Don't Bring Your Smartphone Carrier to the Office

Wayne Rash

It's no secret that the Federal Communications Commission has expressed concern about the early termination fees that wireless carriers charge their customers. There have been situations in the past in which terminating a contract even a day or two early can result in hundreds of dollars in fees. The situation has reached the point where the FCC and Congress have demanded that the carriers justify their fees in a series of hearings last year. In addition, the FCC demanded that the carriers disclose in detail what those fees are, how they are applied, and what the options are for consumers.

The answers have finally come back. In a series of letters responding to the FCC demands, each of the major carriers as well as Google (because of its much-hyped Nexus One) has delivered their plans. If your company plans to buy wireless devices including things like phones and BlackBerries, you should read these responses before you drop the first nickel.

The letters responding to the FCC's demands appear on the  Wireless Bureau's Web site. You'll have to search for the headlines from February 23 to find them, but each carrier, including Google, is there and you can read them in detail. What you see will tell you two things. First, the carriers aren't uniformly evil in terms of how they handle their contracts. And second, they don't all require contracts.

Verizon Wireless is the best-known case of rapacious early termination fees. If you buy a 3G device such as one of the newer BlackBerries, you'll get socked with a $350 early termination fee. According to Verizon, this fee drops by $10 a month until your contract runs out. This fee is nearly twice what other carriers charge for substantially the same phones.

The other three major carriers have early termination fees of $200 that reduce over the course of their contracts.

But this is only the beginning of the difference among the carriers. Verizon, T-Mobile and AT&T will let you buy a device without a contract, and thus without an early termination fee. Sprint won't, unless you're an existing customer.

The two GSM carriers, AT&T and T-Mobile, are by far the most flexible of this group. Either of them will let you bring in any GSM device from anywhere, and they'll set it up for their network without a contract and without an early termination fee. They'll also unlock your phone, even if it is under contract, so you can use SIM cards from other countries (although the process is a LOT easier with T-Mobile). This is especially handy because their phones work anywhere on Earth. With Sprint and Verizon, you're basically stuck with using the phones where they have service (although both have a couple of specialized-and very expensive-phones that work internationally).

And then there's Google. You can buy a Nexus One from the company and get a subsidized price if you sign up with T-Mobile. If you terminate early, you pay T-Mobile's early termination fee. But you're also stuck with a special fee called an equipment recovery fee of $250 for early cancellation. Fortunately, you can also buy the Nexus One for $529 directly from Google and use it on any GSM network. Whether you think $529 is hideously overpriced is up to you.

So what do you as a company that provides phones for its employees do? To some extent, that depends on whether you have an existing contract that gives you a better deal than what these companies are offering to the world at large. All of these companies will do almost anything-including adjust their early termination fees-to get corporate business.


But let's say you don't, and let's say you're in an area where you've got good coverage from the four major carriers. Here are my recommendations:

If possible, avoid Verizon. Why set yourself up to be screwed if you have to cut back on phone users? All this does is reduce your flexibility, increase your costs, and it gives you nothing in terms of service, despite those ads with the Verizon staff standing in your parking lot.

Think twice about Sprint unless you need the push-to-talk features of the Nextel part of their operation. The iDEN PTT works better the others, and Sprint offers some devices designed for rugged service that make their phones a great choice for construction, law enforcement, emergency services and the like. And Sprint can be flexible in regard to contract terms.

AT&T and T-Mobile give you a clear edge in flexibility and despite the weird map you keep seeing in the AT&T commercials, offer good service. T-Mobile repeatedly wins awards in customer service. If your employees travel internationally, these are the only carriers that give you a reasonable choice, despite what Verizon and Sprint say about their world phones.

The bottom line, of course, is that the best deal for you is the deal you can swing with the companies. Or, even better, the deal you can swing with an independent dealer for the companies. I bought my T-Mobile BlackBerries for my company a couple of years ago from Cost Management Associates in Rockville, Maryland, and ended up with the device at a significant savings, no contract at all, and a company that provides its own tech support in addition to the tech support from T-Mobile.

But whatever you do, don't just blindly set your company up with phones and PDAs with a carrier just because you use them at home. You'll end up wasting your company's money and likely not getting the service you need.



Add Comment      Leave a comment on this blog post
Mar 4, 2010 4:03 PM Anonymous Anonymous  says:
The $150.00 difference is worth it when considering the toll on NOT using the Verizon network. Reply

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