T's early-termination fee is $175 and it decreases by $5 for each month of your contract.
T-Mobile USA's early-termination fee schedule is a little more complicated. As of June 28, customers with a one-year or two-year contract with T-Mobile will see their early-termination fee drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they will pay a termination of fee of $50. For customers who terminate their service in the last 30 days of their contract they will either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.
Do these other carriers offer no-contract options?
Sprint allows some of its phones to be purchased for full retail price without a contract. However, the Palm Pre, which went on sale in June, requires a two-year data plan.
Sprint's prepaid brands Boost Mobile and Virgin Mobile USA also offer customers prepaid options that don't require a contract. And phones are purchased at full retail prices.
AT&T allows some phones to be purchased at full price without a contract, but phones such as the Apple iPhone must be purchased with a two-year contract and a $30 a month data plan. AT&T also offers prepaid phones.
T-Mobile USA also offers customers who don't want a contract different options, including T-Mobile Prepaid phones and plans, FlexPay, and month-to-month services including its new Even More plans.
Its Even More Plus plan allows customers to purchase any phone in T-Mobile's device lineup and sign up for a month-to-month rate plan without signing a contract. Customers pay full retail price for the phones, but have the option to purchase their phones using an Equipment Installment Plan over time until the phone is paid off.
For example, a customer purchasing the Google Android myTouch smartphone would pay $150 for the phone with a two-year contract. But with the Even More Plus plan, the customer would pay $400 for the phone with no contract. If the customer wanted to use the Equipment Installment Plan, he or she would pay $20 a month for the phone over 20 months.
The Apple iPhone and other smartphones hitting the market are cool, but if you don't have a spare $200 in your wallet, and you can't afford the hefty monthly service fees, there are less expensive options that still offer some of the wireless Web at a much more affordable price tag.
These alternative phones may not be as sexy as the iPhone or the new Palm Pre. And the Internet service and applications will not be as slick as what you'll find on a full-fledged smartphone. But for many wireless subscribers, less expensive feature-phones and cheaper data plans will offer enough to do the trick.
There is no denying that smartphones are the future of the wireless industry. As a category, smartphones are the fastest growing segment of the entire market. And new devices hitting the market this summer are selling fast. Last month, Apple and AT&T sold over a million new iPhone 3GS models in the first weekend it was available. People also lined up throughout the country to be the first to buy the Palm Pre sold exclusively by Sprint Nextel. And hype is already building around the new Google Android phone, called the MyTouch, which is set to launch on T-Mobile's network early next month.
These devices are made for the Internet, and developers are creating lots of cool new applications to take advantage of loads of advanced features. But all these features and speedy access to the mobile Web come with a hefty price tag. And as the economy in the U.S. languishes and more Americans lose their jobs, more consumers may find themselves unable or unwilling to shell out the extra cash every month for a smartphone service.
For many wireless subscribers, the functionality they get on a smartphone is simply overkill. And as a result, they are overpaying for services they don't really need or even use. For these consumers, who are mostly interested in checking e-mail, updating Facebook and Twitter, looking up a few things on the mobile Web, and occasionally using location-based services, there are plenty of less expensive options.
At the low-end of the market, there are several feature phones that with a two-year service contract, rebates, and online discounts cost less than $30. And these devices are just fine for accessing basic Web e-mail and Web sites like Facebook. For a little bit more money upfront, wireless subscribers can get slightly more advanced devices with assisted-GPS for navigation and location-based services, corporate e-mail access, and integrated applications for social networking sites like Facebook.
While these phones are often much cheaper than the latest smartphones on the market, the other big benefit is that the data service plans to access all these mobile Web goodies are cheaper, too. Wireless subscribers on average can save about $15 a month using a more basic feature phone for accessing mobile e-mail and the Internet rather than using a full-fledged smartphone. This is a savings of about $360 over the life of a two-year contract.
To help readers figure out which phone and carrier service plan fits their needs best, here is a summary of some of the hottest phones on each of the four major U.S. carrier networks with a summary of the service plans that are offered for these devices. For full reviews of each of the phones listed in the article, check out CNET Reviews.
*** AT&T ***
Motorola Karma QA1 - $79 with 2-year contract
Motorola Karma QA1
(Credit: CNET)Motorola Karma QA1 CNET review
The Karma is a new 3G phone that offers text messaging, instant messaging, and home screen access to Facebook and MySpace. It has a slide-out QWERTY keyboard, and high-resolution display. Other features include assisted-GPS, a 2.0-megapixel camera, an MP3 player, stereo Bluetooth, a 3.5-mm headset jack, a microSD card slot capable of holding up to 16GB cards, and quad-band GSM.
LG Neon - $30 with 2-year contract
LG Neon
(Credit: CNET)The Neon is one of the lowest-cost touch-screen devices available. It also features a full QWERTY keyboard, a 2.0 megapixel camera, and access to instant messaging (AIM, Windows Live Messenger, and Yahoo Messenger), mobile e-mail, AT&T music, and the mobile Internet. While there is mobile e-mail support it only supports a few service providers, including AOL, Yahoo, AIM, Windows Live Hotmail, AT&T Yahoo, Bellsouth, Comcast, Earthlink, Juno, Mindspring, and NetZero. Gmail is not accessible because the phone doesn't support POP or IMAP. It is also not a 3G phone.
