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The average cell phone customer now switches carriers as soon as his or her second two-year contract is up. That startling decline in loyalty is causing wireless companies to rethink the way they do business, according to a new study released Monday.

The average length of relationships between carriers and their under-contract customers fell to an all-time low of 48 months last year, PricewaterhouseCoopers’ found in the latest edition of its North American wireless industry survey. The comprehensive annual study includes data from all of the region’s major carriers.

The trend has building for a few years. What’s shocking is how quickly it accelerated. In 2010, the average customer-carrier relationship was 59 months — nearly a full year longer.

The most precipitous decline came among smaller cell phone companies, but large carriers like Verizon (, Fortune 500), AT&T (, Fortune 500) and Sprint (, Fortune 500) didn’t fare much better. Their average relationships with customers under contract lasted just 51 months.

"Competition is fierce, and pricing is a key element," said Pierre-Alain Sur, global communications industry leader at PwC. "That accelerates the jump from one carrier to another at the end of a contract period."

If customers are going to cut and run frequently, carriers will need to rethink their pricing models — particularly when it comes to expensive smartphones.

They’ve been encouraging customers to upgrade to smartphones because the devices bring in a new revenue stream. Most providers charge smartphone customers a premium for data usage, with plans averaging about $25 per month.

But what carriers didn’t anticipate were the incredible costs of keeping smartphone customers satisfied.

To get smartphones down to the magic price point of $200, carriers pay an average subsidy of $280 for each device — four times as much as the $70 average subsidy on a feature phone. Plus, smartphone customers are data hogs, requiring wireless companies to spend tens of billions of dollars each year improving their 3G network capacity and building out their 4G networks.

Meanwhile, average revenue per smartphone user is actually declining.

As data use grows, people are talking on their phones less easy payday loans. The average subscriber used just 638 voice minutes per month in 2011, down from 720 minutes in 2010. Customers are cutting back their voice plans, sending carriers’ average revenue per smartphone user down to $83 per month last year. That’s a drop from $86 in 2010 and $93 from 2009.

Less loyalty, growing subsidies, higher infrastructure costs and declining revenues have created an unsustainable dynamic for carriers. Profit margins are falling, and analysts expect the trend to get worse.

The iPhone is a nightmare for carriers

That means sweeping changes are coming.

"The business model is shifting, so they have to find a solution," Sur said.

Carriers have a few options.

First, they can increase prices on their phones. That’s already started to happen. Verizon and AT&T now offer a small selection of 4G phones for more than $200, with some as high as $300.

Another tactic is for them to pressure handset manufacturers to reduce device costs. Some may bargain, but the maker of the single most popular smartphone — Apple’s (, Fortune 500) iPhone — is no pushover.

Carriers could also try to find alternative sources of revenue. Right now, most are "dumb pipes," taking no revenue from the content that travels over their networks. If carriers could nab a slice of app store sales or video purchases, that might reverse their fortunes.

Finally, cell phone companies could switch to the "bring your own device" model that is popular overseas.

North American carriers have embraced the subsidy model for decades for two reasons: incompatible technologies presented steep obstacles to switching, and the subsidy model seemed to build customer loyalty.

Now, the whole industry is migrating to the 4G-LTE standard. With loyalty going out the window, carriers may drop subsidies and contracts altogether. Some may even try leasing handsets to customers.

Whichever option carriers choose, they will have to act fast, Sur thinks.

"They are going to have to determine what’s going to be the business model of the future," he said. "Carriers are at an inflection point." 

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Two prominent liberal politicians have pulled out from a panel tasked with drafting a new constitution after Islamists won a majority of seats on the body.

The 100-member panel selected over the weekend includes nearly 60 Islamists and only six women and six minority Christians. The members were chosen by parliament’s two chambers, where Islamists have a majority.

The two pulling out are independent lawmaker Amr Hamzawy and veteran Christian activist Mona Makram Obeid paperless payday loans.

They announced they were quitting the panel on Monday on their Twitter accounts.

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The number of first-time filers for unemployment benefits fell to a four-year low last week, hinting that solid job growth likely continued in March.

About 348,000 people filed for initial jobless claims in the week ended March 17, down from the previous week’s 353,000 claims, the Labor Department reported Thursday.

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Obama battles job crisis

Before Obama even took office, America had lost 4.4 million jobs. Track his progress since then.

Economists surveyed by Briefing.com had predicted the newly unemployed would file 355,000 claims payday loans for bad credit.

Unemployment claims are considered a key indicator of the job market’s strength, and recently they have fallen back to levels consistent with a healthier labor market.

