What You Need to Know Before You Change Cell Phone Plans

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Getting rid of a cell phone provider or switching services is not cheap, and certainly not hassle-free, but not to worry, the Feds are on the case. And depending on your carrier, cancelations are starting to cost a bit less, already.

Even though no domestic carrier is as forgiving for plan droppers as Verizon Wireless (VZ), which eliminated the flat-fee of $175 for anyone leaving their plan early in November, 2006, AT&T (T) restructured their termination fee plan last month and Sprint Nextel (S) and T-Mobile are expected to follow suit by the end of this year.

In the meantime, the Federal Communications Commission plans to hear consumers' opinions on termination fees at an open agenda meeting in Washington D.C. on June 12. After the hearing, the FCC is expected to create a taskforce to create a nationwide cancelation fee policy that would apply to all cellular service providers.

Until then, Verizon and AT&T customers who renewed or entered into a new contract on or after their company's respective policy change dates (November 16, 2006 and May 25, 2008), are no longer responsible for the rate of $175 that the company previously charged no matter when you canceled your agreement. Instead, Verizon or AT&T customers will be able to deduct $5 from the early termination fee of $175 for each month they fulfill in a one or two year contract. (Hey, $5 may not sound like much, but remember, small amounts can add up!)

That savings is a first step. Now cell phone executives and consumer watchdog groups will turn their attention to the FCC hearings later this month. "I am encouraged that industry has stepped up to address an issue that consumers and state commissioners have been concerned about for some time," said Deborah Taylor Tate in a recent release on the FCC's Web site. "In such a competitive market, we should look first to industry, rather than government regulation, to offer consumers the price and service options that best meet their needs." Stay tuned.

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