Proposed law would require carriers to sell contract-free phones
We don't usually take much stock in proposed legislation -- Schoolhouse Rock left out the part where lobbyists gut all the good bits -- but we're willing to root for the Wireless Consumer Protection and Community Broadband Empowerment Act, currently on the floor in the House and Senate. The bill, sponsored by Massachusetts Rep. Ed Markey, would require carriers to sell contract-free phones, provide rate plan information in a "clear, plain, and conspicuous manner," disclose any phone subsidies hidden in the plan's price, and offer price-comparable plans with no subsidy or early termination fee. That means you'd finally know exactly how much a plan would bill you every month including taxes and fees, it'd be easier to see how much devices like the iPhone are marked up, and most importantly, it'd be way easier to switch carriers to get better deals. The House Subcommittee on Telecommunications and the Internet, of which Markey is the chairman, held a hearing on the bill this morning with reps from both the wireless industry and consumer groups present, so progress is being made -- we'll see how things go.[Via CNET]
Read - Markey's statement to open the hearings
Read - Proposed bill [PDF]
Reader Comments (Page 1 of 1)
Jennifer Trevino-Long @ Feb 27th 2008 4:24PM
Love you Bill! Glad you're on Capital Hill!
Jeremy B @ Feb 27th 2008 4:24PM
The bill sounds good in theory but I'm not sure how much it would benefit consumers. Major carriers already sell plans that do not require a contract--they are sold under names likes Prepay, Pay as You Go, or FlexPay.
And I'm not sure why you would want to eliminate the subsidies. The subsidies actually REDUCE the price of the phone to the consumer. For example, you can buy a BlackBerry Pearl for $270 from NewEgg or you can get one for $99 from T-Mobile or AT&T when you sign up for a 2-year contract. That is a real savings of $170, which is a subsidy that favors the consumer.
Student Driver @ Feb 27th 2008 4:37PM
But, if the phone is "open" in this context, more of a given device can be sold and used across carriers. Thus, a high-demand unit can generate more volume and drop in price anyway.
We would probably still have the current system, but call them "bundles" with a discounted phone and plan, rather than it being a necessary evil to get better phones and/or service options.
Dave @ Feb 27th 2008 8:53PM
tell me again why I want more people to have cell phones? Another thing I dont need: seeing more assholes on their bluetooth headsets looking like schizophrenics talking to themselves
Razor1973 @ Feb 27th 2008 4:40PM
YES! FINALLY!
Kash @ Feb 27th 2008 5:08PM
$170 savings over 24 months is $7.08 a month.. and thats if you don't end your contract early.. if you do thats a $200 ETF.. your savings just went out the window.. and thats assuming that the phone doesn't break.
The D Train @ Feb 27th 2008 5:10PM
You say yes finally, and that tells me you didnt know that there are only currently two companies that require a contract agreement even if you buy a new phone at full retail price.
boydston02 @ Feb 27th 2008 5:33PM
Seems like it could be nice. But I don't like the government telling businesses what to do, unless it is really needed, of course. I am not sure this is very necassary, though.
MBN @ Feb 27th 2008 6:55PM
You're so right. Government should stay out of it. Let the market handle it. We don't have anything like a mobile provider monopoly in the US.
Nobody likes contracts, but we seem to like paying full-price up front for a new phone even less. Subsidizing phones is a great tool that allows more people to get into a mobile phone. Contracts with penalties are the necessary protection to protect the carriers from getting screwed when they're selling handsets at a loss.
boydston02 @ Feb 27th 2008 7:26PM
Yes, there is no monopoly, making for quite nice competition. In fact, hasn't the market been moving in this proposed-bill's direction for years and STILL IS? Haven't all or most of the providers started offering pro rated ETF's? And remember years ago when it was so hard to figure out the actual costs of plans and options, etc. It used to be a very common occurence for people to be blown away when they started getting bills (b/c of things like roaming and overage minutes). That has lessened a lot in recent years. Whenever I look at planes these days, they are fairly clear and easy to compare between providers. Sure they could be even clearer, but it is not that bad. Yes there are taxes and some fees (imposed by the Government) that they don't tell you about, but that is normal. Nobody advertises how much the price of the big screen TV will cost AFTER the taxes.