Check the unemployment rate in your state

Even when the economy was stronger in 2005 and 2006, it was not uncommon to see Americans file around 350,000 new claims a week, due to usual turnover.

Employers have now added more than 200,000 jobs each month since December, and a decline in unemployment claims suggests job growth may have continued at that pace in March, said Jennifer Lee, senior economist with BMO Capital Markets.

Since the initial claims number can be volatile from week to week, economists often look to the four-week moving average as a broader gauge of the labor market’s health. Lately, that figure has also been on a gradual decline.

Meanwhile, continuing claims fell. About 3.35 million people filed for their second week of unemployment benefits or more in the week ended March 3, the most recent data available. That’s down 9,000 from the previous week.  

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Confidence among U.S. consumers unexpectedly dropped in March as this year

WASHINGTON — Beware of car dealer ads that promise to pay off the loan on your trade-in.

In a first-of-its-kind case, the Federal Trade Commission targeted five car dealers in four states that regulators say deceived consumers by promising to pay off their loans, no matter what was owed on the cars. The balance, the FTC said, was usually rolled right into the new car loan. One dealer later required customers to pay the balance out of pocket.

Settlements agreed to by the dealers would require them to stop running the ads on their webpages and other sites such as YouTube. The settlements remain subject to a final vote by the commission after a 30-day public comment period.

Wednesday’s announcement from the commission named the following companies: Billion Auto Inc. of Sioux Falls, S.D.; Frank Myers AutoMaxx LLC of Winston-Salem, N.C.; Key Hyundai of Manchester LLC in Vernon, Conn., and Hyundai of Milford LLC in Milford, Conn., which advertised jointly; and Ramey Motors Inc. of Princeton, W.Va.

The FTC has brought cases against auto dealers before, but not for this kind of advertising.

“Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will pay off what they owe on their current vehicle, when they really won’t,” said David Vladeck, head of the commission’s consumer protection bureau.

The promises might sound attractive to anyone facing tough financial times. Rosemary Shahan, president of California-based Consumers for Auto Reliability and Safety, says this kind of misleading advertising pitch is a common practice among dealers, and that people who are upside down on their loans — owing more on the old car than its actual value — are especially vulnerable.

“A huge percentage of people are upside down,” Shahan said. “What they don’t realize is that they are just getting deeper and deeper into debt.”

She says it’s usually better to keep the old car and pay off the loan before buying a new car. Despite the claims, consumers still ended up being responsible for paying the difference between the trade-in loan balance and the vehicle’s value, the commission said.

As part of the proposed settlements, the dealers would be barred from future deceptive ads. They also would not be allowed to misrepresent any other facts.

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Apple’s decision to keep the new iPad’s size nearly identical to the iPad 2 is giving case makers some wiggle room — literally.

The third-generation iPad, set to hit stores March 16, will be less than a millimeter thicker than the last one. It doesn’t sound like much, but for makers of plastic, wood or metal tablet cases, it means manufacturing changes that can keep their products from store shelves during the pivotal first few weeks after a release.

Apple doesn’t announce its product specs in advance, so manufacturers find out about changes at the same time as everyone else. The best prepared are the ones that gambled and started making a tablet case with enough space inside to house either the iPad 2 or a slightly modified version.

The moment of truth for BodyGuardz came when Apple (, Fortune 500) CEO Tim Cook unveiled the new iPad’s dimensions on Wednesday.

Dain Hodson, BodyGuardz’s chief operating officer, was following tech blog Engadget’s live coverage of the event. When news came that the new model would be "9.4 millimeters thin," Hodson immediately reached for the tape measure in his drawer.

New 4G iPad marks the beginning of the end for 3G

Cradling the phone on his shoulder, he carefully measured the plastic production sample case that had just arrived from China.

"Looks like we’re good," he announced with relief. "That’s everything. That’s the starting gun for us."

BodyGuardz will now ramp up production, but in reality, its manufacturing cycle started weeks ago. The Bluffdale, Utah company decided to roll the dice after a mysterious e-mail arrived two months ago. The message came from an unknown Chinese manufacturing company that claimed it had the secret iPad 3 specs everyone desired.

"I’m very leery when I hear that, because especially for cases, there are some companies out there that will say they have five designs they’re speculating will be the right size," Hodson said. "And many times, they’re not right. You can be one millimeter off and you’re impeding somebody from using the device correctly."

Changes in the placement of buttons, cameras, speakers and USB ports are all a nightmare for companies that start early. Wednesday’s announcement gave BodyGuardz executives some relief: It looks like the Chinese source was right, and BodyGuardz’s cases will fit both the new iPad and the previous model.

