Consumer Reports’ best cell phone deals

Cell-phone service seems to stubbornly resist improvement. The Annual Survey of Cell-Phone Service conducted by the Consumer Reports National Research Center found that fewer than half of respondents were completely or very satisfied with their service. That makes cell service among the lower-rated services we survey, as it has been for the past six years.

S till, there are bright spots. Verizon and Alltel scored better than other providers this year, as they have in the past. T-Mobile matched satisfaction rates for Verizon in almost all the cities we surveyed. And T-Mobile plans generally offer more for the money than those of Verizon and Alltel.

Meanwhile, cell carriers are getting more consumer-friendly. Last fall, all of our rated service providers pledged to join Verizon and prorate their hefty $150 to $200 early-termination fees. Holdouts also said they would join Alltel and T-Mobile and end their heavy-handed practice of mandatory contract extensions when you make changes to your service plan.

Mandatory contract extensions were one of the top two complaints of survey respondents, tied with high costs for service. More than 60 percent of respondents who made changes to their cell-phone service plan in the past year said they were required to extend their contract as part of the deal. That number might understate the problem because some carriers haven't always been up front with customers about such extensions, according to allegations in recent legal filings.

In the past five years, consumer advocates such as the Foundation for Taxpayer and Consumer Rights, in Santa Monica, Calif., and class-action lawyers have filed more than 100 lawsuits coast to coast, according to an analysis by Thomson West, a legal-information-services firm. The cases involve issues such as early-termination fees, calculation of airtime, arbitration requirements, class-action prohibitions, rebates and other contract provisions.

One important outcome was a spate of recent court decisions in several states that struck down as "unconscionable" cell-phone service contract provisions that had forced customers to arbitrate disputes individually and prohibited them from banding together into class actions. "In the last 18 months, there has been a sea change and a run of court decisions favoring consumers," says Paul Bland, staff attorney with Public Justice, a nonprofit public-interest law firm in Washington, D.C., and an expert on class-action bans in consumer contracts.

The proposed settlement in another California suit might signal new flexibility about taking your phone with you when you switch carriers. Most phones in the U.S. are locked to a specific carrier. But Sprint has agreed to provide departing customers with a code that unlocks their phone, with the promise of making it usable with other compatible carriers.

Also, in late November Verizon announced that it will by the end of 2008 provide customers the option to use, on its nationwide wireless network, wireless devices, software and applications offered by other companies which meet Verizon's technical specifications. Advocates at Consumers Union , the nonprofit publisher of Consumer Reports , said the news was encouraging but its full impact will not be clear until more details are available.

Congress has joined in and ratcheted up pressure on the industry with public hearings and the threat of consumer-rights legislation. "People want their cell service to work, they believe it's a necessary part of life, and they don't want to get ripped off," says Sen. Amy Klobuchar, D-Minn. Klobuchar has introduced legislation that would require prorated cell-phone service termination fees and public disclosure of the incidence of dropped calls and coverage gaps by location.

Prospects for the bill were unclear as we went to press. But a day before hearings on the legislation in October, AT&T announced that it would prorate its fees beginning in early 2008. Other carriers began easing up some restrictions last summer and fall, albeit modestly.

Despite such positive developments, you still need to take charge of fixing problems with your cell-phone service. Here are some steps to consider.

Problem: Poor coverage.
Substandard service quality was the biggest reason our survey respondents switched carriers in the previous three years, our survey found.

Listen to our readers’ experiences. Alltel and Verizon got high marks across the board for connectivity.T-Mobile had relatively high satisfaction scores, but customers experienced problems with lack of service in some cities. Subscribers also highlighted problems with AT&T for gaps in service and static, and with Sprint for dropped calls. Check the signal strength down to street level in areas where you‘ll use the phone most frequently. Interactive online coverage maps, offered by most carriers except Alltel, provide some guidance as to what you can expect.

Problem: Unsatisfactory customer service.
The trouble spots include serious or persistent billing errors, maddening voice-mail menus, and the need to spend lots of time and effort yielding little help from customer service.

