Soldiers starting basic training or preparing to deploy overseas have a lot on their minds.  Worrying about their AT&T cell phone service isn’t supposed to be one of them.

Stop the Cap! has been hearing from soldiers in several states who are sharing similar stories about AT&T insisting on hefty early termination fees when calling to suspend or cancel service because of military training or deployment abroad.  Cell phones are prohibited during basic training, which lasts 10 weeks.  So why pay for a service you cannot use for two and a half months?

The Chicago Tribune shared the story of Nathaniel Jungheim, of Chicago, who faced an intransigent AT&T when he called to put his account on hold during basic training.

“They informed me that they have recently changed how they handle military accounts and said I would have to pay $10 a month plus taxes to keep my account in suspension,” he said.

Jungheim said he complained and was told he would either have to pay the monthly fee or $275 to terminate his contract.

“I asked to speak to a supervisor but was told they would say the same thing,” Jungheim said.

Those “changes” are likely illegal under the Service Member Civil Relief Act, a federal law which protects America’s soldiers from predatory practices from bankers, property management companies, insurance companies, and yes, cell phone companies.

Text of S. 3023 [110th]: Veterans’ Benefits Improvement Act of 2008
Oct 10, 2008: Became Public Law No: 110-389

SEC. 805. TERMINATION OR SUSPENSION OF CONTRACTS FOR CELLULAR TELEPHONE SERVICE FOR CERTAIN SERVICEMEMBERS.

(a) In General- Title III of the Servicemembers Civil Relief Act (50 U.S.C. App. 531 et seq.) is amended by inserting after section 305 the following new section:

SEC. 305A. TERMINATION OR SUSPENSION OF CONTRACTS FOR CELLULAR TELEPHONE SERVICE.

(a) In General- A servicemember who receives orders to deploy outside of the continental United States for not less than 90 days or for a permanent change of duty station within the United States may request the termination or suspension of any contract for cellular telephone service entered into by the servicemember before the date of the commencement of such deployment or permanent change if the servicemember’s ability to satisfy the contract or to utilize the service will be materially affected by such deployment or permanent change. The request shall include a copy of the servicemember’s military orders.

(b) Relief- Upon receiving the request of a servicemember under subsection (a), the cellular telephone service contractor concerned shall–
(1) grant the requested relief without imposition of an early termination fee for termination of the contract or a reactivation fee for suspension of the contract; or
(2) in the case that such servicemember is deployed outside the continental United States as described in subsection (a), permit the servicemember to suspend the contract at no charge until the end of the deployment without requiring, whether as a condition of suspension or otherwise, that the contract be extended.

AT&T doesn’t feel the law applies to them, however, judging from complaints we’ve been receiving from readers.

Stop the Cap! came up on a private military forum open to service members, and ever since, we’ve heard some stunning complaints about AT&T and suspicions the phone company is hoping to rely on soldiers not fully understanding their rights.  Remarkably, all of the complaints have been about AT&T.  Verizon and Sprint reportedly treat the troops with considerably more respect.

“I was ordered to Europe last November and wanted to call and cancel my AT&T service and ran straight into a brick wall with those people,” shares Elizabeth.  “They told me they don’t suspend accounts for anyone, only cancel them, and demanded $200 in early cancel fees to be paid immediately on my credit card or they would ruin my credit.”

Nathan, who is now serving in rural Alaska, shared a similar story.  On his third call to AT&T, the representative offered him just one choice — a $10 a month suspended plan, if he agreed to extend his service contract when he got back.

“I was reading off of AT&T’s own website stating the company would cancel my service with no penalty, but the operator could have cared less,” Nathan writes.  “If I didn’t like it, he would charge me $300 to immediately cancel my contract and that was that.”

Nathan got the distinct impression the representative was accusing him of ripping off AT&T for a new phone he wanted to “walk away” with free and clear.

JJ managed to get a supervisor to “do him a favor” and cancel his contract with no penalty, but only if he faxed over his military ID, birth certificate, driver’s license, orders of deployment, and a copy of a major credit card for “verification purposes.”

“I told them to forget it — I was not about to send some low paid AT&T call center guy every form of ID I had so I could discover my identity stolen when I got back,” JJ said.

“AT&T cares less about the troops who defend their right to exist in a free United States; they only care about money and that is disgusting and unpatriotic,” JJ shares.