Ron @ Feb 27th 2008 7:56PM
I dont know about this. Lots of people say they'd pay full price and still have service and not be locked in, but the discounts and rebates associated with one or two plans seal the deal for most. If this happens thm customers will pay 300 dollars for a razor, or 1000 for and iPhone or high end Nokia or HTC device. I dont know about you but if its like this then I'd have to go prepaid if I didnt have a contract with AT&T already.
Jake @ Feb 27th 2008 8:03PM
Most people do realize that there are subsidies when they sign a contract because they feel that reading the entire price card it too much work.
Its funny really. Watching people's reaction when I say, "If you break this RAZR it is 259 for a new one," is so entertaining.
Jake @ Feb 27th 2008 8:01PM
I don't know if the people responsible for tis bill are retarded, but all carriers do. Its called a no commitment, or retail price. You just have to ask about it and be intelligent enough to realize what your getting into when you do get the subsidized pricing.
In most cases if you are smart enough to read the price card that has RetailPrice - InStoreRebate - MIR = FinalPrice then you obviously smarter then 95% of America.
We shouldn't be passing laws so stupid and ignorant people can continue being stupid and ignorant.
Dave @ Feb 27th 2008 8:59PM
agreed...apparently no one on capitol hill has taken a basic economics course
Jake @ Feb 27th 2008 9:16PM
Not even an econ course... they haven't been into a Wireless store and used their fundamental, basic reading skills.
Jake @ Feb 27th 2008 9:16PM
Not even an econ course... they haven't been into a Wireless store and used their fundamental, basic reading skills.
Jamar @ Feb 28th 2008 10:29AM
This would be rather nice. As it is only crap phones are being subsidized. Make all phones cost something and maybe more people will start going for the nice ones. That or make some of the nice ones free to- Japan seems to have no problem doing that. I could get the 706SC for free in Japan (and cut the price of my service plan in half just for signing a contract alone)- can you do the same with its American counterpart, the a717?
jon @ Feb 28th 2008 2:44PM
at&t does this already!
Winston @ Feb 28th 2008 6:46PM
Great pic! "But today I am still just a bill..."
trooth @ Mar 2nd 2008 6:05PM
Wow so many people actually think the government is concerned about protecting the cell phone consumers. The government is doing this to hide their taxes. On your phone bill you see at least 3 or more federal/state/local government taxes and fees that our applied to your account. The cell phone company must collect these on each bill for the government. Now the government wants to remove the list items of their charges from your bill. So now the government would be free to raise their taxes and surcharges without you knowing that it is them raising the prices on your service. This benefits the local/state/federal governments by hiding their taxes and charges and placing the blame for an extra 10-25% worth of charges on your cell phone bill on the carrier. What's next? Making the mortgage companies and car finance companies include property taxes/liscences/fees in their list price. The government says oil companies making .09 a gallon on gas is too much, the taxes they charge is anywhere from 3 to 6 times as much depending on the state you live in.
So Naive...
JRo @ Mar 29th 2008 11:53PM
I'm glad to see most of the posters understand how the wireless industry works.
I've worked in telecom for a decade now and have been on the wireless side for just over a year.
As a consumer I hated the contract system, but being in the industry I understand it now. Although I despise contracts when changing a price plan, but it makes perfect sense when buying a handset.
People want free phones - companies can't hand these out without a loss and that is why there is a contract. This is why people will still go onto contracts (and of course, bitch about it in hindsight) and the consumers who want their options will bring their own phones onto a non-contract FlexPay type service.
> You cant expect an ISP to give you a free PC with your internet subscription (and provide warranty, servicing, etc) without consequence and the same goes for wireless.