LG Xenon - $99.99 with 2-year contract and rebates
LG Xenon
(Credit: CNET)Xenon has a full QWERTY keypad for text messaging beneath a large touch-screen display. This 3G device has a 2.0 megapixel camera and offers the full suite of AT&T entertainment services. It's one of AT&T's best-selling devices and is available in three colors.
It also has more advanced features, such as stereo Bluetooth, instant messaging (with AIM, Yahoo, and Windows Live accounts), mobile e-mail, and assisted-GPS. The mobile e-mail is housed within a Web-based interface and will only support e-mail from certain accounts like Yahoo, AOL, AIM, Windows Live Hotmail, AT&T Yahoo, BellSouth, Comcast, Earthlink, Juno, Mindspring, and NetZero. We weren't able to use Gmail, especially since the Xenon doesn't support POP or IMAP. As for A-GPS, the Xenon comes with AT&T Navigator, AT&T's turn-by-turn location-based service.
Similar phones from AT&T: (Listed pricing is for phones with a two-year service contract and also reflects the price after any rebates or special Web offers.
Samsung Magnet: $19.99; Pantech Matrix: $29.99; Samsung Propel: $30; Samsung Impression: $149.99
Service plans: AT&T offers a series of voice minute packages starting at $39.99 for 450 minutes of talk time that must be used with all its phones. From there, customers can layer on additional services, such as text messaging or data. For text messaging, AT&T offers bundles of other services. For $5 extra a month, subscribers get 200 text and picture messages . For $15 a month, they get 1,500 messages. And for $20 extra a month, they get unlimited texting.
The plans differ when it comes to data. Smartphone subscribers must subscribe to a $30 unlimited data plan in addition to a voice plan and any texting plan they may choose. Feature-phone customers are charged $15 a month for unlimited e-mail and mobile Web access if they choose this option. It is not mandatory. AT&T also offers a special discount for a combined data and unlimited messaging package that is $30 extra per month.
The bottom line: AT&T subscribers who want access to Web-based personal e-mail and Internet Web sites, like Facebook, can get a good bargain with a low-cost feature phone. At a minimum they can save $15 a month using a non-smartphone data plan versus the data plans that come with smartphones, such as Apple's iPhone and RIM's BlackBerry devices.
*** Verizon Wireless ***
Samsung Alias - $19.99 with 2-year contract and online discount
Samsung Alias
(Credit: CNET)The Samsung SCH-u740 has a dual-flip hinge that lets users view the display in either portrait or landscape mode. It has a QWERTY keyboard, access to Verizon's V Cast offerings, and a full array of multimedia goodies. Other basic features include a vibrate mode, text and multimedia messaging, instant messaging (AOL, MSN, and Yahoo messengers are supported), POP3 and IMAP e-mail support, and corporate e-mail syncing using Web-based Microsoft Exchange and Lotus Domino services. And it comes with a wireless WAP browser for stripped-down versions of Web sites for mobile devices.
LG enV2 - $49.99 with 2-year contract and online discount
LG enV2
(Credit: CNET)The LG enV2 is a slim handset with a full QWERTY keypad that flips up and has two displays. It supports instant messaging, Web browsing using a WAP browser, access to Web e-mail, USB mass storage, wireless syncing, and a text-to-speech feature. It also has a music player with access to Verizon's VCast music service. The music player supports MP3, WMA, and unprotected AAC and AAC+ files. Other Verizon applications are also available, such as VZ Navigator, Verizon's own location-based turn-by-turn navigation service. The enV2 comes with 63MB of built-in memory, but you can always get more storage via a microSD card.
LG Dare - $79.99 with 2-year contract and online discount
LG Dare
(Credit: CNET)The LG Dare has touch-screen interface, an advanced 3.2-megapixel camera, a full HTML browser, and operates on Verizon's 3G EV-DO Rev. A network. The Dare has all the standard features you'd expect on a phone. And also comes with some advanced features, such as full Bluetooth support with stereo A2DP, the capability to use the phone as a modem, and file transfer. It also supports mobile e-mail, mobile instant messaging, a USB mass storage mode, voice command and voice dialing, voice recording, and GPS functionality via Verizon's VZ Navigator service. Mobile e-mail is restricted to popular Web mail services such as Hotmail, Yahoo, and AOL, so it's not nearly as robust as using a smartphone.
It also has a full HTML browser, which is an important distinction since many phones in this category are only WAP-enabled, which presents stripped down mobile versions of Web sites on mobile devices. The phone can also be rotated to display the browser in landscape mode, which makes entering URLs a lot easier via the virtual QWERTY keyboard. However, CNET reviewer Nicole Lee notes in her review that the browser experience is not as clean as the Safari browser on the iPhone.
Similar phones from Verizon Wireless: (Listed pricing is for phones with a two-year service contract and also reflects the price after any rebates or special Web offers.
Verizon Wireless Blitz: $19.99; Motorola Rival: $49.99; Samsung Glyde: $69.99; Motorola Krave ZN4: $69.99; LG Voyager: $79.99; LG enV3: $79.99; LG Versa: $99.99; LG enV Touch: $99.99; Samsung Alias 2: $149.99
Service plans: Verizon Wireless offers a variety of options for consumers who want to use data services. But all these choices can be confusing. Here is a general summary that should help steer prospective consumers in the right direction.
For basic service, Verizon allows subscribers to sign up for services a la carte. So a subscriber could start with a voice plan, which begins at $39.99 per month for 450 minutes of talk time. From there subscribers can layer on additional services. Text-messaging services can be added in different increments. For $5 more a month, subscribers get 250 messages. For $10 a month, they can get 500 messages. For $15 a month they can get 1,500 messages and $20 gets them 5,000 messages per month. All messages sent to other Verizon subscribers are free and not counted against these totals.
