A new website matches restless users with people who want to buy their existing contracts
Gillian Shaw
Sun
When Bijan Shahrokhi heard Apple’s new iPhone was coming out he decided as soon as it reached Canada he would get one.
But between him and the iPhone was the small but pricey matter of two-years-plus left in a cellphone contract that would cost him hundreds of dollars to get out of before he could sign up with Rogers, the network the iPhone would use if it came to Canada.
The dilemma led the University of Toronto electrical engineering grad to launch CellClients.com, a brokerage site that brings together buyers and sellers of cellphone contracts.
It gives customers like Shahrokhi — who want to escape their long-term contracts — a way out. And it offers buyers a chance to pick up contracts that may have better terms than current ones. Sometimes phones and even cash incentives are thrown in.
Shahrokhi sees it as a win-win-win situation. Disgruntled customers get to leave without incurring the full financial penalty of breaking a cellphone contract. Buyers get to pick and choose the best offerings. And mobile phone carriers get a new customer instead of simply losing an upset one.
“It is actually permitted by the wireless providers and it is beneficial to them because we help them replace an unhappy customer with a happy customer,” said Shahrokhi. “The benefits of getting out of a cellphone contract are clear. On average it costs people $400 to get out of their contracts — that’s based on the average number of remaining months when contracts are cancelled which is 20 based on our statistics and client surveys.
“And if you are buying it, you receive free activation, a free SIM [subscriber identity module] card, and a free cellphone handset.”
The website also offers an interesting demonstration of the widely varying rates people are paying for cellphone service. For example, on CellClients.com you can choose from a plan with 200 weekday minutes and unlimited early nights and weekends for $25 a month — or you pay $60 a month to get only 150 weekday minutes and unlimited evenings and weekends. It would take a spread sheet analysis to compare the pluses and minuses.
If you want to spend $50 a month, you can choose plans ranging from 150 weekday minutes to 1,000 minutes. Like the carrier offerings, the contacts being sold represent a range of features and limitations so buyers have to figure out for themselves if it’s a good deal.
But at a time when the Canadian government has announced it is opening up the wireless market to increased competition starting in 2008, price and service discrepancies are going to become increasingly important to consumers here who are already paying rates among the highest in the world.
On CellClients.com sellers who have less popular contracts, phone models that no one wants or a very long time left on a contract, must spice up their offerings with cash incentives.
“Sellers will say, ‘I’ll give you $100 to get out of my contract,’ ” Shahrokhi said.
Potential buyers e-mail the seller if they are interested in a particular contract offering and the sellers then pay CellClients.com a one-time fee of $14.90 to unlock their mailbox and read the messages.
Once they unlock their messages, it is up to the seller to get in touch with the buyer and agree on terms.
“All they need to do is call the provider and let them know they want to transfer the ownership,” said Shahrokhi. “The provider does a credit check with the new customer and then the buyer takes over the contract.”
Terms and conditions may vary with the carrier and the contract, but generally speaking and depending on the type of contract, carriers don’t prohibit such transfers.
Shawn Hall, spokesman for Telus, said that company’s cellphone contract can be transferred subject to a successful credit check on the new subscriber. The new subscriber must also agree to terms and conditions of the contract, along with paying a small fee.
Rebecca Catley, representing Rogers, said transferring a Rogers account from one individual to another is a legal ownership change requiring consent from both parties and a credit check of the new account holder. Outstanding balances at the time of transfer remain the liability of the account holder under whom the charges were incurred. She said some contracts allow for transfer of ownership and some not. For example, plans designed for a particular business couldn’t be transferred to an individual.
Shahrokhi’s site has been running for 31/2 months and it just passed the 1,000 active member mark. Some 250 contracts have been transferred through the site.
As for Shahrokhi, he’s still waiting for the iPhone to reach Canada and then his cellphone contract will be up for grabs.
THE GREAT CONTRACT ESCAPE
You can get out of that cellphone contract by selling it, and you can get into a shorter-term contract by buying one with only part of the time remaining on it. Here are some examples of what’s for sale on CellClients.com.
(For space reasons, not all the details of these example offers are included. Some plans, such as the Telus example, included features such as text messaging and voice mail not shown here.)
© The Vancouver Sun 2007
