AT&T Eases Plan Switching Penalties as Congress Mulls Action

AT&T (NYSE: T) is revamping its policies to allow consumers to prorate their early termination fee according to how long he or she has been on the plan.

The company is also allowing customers who switch plans or change phones during the course of their contract to maintain the same contract instead of re-starting with a new commitment.

These are not the first so-called customer friendly measures AT&T has rolled out in recent months, Kirk Parsons, senior director of wireless services for JD Power & Associates, told CRM Buyer. He points to the company's recent 30-day free trial period as an example.

Pet Peeves

However, these particular changes address one of the top grievances consumers have with their wireless providers, Parsons said. "Billing, along with call quality and customer care, are definitely pet peeves," he said.

Indeed, AT&T is not the only carrier to respond to these complaints. Verizon, for some time, has allowed customers to prorate their termination fees. It also recently introduced similar contract changes to what AT&T has now enacted.

Looming Regulations

Another motive by these wireless carriers is the desire to circumvent potential regulatory measures that may be imposed by Congress, the Federal Communications Commission (FCC), or both.

This week, hearings on consumer wireless plan practices are being held in the Senate Commerce Committee. "Carriers want to be able to show they can self-regulate and not have to have regulations imposed on them," Parsons said.

Also, the FCC is considering holding hearings on a petition submitted by the wireless industry to preempt states from imposing regulations on early termination fee practices.

While the petition has been pending for some time, recently the FCC chairman has been quoted in the press as saying he wants to hold hearings on this issue, Carol Mattey, director of regulatory and capital markets consulting at Deloitte & Touche, told CRM Buyer.

"When you have both the industry regulator and federal legislature looking at an issue that tends to grab the attention of people in the industry," she said.

One fear is that if Congress were to pass a law or the FCC adopt a regulation, then it would have potential ambiguities or would be a "one-size-fits-all" policy that would not suit all of the carriers, she said.

"The wireless providers are anticipating possible regulatory change and they want to get out in front of it," she said.