Then subscribers can either choose to pay $1.99 per megabyte of data used per month when surfing the mobile Net or checking e-mail, or they can sign up for a VPak data plan that includes video clips, sports highlights, news updates and unlimited e-mail and Mobile Web usage. This package is $15 a month.
If subscribers want unlimited messaging, e-mail and data, they can sign up for either a Nationwide Connect Plan, that starts at $69.99 a month for 450 voice minutes, unlimited e-mail and data, and unlimited messaging, or they can sign up for a Nationwide Premium Plan that begins at $79.99 per month for 450 voice minutes, unlimited messaging, Mobile email, VZ Navigator and the V CAST VPak, which includes access to Verizon's entertainment video.
Meanwhile, smartphone subscribers can also sign up a la carte for services. Voice and text messaging is the same. But data services are $29.99 for unlimited Web usage and e-mail. For corporate BlackBerry users the price tag for this service is $44.99 per month.
The bottom line: Verizon Wireless subscribers who want access to Web-based personal e-mail and Internet Web sites, like Facebook, can save at least $15 using a data plan for non-smartphones. But with some smartphones priced at around $50 with a two-year contract, the price difference over the life of the contract might not matter to some subscribers.
*** Sprint Nextel ***
SCP-2700 by Sanyo - Free with 2-year contract and Web purchase
Sanyo SCP-2700
(Credit: CNET)The Sanyo SCP-2700 is a slim and lightweight phone with a full QWERTY keypad that makes it look like a lower-end version of a BlackBerry. It offers POP 3 e-mail from providers like Sprint's own PCS Mail, AOL, Hotmail, Yahoo, and Gmail. It also supports Web-based work e-mail using Outlook Web Access.
LG Rumor2 - $29.99 with 2-year contract, rebates, and Web purchase
LG Rumor
(Credit: CNET)The LG Rumor2 has a full QWERTY keypad and offers access to POP3 e-mail, such as AOL, AIM, Hotmail, Yahoo, and Gmail. It also offers access to work e-mail for subscribers using Web-based Outlook and Lotus Notes. And it includes some basic features, like text and multimedia messaging, an alarm clock, a calendar, a calculator, a voice recorder, voice dialing, wireless phone book backup, a unit converter, and a notepad. It also supports PC syncing, USB mass storage, a memory card manager, GPS with support for Sprint Navigation, Sprint's Family Locater service, stereo Bluetooth, and instant messaging.
Samsung Instinct - $49.99 with 2-year contract, rebates, and Web purchase
Samsung Instinct
(Credit: CNET)The Samsung Instinct is a touch-screen 3G wireless device with POP3 e-mail from AOL, AIM, Hotmail, Yahoo, and Gmail. It also supports corporate e-mail via Outlook Web Access. When it first launched, it was compared to the Apple iPhone. While it's not quite a smartphone, it offers some compelling features, like its own brand of visual voice mail. It offers several organizational tools and voice command for dialing and searching contacts or places and things on the mobile Web. For example, simply speaking the name of a business or even the type of business (like "pizza"), it will use the phone's GPS connection to search your surrounding location for a match. It then offers a map and directions to the business, which can be shared with a friend via a message, or it can dial the number to the location. The phone also supports a full HTML browser.
Similar phones from Sprint Nextel: (Listed pricing is for phones with a two-year service contract and also reflects the price after any rebates or special Web offers.
LG Rumor: $29.99; Palm Centro: $49.99 LG Lotus: $49.99; Samsung Rant: $49.99; Samsung Exclaim: $79.99; Palm Treo 755p: $99.99; Samsung Instinct s30: $129.99; HTC Snap: $149.99
Service plans: Sprint has greatly simplified its pricing. But simple doesn't necessarily mean cheaper. In fact, the service plans offered for Web-enabled and e-mail friendly feature-phones are exactly the same as for its smartphones.
Sprint's Everything Data plans start at $69.99 and include 450 minutes of talk time plus unlimited Web surfing, e-mail, BlackBerry Internet Services, GPS Navigation, and a series of entertainment services, such as Music Premier, TV Premier, and NFL Mobile Live. It also offers unlimited Direct Connect walkie-talkie service for phones that are capable of that. And it includes unlimited text, picture, and video messaging.
The $89.99 per month offers all this with 900 minutes of talk time. And the $99.99 Simply Everything plan includes unlimited voice minutes in addition to these other services.
The bottom line: There is no discount for customers subscribing to a feature phone instead of a smartphone, but feature phones can provide savings in the upfront cost of buying a new phone. So for consumers who don't feel like shelling out $200 for a Palm Pre or a BlackBerry, they can get a device with similar functionality for $50 or less.
*** T-Mobile USA ***
Samsung Gravity - $30 with 2-year contract and rebates
Samsung Gravity
(Credit: CNET)The Samsung Gravity is a thick candy-bar-style phone with a slide-out QWERTY keyboard. Features are on the lower end, with a 1.3-megapixel camera, stereo Bluetooth, a basic music player, and not much else. But its keyboard design is great for typing out text messages, and its affordable price makes this a great texting phone for the budget-minded. It also supports instant messaging for all the major IM services (AIM, ICQ, Windows Live, Yahoo), and e-mail from AOL, Yahoo, Comcast, Gmail, Mac, Verizon, and more. More advanced users will like the stereo Bluetooth, voice command, and the wireless Web browser.
