Stop the Cap! reader Larry Posk from Atlanta just threw AT&T overboard, fed up with the company’s anti-consumer policies, and Sprint paid him $125 to walk.

“I can’t think of a single reason to stay with the sharks at AT&T who are spending my money to pay off legislators to drop Net Neutrality, impose usage caps on all of their broadband and wireless accounts, and now try and wipe out T-Mobile; I’ve had enough,” Larry writes.  “I told AT&T goodbye and switched to an unlimited plan from Sprint, who more than covered my early termination fee and gave me a new smartphone for free.”

Larry is a beneficiary of Sprint’s customer win-0ver promotion that covers up to $125 in early termination fees when customers cancel service mid-contract.  Larry owed AT&T around $70, but Sprint gave him the full $125 benefit as a credit on his first Sprint bill.

“All I had to do was transfer my old AT&T number to Sprint, which effectively ended my AT&T service,” Larry says.  “Technically I did not even have to call AT&T to cancel service — the number transfer does the trick, but I felt extra satisfaction giving AT&T a piece of my mind.”

Larry doesn’t want to do business with companies that engage in Internet Overcharging.

“I can basically understand there might be a need for some limitations on wireless service, but when AT&T put the same scheme on their DSL and U-verse customers, it was clear they were simply ripping customers off and I want no part of it,” Larry says.

Sprint also gave Larry another 10 percent off because he belongs to a credit union that qualifies him for additional discounts.  In the end, he’s actually saving about $24 a month and isn’t exposed to a usage limit any longer.

“I recognize the fact Sprint’s network isn’t as wide-ranging as AT&T or Verizon, but I barely travel and Sprint’s coverage in Atlanta is actually better than AT&T because Sprint hasn’t dropped any of my calls,” Larry says. “Data speed is adequate for my needs, and is about on par with what AT&T was delivering here in Atlanta, but it’s not as fast as Verizon.”

Larry says he didn’t know about Sprint’s promotion until he asked, and he recommends customers inquire about Sprint covering their early termination fees before signing up for service.  We found some customers complaining they did not get the credit, but we suspect that might be because they didn’t follow the terms and conditions.  The most important one of all: you have to buy your new phone from Sprint, not a third-party retailer.  Here is the fine print:

Available for consumer and individual-liable lines only. Available online, via telesales, and in participating Sprint stores. Purchases from other retailers are not eligible for the service credit. Requires port-in from an active wireless line/mobile number or landline/number that comes through the port process to a new-line on an eligible Sprint service plan. Excludes $19.99 Tablet Plan. Request for service credit must be made at sprint.com/switchtosprint within 72 hours from the port-in activation date or service credit will be declined. Ported new-line activation must remain active with Sprint for 61 days to receive full service credit. Upgrades, replacements, add-a-phone/line transactions and ports made between Sprint entities or providers associated with Sprint (i.e. Virgin Mobile USA, Boost Mobile, Common Cents Mobile and Assurance) are excluded. You should continue paying your bill while waiting for your service credit to avoid service interruption and possible credit delay. A $125 service credit will be applied for netbooks, notebooks, tablets, mobile broadband devices and smartphones which include BlackBerry, Android, Windows Mobile, Palm, and Instinct family of devices. All other phones are considered feature phones. A $50 service credit will be applied for feature phones and Sprint Phone Connect (when available). Smartphones require activation on an Everything Plan with data with Premium Data add-on charge.

Dear Chairman Genachowski, Attorney General Holder and Commissioner Sandoval:

We write to urge you to reject AT&T Inc.’s proposed purchase of T-Mobile because it will without question lead to higher prices for consumers.

This is not conjecture; it is the lesson of history. Seven years ago, AT&T Inc.’s wholly owned subsidiary, AT&T Mobility LLC (then known as Cingular Wireless Corporation) requested permission to buy AT&T’s wireless network (then known as AT&T Wireless Services, Inc.) for $41 billion. At that time, AT&T and Cingular had the first and second largest share, respectively, of wireless communications providers in the U.S.

In order to get the merger approved, AT&T and an army of executives, lobbyists and allies assured regulators and consumers that the deal was in the public interest by making promises — the very same promises that we’re hearing from AT&T today:

What happened after the AT&T – Cingular merger? Once the Federal Communications Commission approved the deal (after negligible scrutiny), the newly merged company – which later renamed itself AT&T Mobility LLC– betrayed its promises. It abandoned the old AT&T network, deliberately degrading the network so that AT&T customers would be forced to migrate to Cingular’s own network, pay an upgrade fee of $18, buy new phones and agree to new and more expensive rate plans. These anti-consumer moves were enforced by an anti-competitive “early termination fee” of anywhere between $175 and $400, which prevented customers of AT&T from moving to another carrier.

