AARP is serious about its vigilance over the cellular industry, and it’s serious about a new relationship with Consumer Cellular that wipes out early termination fees (ETFs) for AARP members.
The partnership delivers to new AARP subscribers a 45-day extended trial period and plans starting as low as $10 per month. Contracts are cancelable at anytime, and AARP members get a 5% discount on monthly access and airtime usage.
The deal comes after AARP challenged the telecom industry to develop cell phone plans without ETFs, long-term contracts and mandatory binding arbitration. Consumer Cellular was able to fulfill AARP’s requirements.
Portland, Ore.-based Consumer Cellular started in 1995 as mainly a regional reseller in the Pacific Northwest, but when Cingular bought AT&T Wireless, its founders saw the chance to grow into a national player, according to co-founder and CEO John Marick. Consumer Cellular is now an MVNO using AT&T’s network.
The deal with AARP drew praise from Nebraska Public Service Commissioner Anne Boyle, who testified at an FCC hearing in June on ETFs, arguing such fees should be abolished. Since then, she was appointed chairwoman of the National Association of Utility Commissioners’ Consumer Affairs Committee. “AARP has taken a giant step in what could be the demise of ETF contracts. Since the offer is available to those who are over 50, consumers under 50 may demand the same treatment,” she said in a statement yesterday.
Marick acknowledged that eliminating ETFs is a risk; the company subsidizes its phones so it loses money up front, but it tries to position itself as a company people will want to stay with. The no-contract feature is standard and applies to non-AARP customers as well, he said.
Consumer Cellular’s churn is about 2%, higher than that of the large U.S. facilities-based carriers but far lower than some prepaid service providers. The company’s main mission is to offer affordable services for people concerned about safety and convenience; heavy texters probably wouldn’t find it to be a good fit, he said.
Other wireless services, like the Jitterbug phone through GreatCall, target a more mature audience, but Marick said Consumer Cellular doesn’t really compete head-to-head with them very often. The family plans that are offered by many carriers represent its biggest form of competition, he said.
Four out of the five phones that Consumer Cellular offers by the end of this year will be hearing-aid compatible. The privately held company works primarily with handset makers Motorola and Nokia.