T-Mobile Shadow - $149.99 with 2-year contract and rebates
T-Mobile Shadow
(Credit: CNET)The T-Mobile Shadow is considered an entry-level smartphone that uses the Windows Mobile operating system. It comes in a sleek slider design. And it features Bluetooth and Wi-Fi; a 2-megapixel camera; and various messaging capabilities. Positioned somewhere between the T-Mobile Sidekick family and the T-Mobile Dash, the Shadow (made by HTC) is for customers looking to make the jump from a regular cell phone to a more full-featured handset that can keep up with their social and professional lives without being too serious, according to CNET reviewer Bonnie Cha. Since the phone was introduced before T-Mobile had its 3G up and running, the device runs on the slower EDGE network.
The Shadow supports POP3 and IMAP e-mail accounts. And T-Mobile has included separate wizards for all the popular e-mail clients, including AOL, Gmail, Windows Live, and Yahoo. Since the device is a Windows Mobile 6 smartphone, it also ships with Microsoft's Direct Push technology out of the box so you can get real-time e-mail delivery and automatic synchronization with your Outlook e-mail, calendar, tasks, and contacts via Exchange Server. It also supports instant messaging clients from AOL, ICQ, Yahoo, and Windows Live Messenger apps.
But the real beauty of this phone is that even though it's technically a smartphone, it doesn't require the $34.99 smartphone data plan, and is able to use a much less expensive plan from T-Mobile.
Similar phones from T-Mobile USA: (Listed pricing is for phones with a two-year service contract and also reflects the price after any rebates or special Web offers.
Samsung Memoir: $199.99, MOTOZINE ZN5 $99.99
Service plans: T-Mobile offers its myFaves program that allows unlimited calling to five phone numbers on any network. Its basic service plan, that includes the myFaves option, starts at $39.99 for 300 minutes. Subscribers can then add additional data and messaging services. For non-smartphone/non-Sidekick devices and the T-Mobile Shadow, subscribers can get unlimited Web access, which includes personal e-mail for $9.99 per month. A bundle that includes unlimited Web and domestic MMS and SMS messaging is $19.95 per month. If subscribers want smaller packages of texting service it's $4.99 for 300 message and $14.99 unlimited messaging.
For most of its smartphones and Sidekicks, T-Mobile requires a basic voice plan. The data plans it offers for these devices cost $24.99 for unlimited Web usage and e-mail and $34.99 unlimited data with unlimited messaging.
The bottom line: T-Mobile offers some of the best deals on data services and voice services with its myFaves program. For consumers willing to spend $150, the Shadow is a good entry-level smartphone that won't take a big bite out of your wallet. But even the smartphone data pricing coupled with the myFaves voice plans is a good value when compared to the competition. The downside for T-Mobile is its coverage. The carrier doesn't have nearly the coverage that AT&T, Verizon Wireless, or even Sprint Nextel has. And its 3G network is not yet complete.
 |
Business supplies and services can get expensive. Get smart spending tips and learn about new cost-saving opportunities for your business
|
 |
NEW YORK--T-Mobile USA is betting big on its second Android smartphone, the MyTouch 3G, as it officially launches the device making it its flagship smartphone to compete against Apple's iPhone on AT&T.
(Credit:
T-Mobile USA)
The company announced the MyTouch 3G, which is essentially the same phone as the Google Ion or the HTC Magic, last month. And on Wednesday T-Mobile made the device available for pre-orders to its existing customers. The device will be generally available starting August 5.
The MyTouch is the second smartphone the carrier has introduced that uses Google's open-source mobile operating system, Android. T-Mobile introduced the world's first Google Android phone, called the G1, last fall. And so far the company claims it has sold more than 1 million devices.
Thinner and slightly smaller than the G1, the MyTouch features a large 3.2-inch touch screen with 3G and Wi-Fi support. The device comes loaded with several applications including integrated Google Apps, but it also can access the Android Market, a virtual application storefront where users can have their pick of some 5,000 applications for downloading.
Executives at an event here Wednesday made no bones about pitting the MyTouch against Apple's popular iPhone, which is sold exclusively for AT&T's network in the U.S.
"My hope and expectation is that this device will be compared to the iPhone," said Denny Post, senior vice president and chief marketing officer at T-Mobile USA.
It's easy to see the similarities between the phones. Like the iPhone, the MyTouch has a touch screen with a virtual keyboard. And it has access to a lot of very cool applications.
But executives also point out what they consider important differences between the MyTouch and the iPhone.
Personalization is the big buzzword the T-Mobile marketing folks have used in launching the new phone. They claim no two MyTouches will be the same since users can customize their devices to tailor their own lifestyles and needs. The customization goes beyond the ability to download different applications, and also includes the ability to change the background on the phone's home screen and the ability to organize application icons on the home screen.
While iPhone users can drag and drop icons and customize their sleep mode screens, the home screen essentially looks the same on all iPhones.
Whether or not this differentiator is a big deal to consumers is yet to be seen. Another possibly more important differentiator is the fact that the Android software on the MyTouch allows users to easily switch between multiple applications that are open on the device. The software also allows information from one application to be fed or viewed in another application. For example, there is a little user bar at the top of the phone's screen that shows the temperature and weather. It also has alerts for new e-mails and text messages as they come into the phone, without interrupting the application that is going.