Another customer, deployed overseas, was told to report to an AT&T store in the United States to discontinue service — there was no other way to cancel penalty-free.

As has been so often the case, when media attention shines a bright light on potentially illegal business practices or bad service, relief is soon in sight, for at least a few people.

The Problem Solver called Brooke Vane, a spokeswoman for AT&T, and described Jungheim’s situation.

Vane emailed Thursday to say AT&T adheres to the federal Service Member Civil Relief Act, which provides guidelines for how companies deal with those who are called to duty.

Vane instructed Jungheim to call AT&T’s customer care phone number again and go through the process of suspending service.

“Once he meets the requirements, including providing us with his orders, as required by law, we can process this request,” Vane said.

Thursday evening, Jungheim called AT&T and spoke to a representative.

“I faxed over my deployment orders … so I should be a go,” he said.

He will not be charged the $10 a month.

AT&T's website for servicemembers makes it easy to buy more of their products and services, but doesn't deliver much help to those who want to put their accounts on hold or leave. (Click image to visit site.)

Stop the Cap! recommends you arrange to cancel or suspend service as soon as you have a date in hand for basic training or deployment abroad.  Then call AT&T at 1-800-331-0500 and notify them you need to fax your written request to discontinue service, penalty-free, and are including a copy of your military orders.  By declaring your intent, you will present yourself as knowledgeable about your rights, and are less likely to encounter resistance from AT&T.

Do not fax or mail copies of any forms of personal identification.  They are not required under the law and there is no reason to expose yourself to identity theft.  We recommend you consider service cancellation over service suspension, because it lets you walk away from AT&T free and clear.  You will lose your cell phone number, but when you return, you can sign up as a new customer and receive a new phone discount.

Always write down the name and extension of the person you spoke with along with the time and date of your call and keep it in a file until you are assured the request was processed properly.

If you encounter problems, insist that your call be escalated to a supervisor.  If that fails, two of our readers reported they had near instant resolution to their ongoing problems with AT&T by calling their member of Congress or two Senators.

AT&T has a deal for first responders.

Where cell service is wiped out in a natural disaster (or doesn’t provide adequate coverage even when it does work), the phone company is willing to sell emergency officials their own AT&T mini-cell-tower site — for up to $45,000, not including ongoing monthly service fees.

The Remote Mobility Zone is a briefcase-sized portable cell tower that will typically provide service for a dozen or more concurrent callers over AT&T-licensed spectrum.  The company sells the equipment, but buyers still have to pay a monthly service charge, users must have a qualifying AT&T voice plan, and the data service that comes with it operates at slower-than-3G speeds.

“In the pivotal first minutes of a natural or man-made disaster, AT&T Remote Mobility Zone provides a solution to help maintain critical mobile communications,” said Chris Hill, vice president, Advanced Mobility Solutions, AT&T Business Solutions.  “With AT&T Remote Mobility Zone, users can set up a cell site in less than 30 minutes.”

That’s much faster than AT&T can fix their own cell sites when they go offline in a disaster.

A consultant to first responders, Jim Davis, tells Stop the Cap! the portable cell tower may sound like a good idea, but will meet resistance because of the “optics” of taxpayers paying for private cell phone company equipment.

“You are effectively asking taxpayers to pay for AT&T cell towers, and that is going to present a political problem in a lot of areas,” Davis tells us.  “What is even harder to justify is the fact AT&T charges monthly service fees from the moment the device ships, whether you use it or not — and the service only works with AT&T GSM cell phones, which is fine as long as fire and EMS rescue services are equipped with those phones, and many are not.”

Davis tells us Sprint/Nextel has a significant portion of the cell-phones-for-emergency personnel-market, especially in the east.

“Sprint aggressively prices their services to this market, and their phones won’t work on AT&T’s cell site.”

Davis says the Remote Mobility Zone is likely to present a better fit in the corporate world, especially in the energy sector.

“This device makes sense if you are hydrofracking for natural gas in Pennsylvania, or drilling for oil in Wyoming, or even on an oil drilling platform,” Davis says.  “Those installations are up and running for longer periods of time and are in relatively narrow spaces, perfect for AT&T’s half-mile service area using this device.”

