Phone, TV deals need close look

Your Money

January 28, 2007|By McClatchy-Tribune

Shopping for telephone service, a cell phone plan, cable TV or an electricity provider can be exasperating.

The kaleidoscope of offers, hidden fees and charges, and frustrating customer service can leave you bug-eyed.

"Consumers are frustrated with these services, and the reason they are frustrated is because they just don't have a lot of competition," said Jeannine Kenney, senior policy analyst specializing in telecommunications and media policy at Consumers Union.

"Even in markets where there is some competition, like in cell phones, they use anti-consumer practices like using long-term contracts with hefty penalties to keep you locked in," she said.

The offerings are so complex that many people are willing to just take whatever they're given. But there is a cadre of determined consumers out there who are willing to comparison-shop and hold companies to their promises. They make the competitive process work.

If you'd like to be one of those hardworking consumers and save yourself a few bucks, here's how to do it:

Telephone service

"Consumers should review their old bills to see when they make long-distance calls, how long they talk and where they call," said Tim Morstad, utility specialist with the Texas Office of Public Utility Counsel. "There are a variety of plans that combine a monthly charge plus a permanent rate."

There are also differences between intrastate and interstate calls. "Some long-distance plans have monthly fees and other ones don't," Morstad said. "It boils down with getting familiar with the way you use your phone, because the rates are all set differently."

For example, some plans offer no monthly fee but high per-minute rates.

"If you're a low-volume user and there's no monthly fee, that may be a way to go, because even though your per-minute rate may be much higher, you're using less," Morstad said.

"Not all unlimited package deals save money," said Luz Varela, AT&T Inc. spokeswoman. "Consumers should evaluate their monthly usage to determine the true rate they end up paying. It's like going to an all-you-can-eat buffet, paying the full buffet price, and only eating a small plate of salad."

Some other considerations:

Ask about the company's discount packages. How long is the discount available, and what are the restrictions?

Does the company have rounding charges? Some companies charge for a five-minute long-distance call when you really spoke for only four minutes and two seconds.

Know about any additional monthly charges. Some companies charge a fee to have long-distance charges appear on your local phone bill.

Cell phones

Cell phones do a lot more than make calls, so you need to ask yourself some questions:

Are you going to be using your phone for something other than calls? Will you be sending text messages? Using the Internet? Listening to music?

How often will you use the cell phone? Will it be your primary phone?

If you'll use it primarily for emergencies, consider prepaid or pay-as-you-go plans.

If you send lots of text messages or plan to use the Internet a lot, consider paying a flat fee.

Cell phone companies can really entice you with offers for free or discounted phones, but you have to look beyond that.

"There are so many `gotchas' in cell phones," said Kenney of Consumers Union.

First of all, in order to get that free or discounted cell phone, you typically must sign a two-year contract.

"A lot of people like the contract because with the contract, they get a steeply discounted handset," said Joe Farren, spokesman for CTIA-The Wireless Association, a trade group. "Sometimes you get one for free, and then you're guaranteed a low monthly rate that's not going to go up."

But if you want to get out of the contract before it expires, it will cost you dearly.

"Switching companies in mid-contract can have you paying upwards of $200 in early-termination fees per phone number," said Consumer Reports, whose January issue has a cover story on how to get the best cell phone deals. "If your existing service is at least tolerable, try riding out the contract."

Some cell phone carriers have begun to prorate their early termination fees, Farren said.

"If you're into the contract and you need to get out on your 20th month, you pay a portion of it," he said.

If you're looking to snag that sleek phone through a special deal, you're out of luck if you're a current customer. They typically apply only to new customers.

But if you time it right, you may be able to finagle a better deal.

"If the customer is approaching the end of their contract period, they should contact their cell phone company and say, `I'm about to expire on my current contract and I'm going to be shopping around. What's the best thing you can offer me?'" said Morstad of the Texas Office of Public Utility Counsel.

If your calling habits change, consider moving to one of your cell phone company's other calling plans without penalty.

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