Of course, the MyTouch is not the only smartphone that offers this kind of application multitasking. The Palm Pre announced earlier this summer for Sprint Nextel's network has gotten high marks for its ability to multitask. But Andrew Sherrard, vice president at T-Mobile, says that what sets the MyTouch apart from the Pre is the Android Market mobile application store, which already has 5,000 applications.
At the heart of the MyTouch is the open platform Android software, which was developed by Google. And because it uses the same operating system developed for the G1, the features and functionality available on the MyTouch are not much different from the G1.
And it's likely that other Android devices that will be launched on T-Mobile's network and other operators' networks later this year will also be similar in terms of functionality because they use the same operating system.
But instead of lumping multiple Android devices together, T-Mobile will be focusing much of its marketing on the MyTouch as its flagship device. This makes sense from a competitive standpoint as other wireless operators highlight their own exclusive handsets. Apple has the iPhone. And Sprint has the new Palm Pre. Now T-Mobile will focus its marketing on the MyTouch.
The G1, the first Android phone to come to market, launched in November last year and has been a major success for the carrier. But the phone has mostly appealed to early adopters, Post said. The MyTouch will be targeted at the mass market.
"It will appeal to the same consumers that are interested in the iPhone," she said. "But the applications used on this phone won't be just for show. They won't simply be a novelty. Instead they will be very useful and purposeful."
As part of its push to make the MyTouch its premiere smartphone, T-Mobile has put extra effort into training retail staff to help new customers customize their phones and add new applications.
And even though the Android Market today is only a tenth the size of Apple's App Store, it's expected to grow rapidly as more Android devices come to market. And when that happens, Post says there will be a great need to help consumers to sift through the chaos and discover new applications.
"It will become increasingly important for us to recommend and help highlight applications we think consumers will find most useful," she said. "Customers need a guide to help them find useful apps, and move beyond simple novelties. So you will see us creating bundles for recommendations to make discovery easier."
But going up against the iPhone will not be an easy task as the latest version of the device, the iPhone 3GS, seems even hotter than previous generations. In its first weekend, Apple and AT&T sold more than 1 million units. But consumers are hungry for alternatives, and Post believes consumers will also be swayed by T-Mobile's value proposition. The carrier's unlimited data package is priced about $5 less per month than a comparable data package from AT&T.
It's been almost a year since a judge in Alameda County, Calif., ruled that Sprint Nextel's early-termination fees are illegal, and yet Sprint and every other major U.S. wireless operator still charges customers a fee for canceling their services before a contract expires.
So what gives? Why are these pesky early-termination fees still around if they are against the law?
That's a good question and one that many readers have asked me over the past year. Because I get so many questions about these fees, I decided to put together this FAQ to help people understand what the recent court decisions mean for them and to provide some information about where cell phone early-termination fees stand today.
Let's start with the most obvious question: What did the court decide in the cell phone early-termination fee case in Alameda County Superior Court in California?
In July 2008, the judge in the case found in a preliminary ruling that Sprint Nextel's early-termination fees were unlawful. In December, the court issued its final judgment upholding that preliminary ruling in favor of the plaintiffs.
Does this mean that the people involved in the class will get some money?
Well, the case is still being appealed by Sprint. But as it stands now, it is unlikely that anyone in the class will get money. And here is why. The court ruled in favor of the class members and ordered Sprint to pay damages of about $74 million. But before the judge's ruling, a jury had upheld Sprint's contract. And the jury found that members of the class had violated their Sprint contracts. As a result, the jury awarded Sprint about $226 million in damages. In the end, members of the class still ended up owing Sprint about $150 million. But Sprint waived its right to collect the money, so the net result was that no one gets any money.
But the court in California found that the Sprint early-termination fees are illegal. Does this mean that I don't have to pay an early-termination fee if I decide to leave Sprint now?
No, it doesn't. For one, the class involved in the lawsuit was only certified for members in California. So for anyone living outside of California, the ruling means nothing, because the court doesn't have jurisdiction.
What if I am a cell phone subscriber in California? Do I still have to pay an early-termination fee?
Yes, cell phone subscribers in California still have to pay the early-termination fee specified in their original contract. The reason is that the judgment in this case only took into consideration the specific facts involved in this particular case. It was not a blanket decision that all early-termination fees are illegal. Rather, the court ruled that this specific type of early-termination fee imposed by Sprint is unlawful in its current form.
In short, this means that cell phone companies can continue to charge early-termination fees. And if they are challenged in court--even in Alameda County or anywhere in California--the court might decide something different based on the specific facts in that case. So technically, it's not accurate to say that early-termination fees are illegal anywhere. Instead, the early-termination fee Sprint charged to consumers in the manner and for the time specified in this case was deemed unlawful. That's all.
What's more, the jury in this case deemed Sprint's contract valid, which means that anyone who doesn't pay their early-termination fee is breaking their contract and subject to the terms of that contract.
A Sprint representative has clarified the company's position:
"Sprint will continue to enforce contracts with current customers," said Matt Sullivan, a Sprint Nextel spokesman. "The court in its ruling did not prevent Sprint from charging an Early Termination Fee when a customer terminates his contract early."
Weren't there other lawsuits over early-termination fees? What was the outcome of these cases?
Yes, there have been a few other cases. Verizon Wireless was also being sued in California over early-termination fees, but the company settled the case in July 2008, agreeing to pay $21 million to former subscribers, who argued that the company's ETF was unfair and excessive.