Still, Hodson admits they won’t really know it’s perfect until they can buy a new iPad next week.

"That’s the danger in this game," he said.

Other case makers aren’t rushing off the blocks.

Grove, in Portland, Ore., makes all of its bamboo-and-leather cases by hand. The company’s 23 employees pride themselves on their cases’ artistic finishes, and a pristine fit is paramount. Co-founder Ken Tomita said Grove won’t start adjusting its milling machines until an employee comes back with a model from the nearby Apple store.

Until then, he’s wrestling another dilemma: Apple’s baffling name choice. It’s not the iPad 3 or iPad HD. It’s just "the new iPad."

"Apple really threw us a curve ball," Tomita said. "We had a debate today for half an hour. We can’t just call it ‘the new iPad case.’ That’s confusing."

Until Grove figures that out, its packaging and marketing plans are on hold. But Tomita is relieved that his company doesn’t have to place its big bets in advance.

"The people who are sweating bullets are the ones who use injection molds," Tomita said.

Take the cautionary tale of Hard Candy Cases. The San Francisco company paid $50,000 last year for steel moldings after several Chinese manufacturers claimed the iPhone 4S would have a different shape and a widened home button.

It didn’t. Oops.

"You move forward based on your gut feeling and experiences in the past," said A.G. Findings CEO Hank Goradesky, whose company makes the tough Ballistic line of cases. "There are times when we’ve gambled and lost inventory and tooling."

Goradesky wasn’t willing to miss out on a moment of production time, so he’s had three executives in China overseeing manufacturing for the last two weeks. Relying on the Apple rumor mill, they guessed that the new iPad’s dimensions would be almost identical to the last model.

Wednesday’s confirmation of that was a giant relief.

"God forbid that this thing doesn’t fit and it’s in a store," Goradesky said. "You can’t explain that. Those scenarios can’t exist."  

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China

Pressure mounted on Europe Saturday to build an even bigger financial stabilization fund to head off sovereign debt concerns, with the United States, Brazil, and the Organization for Economic Cooperation and Development all urging an increase.

While the advice coming out of a meeting of G-20 finance ministers, senior officials and central bank heads seemed overwhelming, Germany _ Europe’s main financial engine _ appeared loath to fund yet another increase to stabilization funds that already have about 500 billion euros.

Angel Gurria, the head of the Organization for Economic Cooperation and Development, set the tone at the conference, calling for about $1.5 trillion in “firewall” funds aimed at restoring confidence in European countries’ debt.

“We still have to build the mother of all firewalls,” Gurria said. “The thicker the firewall is, the less likely we’ll have to use it.”

Guido Mantega, the finance minister of Brazil, said “there is a very strongly shared opinion that first, the European countries should strengthen their firewall.”

“The emerging countries are only going to help under two conditions,” Mantega said. “First, that they reinforce their firewalls, and second that reforms are implemented in the International Monetary Fund.” Brazil wants more representation for developing nations in the U.S.-led IMF.

Many want the IMF, which is already participating in European stabilization, to do more.

U.S. Treasury Secretary Timothy Geithner added to the pressure, saying “I hope that we’ll see, I expect that we’ll see continued efforts by the Europeans … to put in place a stronger, more credible firewall,” though he didn’t mention any amount.

Geithner acknowledged the work of European leaders, saying they have “made quite a bit of progress in convincing the world that they are not going to allow a catastrophic financial failure” in their countries.

But he also noted, “It’s important not to rest on that progress, and recognize that progress is there in part based on the expectation that there are more things to come, more actions to come” on the financial firewall.

“They are not done. They know they’ve got more to do,” Geithner said. He added that leaders had moved “slower than some people would like.”

The Germans, whose powerful economy represents the economic keystone of Europe, seem loath to help fund yet more stabilization efforts.

In an editorial in the El Universal newspaper on the eve of the meeting, German Finance Minister Wolfgang Schauble wrote that “should we increase even more the firewalls? The response is a resounding no.” Schauble also rejected sharing other Euro-zone country debts, or expanding the euro money supply to meet countries’ budget gaps.

“This would not only not solve the problems of debt and competitiveness that brought the affected countries to their current state of affairs, it would also discourage their governments from carrying out consolidation and reform.”

German central bank president Jens Weidmann noted Friday that Euro-area political leaders will meet in March to decide whether to further increase the current 500-billion-euro financial stabilization effort, and while he didn’t rule out increased funding, he said money alone won’t do it.

“Higher walls of money can buy time, but that time must be used to tackle the roots of the crisis,” Weidmann told a seminar prior to the ministers meeting. “Ultimately, Greece cannot be forced to comply with the program,” he said of the indebted country’s commitment to make fiscal, wage and other reforms in exchange for the European bailout.