“AT&T is going to have to market this very carefully, because the company is effectively selling a product to cover gaps that AT&T has created themselves either through inadequate coverage or damaged cell towers they should be responsible for fixing fast enough to negate the need for this product.”

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Kelsey Sees Higher Wireless Rates After T-Mobile Deal 3-24-11.flv[/flv]

Getting the mainstream media to cover issues in the telecommunications sphere usually means wading into the “business news” sections of newspapers or watching business cable news channels.  Unfortunately, too often these outlets cater to the whims and preconceived notions of the audience — big business.  In the case of the AT&T/T-Mobile merger, Wall Street loves the idea, but consumers do not.  Watch as Free Press’ Joel Kelsey handily deals with the gang at Bloomberg News, who are convinced mergers and acquisitions never result in price increases for consumers.  Has your cell phone bill gone up or down in the last three years?  (4 minutes)

Although more than 30 million Americans have experienced getting bill shocked with a cell phone bill loaded with overlimit fees and penalties, a wireless industry group says 19 out of 20 of these customers are economically better off getting those high bills, and any plan to notify customers in advance when their usage limits are reached would “harm innovation, limit consumer choice, and impair the potential for competitive differentiation.”

These incredible conclusions come in a filing from the Wireless Communications Association International, an industry group funded by AT&T, Sprint, Clearwire, and Time Warner Cable.

The WCAI just released a new white paper claiming Americans facing Internet Overcharging from usage-capped wireless data plans are actually saving money when carriers impose overlimit fees.  Their reasoning for this new math?  You might overpay for a usage plan that delivers a higher usage allowance than you need.

"And to think they actually believed us when we said Internet Overcharging saved people money!"

The wireless industry is heavily lobbying the Federal Communications Commission to stop the agency from imposing new rules to deal with the bill shock problem.  The FCC favors an advance warning system, which would force providers to notify customers by e-mail or text message when they near their usage allowance.  Letting customers know when they are about to pay enormous penalty usage rates before they are reflected on a future bill could save Americans millions annually.

The WCAI-funded study says consumers don’t need the agency’s help, going as far as to claim the majority of Americans are already well aware they are exceeding their plan limits, and are better off paying short-term penalties.

“The FCC is weighing new regulations that it says will eliminate so-called ‘bill shock,’ but this analysis makes plain that consumers don’t need regulators’ help,” WCAI President Fred Campbell said. “If you give them the right information, they know how to pick the best deal.”

But critics charge providers fighting this provision want to hide the most basic information of all — when consumers are on the verge of running up huge bills.

“The FCC’s effort on bill shock is long overdue in a wireless environment where today’s heavy user is tomorrow’s average user, and where the wireless Web is more and more important to commerce and to society,” Free Press Policy Counsel M. Chris Riley said. “It is vital that consumers are empowered with the information and the tools needed to make decisions about their own wireless usage so they can avoid outrageous charges.”

The WCAI white paper suggests that if providers are forced to issue advance warnings, companies may have to raise rates to compensate.  The paper’s author suggests consumers would find that worse than just paying the bills with overlimit fees:

The Nielsen Study indicates that many consumers incurring overages do so willfully and repeatedly. Their behavior suggests it is unlikely that usage notifications or usage controls would change their behavior because they are either indifferent to the overage charges or have determined that the occasional overage charge is more economical for them than choosing a more expensive plan. Notwithstanding that these overage-incurring consumers may not want or need additional notifications or controls, the adoption of the FCC‘s regulatory proposals would impose on all consumers the financial burden of ―protecting this one small group.

The WCAI dismisses the huge number of complaints that arrive at the FCC each year over this issue as simply “opinions” from consumers, not nearly as credible as their own analysis of actual customer bills.

The paper even argues with the definition of ” bill shock,” suggesting that the nearly 7 percent of wireless customers who blow past their voice allowances only face an average penalty of around $18.  That is “surprising or inconvenient; but it is unlikely to be shocking.”

Bill Shock

The WCAI study admits the dollar amounts for data-usage bill shock can be considerably higher, sometimes $100 or more.  The charges occur more frequently, too — impacting nearly 18 percent of customers.  But the group dismisses it as a rare occurrence anyway and that carriers will issue credits for astronomical surprise bills.  Besides, the paper concludes, when it was written most consumers were enrolled in increasingly-rare “unlimited use” plans.  Since the raw data was collected largely before AT&T abandoned its flat rate data pricing in 2010, statistics regarding bill shock for AT&T’s new limited use plans were not available.  The white paper inaccurately dismisses that major rate change, claiming it “had no impact on the data analyzed.”  That leaves readers believing the rate changes made no difference.