Sprint is also defending itself in another class action lawsuit that is certified for a nationwide class. The case is being handled in New Jersey, but will cover plaintiffs from former Sprint subscribers in every state, except California. A Sprint spokesman said that the company is close to a settlement in this case and that the terms are similar in scope to the ones in the settlement that Verizon Wireless agreed to last year. A settlement in this case would also lay to rest all other cases against Sprint for early-termination fees, except for the case in California, which is still in litigation.
So it seems like all these class action lawsuits haven't really had much of an effect on the industry since I still have to pay an early-termination fee. Is that true?
Well, not really. The lawsuits and consumer outrage over these fees, likely prompted Congress and the Federal Communications Commission to take notice, which resulted in some public hearings regarding early-termination fees. The FCC had even considered regulating early-termination fees to establish a national policy. But the agency decided to back off, because the industry was taking action on its own.
What have cell phone operators done to change their early-termination fees?
Over the past few years, all four of the major wireless operators in the U.S. have begun prorating their cell phone contracts.
Verizon Wireless was the first to adopt a pro-rated policy in 2006. And now almost every Verizon subscriber has a prorated early-termination fee as part of their contract. AT&T was next. As of May 25, 2008, all new AT&T subscribers have had their termination fees prorated over the life of their contract. For both Verizon and AT&T subscribers, the early-termination fee starts at $175 and is reduced by $5 every month over the life of the one- and two-year contracts.
T-Mobile USA began prorating its early-termination fees on June 28, 2008. Since then, new customers with a one-year or two-year contract have seen their early-termination fees drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they pay a termination fee of $50. Customers who terminate their service in the last 30 days of their contract either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.
Sprint Nextel was the last of the four major wireless operators to offer a prorated contract. As of November 2, 2008, Sprint adopted a policy that drops the $200 early-termination fee by $10 increments beginning in the sixth month of the contract. This means that by the 15th month of the contract, the ETF is down to $100. The new policy applies to both new customers and those who are renewing service agreements, so long as they signed up or renewed their contract after November, 2, 2008.
How can I avoid signing a contract with my wireless provider and avoid an early-termination fee altogether?
All four major wireless carriers offer customers alternatives to contracts. There are prepaid services that allow customers to pay in advance and do not require a contract. Most of the providers also offer the option to buy a handset at full retail price without committing to a contract. Of course, this also means that customers have to pay full retail price and cannot get a free or subsidized phone. Customers then pay service charges on a month-to-month basis.
A few consumer advocacy groups have recently asked the four major wireless operators to waive their early-termination fees for people who have been laid off and can't afford to pay their cell phone bills anymore. Are any of them considering doing this?
No, but wireless operators aren't completely heartless. Most of them allow customers to downgrade their plans to save money without restarting the clock on their contracts or incurring penalties.
But what if I can't afford my pricey data plan anymore? Can I get rid of that and downgrade to a voice-only service?
This is a tricky one. And before you decide to do anything you should check with your carrier about their policy.
Verizon spokesman Tom Pica said that the company deals with these types of issues on a case by case basis. Customers who are having trouble paying their bills can talk to Verizon customer service to work out a solution. But Pica advises people who are struggling to contact customer support sooner rather than later.
A Sprint spokesman said that if a customer with a separate data plan wants to drop that plan and go to a voice only plan or go to a lower data monthly plan, there is no early-termination fee. But, if the customer has a BlackBerry device, which requires a BlackBerry data plan, the customer must swap out his handset to avoid an early-termination fee. If the customer buys a new handset, the two-year contract clock restarts, but if he activates a handset he already owns, there is no early-termination fee.
A customer with a phone and separate 3G wireless data card for his laptop who cancels his data service will be charged an early-termination fee for the data card service. The easiest way to think of it is that the early-termination fee goes with the equipment.
T-Mobile USA, the fourth-largest cell phone operator in the U.S., is launching new service promotions in an effort to keep long-term customers and attract new ones.
The company plans to offer a special $50 per month unlimited voice plan to longtime customers in San Francisco, initially. It will also offer new customers who switch from a competitor a $135 rebate, Reuters reported Thursday.
T-Mobile's new plan will only be available to San Francisco customers who have used its service for 22 months or more, according to a T-Mobile representative who spoke to Reuters. An analyst told the wire service that the plan will likely go nationwide soon.
The promotions come as T-Mobile faces stiff competition from the three other major cell phone operators in the U.S. During the fourth quarter, AT&T and Verizon each added customers. AT&T added 2.1 million customers, including 1.9 million iPhone users. Verizon Wireless added 1.4 million new subscribers in the fourth quarter.
T-Mobile USA also added customers in the fourth quarter, but its figure was considerably lower at 621,000. It was also down from the previous quarter's figure of 670,000 new subscribers, and down considerably from a year earlier when it added 951,000 subscribers in the fourth quarter of 2007.
The bulk of T-Mobile's new subscribers came from prepaid accounts, as the total number of customers signing up for contracts slowed compared with previous quarters.
Meanwhile, Sprint Nextel, which reported fourth-quarter earnings Thursday, continued to lose customers, shedding 1.3 million customers during the fourth quarter.
The results from the four major carriers suggest that higher-value customers, who enter contracts and generally generate more revenue per month, are gravitating toward the two biggest carriers, rather than T-Mobile or Sprint.
