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Aug. 20, 2008

The AARP (American Association of Retired Persons) is serious about its vigilance over the mobile industry, and is working 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 percent discount on monthly access and airtime usage.

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 agreement 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.

The deal with AARP was well received by 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.

Consumer Cellular’s churn is about 2 percent, higher than that of the large U.S. facilities-based wireless 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.

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.

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.

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Source: The AARP.