In short, AT&T policyholders were railroaded into spending hundreds of dollars more in order to maintain their cellular service – a colossal rip-off by the same corporate executives who are now asking for permission to do it all over again.

Nothing in the terms of the proposed merger bars AT&T from engaging in a repeat performance against helpless T-Mobile customers if this deal is approved. Indeed, even as the companies mount a massive public relations campaign to win your approval, T-Mobile executives are already implicitly acknowledging that once the merger is approved, AT&T will make changes in the T-Mobile network:

T-Mobile has no plans to alter our 3G / 4G network in any way that would make your device obsolete. The deal is expected to close in approximately 12 months. After that, decisions about the network will be AT&T’s to make. That said, the president and CEO of AT&T Mobility was quoted in the Associated Press saying “there’s nothing for [customers] to worry about… [network changes affecting devices] will be done over time… ”

Moreover, AT&T has publicly admitted that if the merger goes through, T-Mobile subscribers with 3G phones will have to replace their phones to keep their wireless broadband service. AT&T plans to “rearrange how T-Mobile’s cell towers work” so that T-Mobile’s airwaves can be used for 4G service rather than 3G. Even though AT&T will be altering T-Mobile’s 3G cell towers to operate 4G services, Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, said that after the merger, T-Mobile 3G phones will need to be replaced with AT&T 3G phones, which “will happen as part of the normal phone upgrade process.” Once AT&T forces the T-Mobile subscribers with 3G phones to buy AT&T 3G phones, it is only a matter of time before AT&T pushes all of its subscribers over to the 4G network.

T-Mobile customers who are forced to migrate to AT&T’s network will have to buy new phones, agree to more expensive rate plans, or cancel their contracts and pay a termination fee.

Once known for its low prices, T-Mobile has already begun increasing its rates and decreasing options in anticipation of the merger. On July 20, 2011, T-Mobile discontinued its unlimited data plans, replacing them with plans that cap the amount of data a customer can use; once the customer hits the data cap, T-Mobile will substantially slow down their network speed. Nine days later, AT&T, which stopped offering new unlimited data plans last year, announced it would similarly start throttling data speeds even for customers on “grandfathered” unlimited data plans. AT&T is attributing its slow-down to the “serious wireless spectrum crunch.” In another implicit promise sure to be broken, AT&T has told its customers and regulators that “[n]othing short of completing the T-Mobile merger will provide additional spectrum capacity to address these near term challenges.”

Finally, T-Mobile was recently named one of the world’s most ethical companies for 2011. It was the only U.S. wireless telecommunication service provider that made the list. By contrast, complaints about AT&T’s service and prices are legion. Indeed, the views of millions of AT&T customers have been summarized by an online campaign known as “#attfail.” This merger will eliminate a U.S. wireless company that at least seemed to care about its customers.

To this day, the AT&T customers who were misled and overcharged by AT&T’s actions after the 2004 merger are still fighting in the courts for refunds and other remediation arising from the merger. In 2006, lawyers for Consumer Watchdog, joined by a group of private law firms, filed a national class action lawsuit against AT&T on behalf of the millions of customers who were victimized by the merger: Coneff v. AT&T Corp., et al., No. C06-0944 (W.D. Wash). In response, AT&T’s lawyers claimed that when AT&T customers were forcibly moved to the new network, they simultaneously agreed to waive their right to seek refunds from AT&T in court because of a provision buried in the fine-print of AT&T’s contract that required arbitration of all disputes and barred customers from joining together in an arbitration. Throughout the litigation, AT&T changed its arbitration clause several times, each time modifying various terms while retaining the arbitration clause that prohibited customers from bringing or participating in a class action, regardless of whether it is brought in arbitration or in court.

In 2009, the U.S. District Court in Seattle, Washington, held that AT&T’s arbitration clause was unconscionable because most AT&T customers would never obtain redress without the ability to bring a class action. The case is presently before the 9th Circuit. In its briefing, AT&T now contends that the U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion 563 U.S. __ (2011) should be interpreted by the courts to apply to the egregiously unfair and one-sided mandatory arbitration clauses like the one struck down in Coneff in 2009, which, in our case and unlike in Concepcion, has been shown to preclude customers’ basic due process rights.