T-Mobile and Sprint seem to be duking it out for value customers, which is where these new promotions from T-Mobile are targeted. In fact, it looks as if T-Mobile's marketing may be in response to a new plan that Sprint's prepaid brand, Boost Mobile, launched in January. Boost is offering an unlimited mobile plan for $50 a month. During Sprint's earnings conference call on Thursday, executives for Sprint said the service is off to a good start.
|
Business supplies and services can get expensive. Get smart spending tips and learn about new cost-saving opportunities for your business
|
|
Correction, 4:03 p.m. PST: This story misstated the day the company announced subscriber figures. It was Thursday.
Competition is heating up in the wireless market and it looks like T-Mobile USA is getting singed.
Deutsche Telekom, which owns the wireless company T-Mobile International and T-Mobile USA, reported earnings on Thursday citing slower subscriber growth for its U.S. wireless entity.
During the fourth quarter, T-Mobile USA, which is the fourth largest wireless operator in the U.S., added 621,000 new customers. This was down from the previous quarter when the company added 670,000 new subscribers. And it was down considerably from a year earlier when it added 951,000 subscribers in the fourth quarter of 2007.
The bulk of new subscribers came from pre-paid accounts, as the total number of customers signing up for contracts slowed compared to previous quarters. In the fourth quarter, T-Mobile USA added 267,000 contract customers, down from 733,000 contract customers a year ago. Even during the third quarter of 2008, the company managed to add 293,000 post-paid customers.
That said, T-Mobile saw an increase in prepaid subscribers as it added 355,000 of these customers in the third quarter, up from 218,000 in the fourth quarter of 2007. It added 377,000 prepaid accounts in the third quarter of 2008.
The strength of the prepaid market could be attributed to the deepening U.S. recession and stronger competition among the nation's largest wireless companies. While consumers are not getting rid of their cell phone service, some subscribers are looking for cheaper alternatives.
Based on results from AT&T and Verizon Wireless, it appears that customers looking for higher-end smartphones are gravitating toward the two biggest carriers rather than T-Mobile, which is often seen as a value player in the market.
T-Mobile has launched its 3G wireless network and it also offers the only Google Android phone on the market, the G1. It also sold the Samsung Behold during the quarter. Smartphone sales helped boost T-Mobile's contract subscriptions, accounting for 40 percent of the devices sold to contract customers in the fourth quarter.
But it appears that smartphone customers looking for a 3G network are going with AT&T and Verizon, which have larger 3G footprints and a wider variety of smartphones.
Denny Strigl, chief operating officer for Verizon, noted on the company's conference call Tuesday that 37 percent of new devices sold during the quarter were smartphones. Verizon added 1.4 million new subscribers during the fourth quarter of 2008. Adding customers from the Alltel merger, Verizon now has more than 80 million wireless customers.
During the fourth quarter, AT&T added 2.1 million new subscribers, including 1.9 million new iPhone users. AT&T now has a total of 77 million wireless subscribers, an increase of 7 million subscribers for the year. The company increased its "postpaid" (as opposed to prepaid) customers by 13.9 percent versus the same quarter last year.
Meanwhile, T-Mobile reported that its churn, or the rate at which customers dump its service, was 2.4 percent in the fourth quarter of 2008, consistent with rates from the previous quarter, but up from 1.8 percent the same quarter a year ago.
Sprint Nextel, the nation's third largest wireless operator, reports earnings next month.
T-Mobile USA, which is currently rolling out its 3G wireless network across the country, is turning to Yahoo to power its search and mobile Web portal in an effort to boost data usage.
On Thursday T-Mobile said it would use Yahoo's OneSearch as the default search tool on its phones. T-Mobile is rebranding its mobile Web service and calling it Web2go. This service is supposed to provide a better Web browsing experience and easier navigation through a home page on T-Mobile's mobile phones. And it integrates Yahoo's OneSearch tool into it.
Also as part of the deal, Yahoo will offer sponsored search results and in some cases display advertising within the search results presented through T-Mobile's Web2go service. The companies will share the advertising revenue, but further details weren't given.
With close to 3 billion mobile phone users around the world, every major search company is vying for a piece of the action. They're also competing for a piece of the emerging mobile advertising market, which is still in its infancy. As a result, the stakes for the three main search giants--Google, Microsoft, and Yahoo--have never been higher.
Google dominates the search and advertising markets on the traditional Web. And it's already getting a strong foothold in the mobile market. In fact, it also has an important relationship with T-Mobile. Just two months ago, T-Mobile became the first wireless carrier to offer a phone using Google's Android operating system. As part of the deal, the G1, made by phone manufacturer HTC, has several Google applications, such as Gmail, Google search and Google Maps integrated into the device.
Microsoft is also making headway in this market and is believed to be close to signing a deal with Verizon Wireless worth about $550 million to $650 million in guaranteed revenue a year.
Yahoo has worked hard over the past couple of years to make its mark on mobile. The company already has deals with T-Mobile in Europe to power its search in North and Central Europe. O2 in the U.K. is also partnering with Yahoo. In total, Yahoo claims to have about 25 percent market share in Europe and more than 30 percent in the U.K.
Yahoo's OneSearch service is the core of its mobile strategy, and it provides search results that are supposed to be the most useful for someone who is surfing the Web from a mobile phone. Yahoo also provides voice search, allowing users to speak the term they are searching for into their phones instead of typing it into the keypad. Google just announced its voice search for the iPhone this week.
While deals with specific carriers are important today, it's unclear how important they will be in the future. Yahoo's OneSearch can be downloaded from the Web and any mobile user with a browser can search using Google whether it's preloaded on the phone or not. That said, for now, most mobile subscribers using a basic cell phone don't download new applications. And most don't venture beyond the carrier "deck" or menu of choices that it is given to them on their phones.