“But it should be clear that no further disbursements will be warranted if Greece fails to keep its side of the bargain,” Weidmann said.

Mexican central bank Governor Agustin Carstens said Friday that the “IMF’s lending capacity is an issue that will be discussed” at Saturday’s meeting among finance ministers and central bankers.

But one Canadian finance official, who was not authorized to speak on the record, said that “on the issues of IMF funding, I don’t think we are near a consensus.”

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The Thomson Reuters/University of Michigan final index of consumer sentiment for February rose to 75.3 from 75 at the end of last month. Economists projected a reading of 73 after a preliminary figure of 72.5, according to the median estimate in a Bloomberg News survey.

Forecasts ranged from 71 to 76 in the survey of 60 economists. The measure averaged 89 in the five years leading to the recession that began in December 2007 and ended in June 2009.

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Of all the bank fees that customers love to hate, overdraft charges on checking accounts have to be near the top. The government’s new consumer protection agency appears to agree.

The Consumer Financial Protection Bureau said Wednesday that it will investigate overdraft fees, including how they are marketed and explained to customers. The agency said the probe could result in additional rules, perhaps even lawsuits.

Overdraft fees are charged by banks when customers try to spend more money than they have in an account. Banks will allow the transaction, then charge the customer a penalty of as much as $35.

“We’ve heard many stories about the $40 cup of coffee,” the agency’s director, Richard Cordray, told reporters and representatives from banks and consumer groups.

Cordray and representatives from four consumer advocacy groups said that the overdraft fees hurt the people who can least afford them because poorer customers are more likely to drain their checking accounts to close to zero.

Since the 2008 financial crisis, the government has clamped down on bank practices that it considers unfair, such as marketing credit cards to teenagers. Banks have complained some of the government’s moves have been too intrusive.

In 2010, the Federal Reserve barred banks from automatically enrolling customers in so-called overdraft protection programs for debit card or ATM transactions. Without overdraft protection, a transaction is declined if the customer can’t cover it.

The rule did not apply to checks, online bill payments or recurring debits, such as having the monthly cable bill automatically sent to your debit card. It also did not limit how much banks can charge for the service.

Banks have responded by marketing overdraft protection aggressively. Some told customers that opting out of overdraft protection could prevent them from making everyday transactions, including “medical or health emergencies,” according to research published last year by the Center for Responsible Lending, a consumer group that opposes overdraft fees.

Cordray said the problem is not just the fees but that banks often don’t explain them clearly. One bank, which he did not name, required customers to visit three different websites and scroll through 50 pages of dense text just to get an explanation, he said.

Cordray praised banks for finding ways to help customers avoid the fees, such as not charging overdrafts for purchases of less than $5 or giving customers 24 hours to add more money to an account payday loans direct lenders.

Representatives of consumer groups who appeared with Cordray said customers would rather have their cards declined than be charged the fee. A representative of Citigroup, one of the country’s largest banks, said customers prefer to avoid the embarrassment.

Andrew Rowe, a senior vice president from Bank of America, said the bank has started giving customers “clarity statements” to explain fees and sending them text messages when their accounts drop below $25. Last month, Bank of America sent 20 million such texts to 8 million customers, Rowe said.

Bank of America was a leader in trimming overdraft fees beginning in 2009, when Brian Moynihan, now the CEO, was running the bank’s consumer banking unit. At the time, the bank owed $45 billion in government bailout loans. It has since paid the money back.

Banks have also drawn criticism for a practice known as “re-ordering” _ when a bank takes all the purchases a customer makes in a single day and subtracts the biggest ones from the customer’s account first. Banks say it helps customers pay their most important bills first, like mortgages and student loans. Consumer groups say it’s a way to rake in fees.

The practice has been challenged in class-action lawsuits around the country. Bank of America settled one case for $410 million last July. JPMorgan Chase agreed this month to pay $110 million to settle similar claims.

The CFPB, born out of outrage over the financial crisis and the banking practices that led to it, said it would focus on four areas: re-ordering, missing or confusing information, misleading marketing and disproportionate impact on low-income and young customers.

According to a 2008 study by the Federal Deposit Insurance Corp., 9 percent of checking accounts incur 84 percent of overdraft fees. The study found that nearly half of younger cardholders paid the fees.

The CFPB also is requesting public input on the idea of a “penalty fee box” _ a disclosure on checking account statements that would highlight overdrafts and related fees.

The agency said it plans to issue a report by the end of the year.

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Follow Daniel Wagner at www.twitter.com/wagnerreports.

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