Albert Einstein defined insanity as doing the same thing over and over again and expecting different results. Considering AT&T’s track record, it is irrational to expect that the AT&T and T-Mobile merger will yield different results. If the merger is approved, millions of T-Mobile customers will be subjected to the same costly and unfair practices that AT&T customers experienced after the 2004 Cingular merger. Moreover, permitting AT&T to swallow a competitor will leave the American cellular marketplace controlled by a duopoly that, through the artifice of termination fees and arbitration agreements, will effectively eliminate competition between them.

This is a bread and butter test of the federal government’s commitment to American consumers versus the Wall Street and corporate interests that too often seem to be the winners every time the federal government takes action.  The Administration should ignore the lofty pronouncements of the corporate-funded academics and allies who provide cover for the glib promises of two cellular giants, along with the Wall Street firms that will reap millions in fees for providing the merger paperwork, in favor of the average American family, who, after all they have been forced to sacrifice these last few years, should not be required to pay more of their dollars for the ability to use a cell phone.

Harvey Rosenfeld

Laura Antonini

You can find documented footnotes accompanying this letter here.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT T-Mobile Merger Ad.flv[/flv]

AT&T is blanketing the airwaves with claims of improved service in its advertising promoting the merger with T-Mobile.  (1 minute)

A very pricey upgrade

Frontier Communications’ DSL modem rental fee is now as high as $6.99 a month in some of the phone company’s service areas, $14.99 a month if you want the convenience of a wireless router built-in.  That’s $84 and $189 a year, respectively, for equipment that cost the company a fraction of that.

“Lymelizzard,” a would-be Frontier DSL customer in Robbinsville, North Carolina, considers that highway robbery.

“I can go and buy the modem at a store and it would be less than one year of rental,” he wrote on Broadband Reports’ Frontier forum.

Frontier Communications’ regular monthly prices are not exactly aggressive in North Carolina, charging up to $50 a month for 3Mbps DSL, $55 for up to 7Mbps, before the modem rental fee and other charges are included.  A customer with Frontier’s wireless router would pay more than $70 a month, just for 7Mbps DSL service:

Frontier's No-Contract Prices for New Customers Only. Prices less for 1-2 year contracts that include $165 early termination fee for Double Plays and up to $120 early termination fee for High-Speed Internet only plans. One-time charges up to $60. Additional charges, taxes and terms apply.

Frontier has quietly increased equipment fees over the years.  Back in 2010, the company raised the rental fee to $4.50 a month.  Some service areas have been paying $6.99 a month since 2009, but now face even higher prices if they want a home “Wi-Fi” hotspot included.

Something else has changed at Frontier as well.  The company is making it more difficult for customers to purchase their own modems and use them instead, skipping the modem rental fee.  Customers trying to save several dollars a month now face a brick wall when contacting customer service.

“The salesman on the phone even said [the modem rental fee] wasn’t a good deal but he could not waive it,” Lymelizzard wrote.  He declined to become a Frontier DSL customer, considering the modem rental fee a deal-breaker.

“I’m surprised that all the Joe Customers out in Frontier-land haven’t complained,” he said. “This is merely a money grab on Frontier’s part. I could see the fee for a year, maybe two, but for the life of the account that’s bogus.”

Cox alienates their customers.

Six of the 19 ‘Most Hated Companies in America’ are big cable, satellite and phone companies.  The list, published this month by The Atlantic magazine, call out the perpetrators of bad customer service, high prices, and in the case of Time Warner Cable (#3) — Internet Overcharging.

The American Customer Satisfaction Index rates companies based on thousands of surveys. In the latest index, the most-hated companies include large banks, airlines, power and telecom companies.  Especially called out this year was Time Warner Cable, celebrating a decade of public relations blunders ranging from gouging experiments on Internet service pricing, showing pornography on children’s channels, high rates, and downright lousy service in some areas.  And with CEO Glenn Britt entertaining a return to Internet rate gouging, the company’s 59/100 score still has plenty of room to fall.

#3 — Time Warner Cable (59/100) — All of the above, plus sexually harassing a North Carolina customer.

#4 — Comcast (59/100) –Dreadful customer service and poor communications left consumers with dozens of channels gone missing, outrageous rate hikes, their phone service implicated in a Florida woman’s death, and who could forget the technician that set a customer’s house on fire. This one actually lost two score points since last year.