But that could soon change. As smartphones like Apple's iPhone, all the BlackBerry devices, and new Android phones become increasingly popular among consumers, users are more likely to venture beyond the applications and services preloaded on their phones. Apple has already seen great success with its App Store. More than 3,000 applications are currently available through the App Store, and Apple has said that users downloaded more than 100 million applications between the site's launch on July 11 and the beginning of September.
Research In Motion, the maker of the BlackBerry, and Google are launching application store fronts that will allow subscribers to easily access applications from third party developers.
What this likely means for the mobile market is that mobile users are being conditioned to explore and download content that is not spoon-fed to them by their service provider. And as users get more comfortable exploring the mobile Web on their own, deals such as the one between Yahoo and T-Mobile may become less relevant.
Think of the portal wars of the late 1990s. AOL dominated as a portal provider, but once users realized they could find whatever they wanted or needed on their own, Google emerged as a top destination site providing search, aggregated news, and now a whole slew of new applications.
Still, for the moment, there are millions of basic cell phones on the market. And if carriers want to boost data usage on these devices, they will need a little help from the Microsofts, Yahoos, and Googles of the world.
T-Mobile's G1
(Credit: Sarah Tew/CNET Networks)NEW YORK--Google's first Android phone may not win any beauty contests, but the smartphone's software and advanced Web browsing will give today's current crop of smartphones, including the iPhone, a run for their money.
T-Mobile USA and Google unveiled the first Google Android phone Tuesday at an event here. The phone, previously code-named the HTC Dream, is now called the T-Mobile G1. And it goes on sale in the U.S. on T-Mobile's network starting October 22 for $179 with a two-year service contract.
T-Mobile USA's parent company Deutsche Telekom will also be selling the device starting in November in the United Kingdom through its T-Mobile service. And the phone will be available throughout the rest of Europe via T-Mobile starting in the first quarter of 2009.
From a hardware perspective, the G1 isn't a game changer. The device, which has a full QWERTY keyboard that slides out from a touch-screen exterior, looks similar to other devices on the market, such as the T-Mobile Sidekick or Verizon's LG Voyager.
But under the hood, the Google Android software greatly improves the mobile Web experience for users, making it a compelling competitor to the Apple iPhone and a hands-down winner when compared with other smartphones like Research In Motion's BlackBerry or phones running Microsoft Windows Mobile operating system.
... Read moreTuesday is G-day for T-Mobile USA as it introduces the world to the first ever Google Android phone.
To keep up with the news as it happens, check out the CNET News live blog from the press conference held by T-Mobile at 10:30 a.m. EDT (7:30 a.m. PDT) in New York City.
T-Mobile USA will be the first mobile operator to offer a phone that uses the open-source Google Android operating system. The device made by HTC has been widely anticipated. And on Tuesday morning, T-Mobile and Google will finally unveil the phone, which is expected to go on sale in October.
I'll be at the event, live blogging the announcement with a host of other CNET folks. So make sure to follow all the action on the CNET News Wireless Blog and come back to CNET News later in the day for video and photos of the new device. CNET Reviews will also be posting a First Look of the device, and I'll be joined by Natali Del Conte of CNET TV, who will also share her initial thoughts on the big news.
T-Mobile USA plans to have more than 20 markets lit with 3G coverage when it begins selling the first ever Google Android phone in October. But will it be enough to entice smartphone consumers to choose the HTC Dream over the iPhone 3G or even the BlackBerry Bold?
The verdict is still out on that one.
Even though the Android-based HTC Dream hasn't been officially announced, most people believe it will support 3G speeds when T-Mobile unveils it next week. And given the fact that it will compete head-to-head with Apple's iPhone 3G and newer versions of Research in Motion's BlackBerry devices, it really needs to be 3G.
The biggest problem for T-Mobile has been its nearly nonexistent 3G network. T-Mobile launched its 3G service in New York in May. Since then, it has added service in 12 other markets including, Austin,Texas, Baltimore, Boston, Dallas, Houston, Las Vegas, Miami, Minneapolis, Phoenix, Portland, Ore., San Antonio, and San Diego.
And on Thursday T-Mobile said it would expand its 3G coverage from 13 markets to 27 markets by the end of the year. The expansion will provide 3G access to more than two-thirds of T-Mobile's current customer base, the company said. T-Mobile also plans to keep expanding coverage in 2009.
By mid-October, when the HTC Dream hits the market, the company will expand 3G coverage to additional markets including, Atlanta, Chicago, Los Angeles, Orlando, Fla., Philadelphia, Sacramento, Calif., San Francisco, and Seattle. And by the end of the year, six more markets will get 3G: Birmingham, Ala., Denver, Detroit, Kansas City, Memphis, Tenn., and Tampa, Fla.
Getting the 3G service up and running in as many markets as possible is key to T-Mobile's overall strategy. But even with the planned network expansion, T-Mobile will still be woefully behind its competitors when it comes to its 3G coverage.
Verizon Wireless and Sprint Nextel have the largest 3G footprints. AT&T plans to have 3G deployed in 350 markets by the end of the year, but it has still been criticized for not having enough of its network covered with 3G to satisfy some iPhone 3G users. T-Mobile's lack of 3G coverage could lead customers--even those who are hot to try an Android phone--willing to wait for a different Android handset on another carrier's network.