But the group’s logic completely derails when it concludes there are “consumer benefits to overages.”  Namely, providers “simplified” rate plans to reduce choice which was causing “customer confusion.”  The paper concludes “there is substantial evidence that consumers make deliberate choices to incur overages rather than upgrading to a more expensive monthly rate plan, and that they overwhelmingly benefit from such choices.”

The white paper ignores several important factors:

1. The diminishing number of unlimited access plans which give consumers a way to avoid overlimit fees, especially for data;
2. Carriers themselves arbitrarily set the arbitrary rules for the playing field – calling plan allowances, data allowances, limits, overlimit fees and penalties, and roaming rates;
3. The study ignores the record number of consumers complaining about surprising bills and the true economic impact providing simple text message or e-mailed notifications would have, and doesn’t give any reason why a consumer can’t simply shut off services once limits are reached, to prevent excess charges.

The white paper notes that 736,000 Americans annually are getting surprisingly high bills.  Assuming they are an average of $20 higher than anticipated, that represents nearly $15 million dollars in extra revenue for carriers — ample reason to hire dollar-a-holler groups to produce nonsensical reports that conclude a system to notify consumers they are about to be one of those 736,000 customers is actually bad for them and their wallets.

The FCC’s Consumer Task Force recommends these strategies to avoid bill shock:

•    Understand your calling pattern for making voice calls, and ask your carrier for a plan that would be best for your kind of use.
•    If you are an infrequent phone user, consider a pre-paid plan. Because you “pre-pay” for all your minutes, these plans make it impossible to go over your set limit.
•    Understand what your roaming charges are and where you will incur them.
•    Understand your options for data and text plans.
•    If you are going to use your mobile phone outside the U.S. for voice, email, and other services, make certain to find out beforehand what charges may apply. (Visit Wireless World Travel for more information about using a wireless phone in other countries.)
•    Ask how your carrier can help you avoid bill shock – with phone or text alerts, by letting you monitor your account online, or by giving you other information.
•    If you have tried to resolve a billing issue with your carrier and can not reach an acceptable resolution, complain to the FCC. You can call our Consumer Center, toll-free, at 1-888-CALL FCC (1-888-225-5322), or file a complaint here.

To learn more, read the FCC’s White Paper on Bill Shock.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/FCC Bill Shock.flv[/flv]

The Federal Communications Commission discusses the problem of “bill shock.”  (1 minute)

Consumers looking for better deals on AT&T phones have until March 8th to grab them because after that date, AT&T phones will no longer be sold by most third-party online retailers.

Wirefly, which runs its own online storefront in addition to selling phones through Dell and Amazon.com, is a major dealer of AT&T phones and routinely undercuts pricing offered by AT&T’s own website and retail outlets.

Andy Zeinfeld, Wirefly’s CEO announced the change on the company’s website:

Unfortunately, circumstances prevent us from being able to deliver on this promise with regard to AT&T phones. It is therefore with regret that I must inform you that effective March, 2011, we will no longer offer AT&T products and services on Wirefly.com.

[…] As circumstances allow, we will work with AT&T toward the goal of offering their products and services again in the future.

LetsTalk made a similar announcement to their affiliates: “We’re reaching out to let you know of an upcoming change to our carrier offering.  Effective March 8th, LetsTalk as well as other web indirect agents […] will no longer be able to offer AT&T Wireless as a carrier option to our customers.”

The change likely indicates AT&T has radically reduced compensation for third party sellers.  Most earn discounts and commissions on phone sales — part of that savings is passed on to consumers in the form of lower prices, part is pocketed as revenue.

Consumers looking for bargains will pay the price.

Take the HTC Surround. AT&T sells the phone to new customers for $49.99. Wirefly sells the same phone for as low as $24.99, and LetsTalk gives you the phone for free with a new, 2-year contract.  Motorola’s Droid X that Verizon sells for $199 can be had for free from Wirefly or LetsTalk — no sales tax either.

Both AT&T and Verizon have been scaling back discounts and promotions on new phones in an effort to cut costs.