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AT&T Wireless offers free cancellations

The wireless carrier tells its customers that for July they can cancel their subscriptions--which will become more pricey this month--without paying the cancellation fee.

AT&T Wireless customers can hang up on AT&T Wireless for free this month.

The wireless carrier has told its 19 million customers in their July bills that they can cancel their subscriptions without having to pay the usual $175 cancellation fee.

The nation's third largest wireless carrier also plans to increase most of its customers' rates this month. AT&T Wireless will start charging callers for calls that go unanswered for more than 30 seconds. Also, directory assistance will rise from 99 cents to $1.25.

While most carriers will waive a cancellation fee because of extenuating circumstances, like a customer embarking on a tour of military duty, none has ever decided to offer it to all their customers at once.

"To be fair and above board as possible, we've decided to proactively give people who don't like the rate increases the ability to waive the cancellation fee," said AT&T Wireless spokesman Ritch Blasi.

It's a one-time offer, and customers have to act by the end of July, Blasi said.

The move is a rare one as wireless carriers continue to fight what the industry calls "churn," which refers to the number of customers who change carriers because they aren't satisfied with service, or decide that their plan is too expensive. Most carriers report churn rates of between 1.5 percent and 3 percent of their customers per month, according to the Federal Communications Commission.

The cancellation fee that customers have to pay has helped keep some on board, posing as a kind of pain threshold. It forces consumers to weigh whether getting out of a bad cellular situation is worth $175, and most decide it's not, said Alan Reiter of Wireless Internet and Mobile Computing, a wireless consulting firm in Chevy Chase, Md.

Waiving the fee just might open the floodgates for more people to leave AT&T for greener pastures, he said.

"Cellular subscribers really are in some ways indentured servants because they cannot typically switch from one carrier to another without incurring a significant penalty," he said. "AT&T Wireless is giving (them) a reprieve."

Don't count on the nation's other carriers, such as Verizon Wireless, deciding to make the same offer.

"We have no reason to do that, we provide people with an incentive to stay," said Verizon Wireless spokeswoman Brenda Raney.

The latest incentive, she said, was in February when the carrier launched its "America's Choice" plan. The $35 a month plan allows for 300 minutes of cellular calling time each month. That is double the number of minutes under Verizon's other $35 a month plans, she said.