Again, heed the voice of experience — but don’t expect too much. In our survey, Alltel, T-Mobile, and Verizon were the better choices in a bad lot for customer service. Only about 40 percent of their customers said these companies were very helpful, responding to queries and complaints about service issues — none too impressive. But only 21 percent of Sprint customers said the same thing. Sprint made news last summer when it terminated 1,000 subscribers for complaining too much about the service. Roni Singleton, a Sprint representative, says, “They were contacting us, in some cases, 100 times per month.We tried to resolve their issues, but they were still not satisfied, and it gets to the point where you say these customers may be better off somewhere else.”

If customer service isn’t helpful, file a complaint with your state public utility commission or consumer advocate.

Problem: Early-termination fees.
About one in seven survey respondents said they were seriously considering a switch to a better carrier but were discouraged from doing so by penalties that can run as high as $200 per phone line. Termination fees are especially onerous when a carrier keeps charging former customers a monthly service fee until they pony up the penalty.

It’s not clear what actual costs such fees are intended to offset. Cellular carriers variously claim that the fees are used to recoup handset and rate-plan discounts, unspecified “costs caused by early termination” and “transaction costs,” and even the capital investment in their wireless networks.

Scott Poynter, lead counsel in a class action suit against Alltel, which is based in Arkansas, says the carrier uses those fees to “hold its customers hostage.” He argues that if the fees recover real costs, why has Alltel charged the same $200 fee if the customer quits 23 days or 23 months into a 24-month contract? Alltel, which is contesting the lawsuit, declined to comment. Poynter says the carrier should shrink the fee proportionately as the contract matures. Last fall Alltel, AT&T and T-Mobile said they would join Verizon in doing just that. As we went to press, Sprint told us that it planned to announce prorated early termination fees in November.

Paul Weiss, lead counsel in class-action suits against Sprint, T-Mobile, and Verizon, says that the industry has collected several hundred million dollars in unjust penalties. “This is an enormous profit center for cell companies,” Weiss says.

Attack this problem based on your specific circumstances. If you’re near the end of your contract, wait until it runs out before quitting the company. If you’re at the very beginning of your contract, take advantage of 14- to 30-day free trial periods offered by the carriers. They allow you to cancel a new account without penalties. After that, try to negotiate a waiver, especially if service quality has deteriorated, or you’ve moved to an area the carrier does not serve well or at all, or the company has been taken over by another carrier.

You might also consider transferring your contract to someone else by going to or For about $15 to $20, you can transfer a contract with the cell carrier’s approval. The person who takes over your phone and service becomes responsible for future payments, and you walk away. But remember, if you want to keep your current phone number, arrange that with your carrier before the transfer to avoid any potential complications.

Last, consider termination fees when choosing a company in the future. Since November 2006, Verizon has been prorating its $175 early-termination fee on its two-year contracts, but only by $5 a month. Even if you cancel the contract just days before it concludes, you’ll still be liable for at least $60. Last fall, AT&T and T-Mobile announced that they would prorate their fees starting in early 2008 but had not determined by how much at press time.

Problem: Mandatory extensions.
In the wake of legal actions, there’s movement on this issue, too, by some carriers. In September, the Minnesota attorney general, Lori Swanson, sued Sprint, saying that the company tacked on contract extensions of up to two years without proper disclosure or consent when customers made changes to their service plans. After that, AT&T and Verizon announced that they would join Alltel and T-Mobile in eliminating contract extensions when customers changed their plan. However, note that switching to some special promotional plans or getting a new “free” or discounted phone might still trigger a contract extension.

“In some cases, Sprint extended the contract when customers called to complain or to get new batteries or small repairs for the phone,” Swanson says. “So the allegation is consumer fraud.” Sprint denies the charges, but told Consumer Reports that it too planned to stop requiring contract extensions for plan changes. In our survey, mandatory contract extensions were most frequent among Sprint customers.

Carriers, however, still have other ways to lure you back into a contract term with offers of a sexy new phone or other inducement. Verizon, for example, sent direct-mail ads to some customers this year promising one “free” month of service worth $9.99 if they renewed their contract for another year; the fine print revealed that the supposed freebie put them back on the hook for a $175 early-termination fee.

Be vigilant. Scrutinize contract details, your monthly billing statement, and any “free” offers or promotions.

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