#5 — Charter Communications (59/100) — The usual rate increases were bad enough, but Charter also told their customers they were on the hook for cable boxes lost in fires that were not their fault, was held accountable for faulty billing practices, went bankrupt, introduced its own Internet Overcharging scheme, and worst of all — their infamous PR disaster telling tornado victims in Alabama to go and find their lost cable boxes scattered somewhere in the neighborhood.  The representative on the line will wait.

#14 — AT&T (66/100) — Limited coverage and the introduction of usage pricing for data pl    …   oh sorry, AT&T dropped the call.  All reasons why AT&T wins the ‘you suck’ award among mobile providers this year.

#17 — Cox Cable (67/100) — The home of the $480 early termination fee, Cox alienates customers like few others.  They even use spacemen to harass their customers.  Bemusingly, Cox is considered a customer service success compared with our other bad boys.

#18 — Dish Network (67/100) — Trending downwards, Dish is still giving their customers a bath in bad billing and worse customer service.  They are lovers of big ad splashes with a terrifying excess of fine print which ruins the deal, if you read it.

If you want to say goodbye to Verizon Wireless, or just want a new phone without waiting for your old contract to expire, Verizon has a deal they really don’t want to give you, but they have to — it’s in their contract.

Verizon Wireless has announced they are unilaterally changing your wireless contract with an increase in the Regulatory Recovery Fee (a bill-padding junk fee) from $0.13 to $0.16 effective July 1st.  That fee opens a 60-day window for customers to exit their contracts because the carrier is imposing a “materially adverse” change without your advance consent.  After 60 days, you effectively give that consent by staying with the company.

“Materially adverse” is simple to understand, even if Verizon customer service representatives feign ignorance and stamp their feet as you demand to leave without paying an early exit fee.  It means Verizon has notified you they are changing the contract — one you signed in good faith for a set price, and they are now unilaterally changing it.  Unless those price changes come about because of a government mandate, Verizon cannot impose them without first granting you a window to cancel your agreement, penalty-free.

For customers unhappy with Verizon, they can freely take their business somewhere else.  For those who intend to stay, they can switch to a prepaid plan or sign a new two year contract and get a new phone at the same price any other new customer would pay, even if only 30 days into an existing contract.

This welcome window may mean a lot to customers looking for an early upgrade -and- keep Verizon’s unlimited smartphone data plan the company plans to discontinue July 7th.

With their “materially adverse” contract clause potentially exposing them to hundreds of dollars in lost cancellation fees they cannot impose, nobody said they would make it easy for you to jump free without some hassle.

When calling Verizon Wireless and requesting the “cancel service” option, expect the representative to pretend they don’t know what you are talking about, claim you still owe a penalty, or even express shock you are trying to escape them over a measly three cent rate increase.  Some may even try and credit three cents for each month remaining on your contract and claim that since you are no longer effectively paying the increased fee, you have no right to complain.

Tell them tough cookies — go and read their own contract:

Can Verizon Wireless Change This Agreement or My Service?

We may change prices or any other term of your Service or this agreement at any time,but we’ll provide notice first, including written notice if you have Postpay Service. If you use your Service after the change takes effect, that means you’re accepting the change. If you’re a Postpay customer and a change to your Plan or this agreement has a material adverse effect on you, you can cancel the line of Service that has been affected within 60 days of receiving the notice with no early termination fee.

Ask them to find the clause in their terms and conditions that says once they announce a rate change, that does not represent a change to your plan.  Then ask where it says in their agreement a subsequent credit frees them from the obligation of allowing you a penalty-free window to exit once a materially adverse change has been announced.  Let them know the only way they could have kept you from exercising your rights under the contract was if they never announced the price change impacting you in the first place.  Expect a long wait on hold.  A very long wait.

To truly escape Verizon Wireless’ contract, you will need to be prepared to say “no” to all of their counteroffers, and they will pelt you with them like an Oklahoma hail storm:

• Reduced price phone upgrade?  No.
• Free service for a month?  No.
• Free accessories?  No.
• Free texting plan?  No.
• A free sample of their data or tethering plan?  No!
• Cancel. Cancel. Cancel!

If they still want to argue, repeat after me:

“Despite your willingness to credit my account, once you are legally obligated, under your contract, to notify me of your intention to change my plan by raising prices that are within your control, you triggered the materially adverse clause, regardless of your subsequent attempt to credit my account.  Cancel the account immediately or I will escalate this to the same Executive Customer Service office that slapped you guys down the last time you tried this.  Once you notify us of a fee increase, the window to exit penalty-free is open, and only I can close it by agreeing to stay after 60 days.”