CellBreaker seeks to help customers end cellphone service contracts
Durham-based CellBreaker is looking to launch software this fall to help customers get out of their cellphone service contracts automatically if they’ve been breached by the carrier.
“I’m basically just very passionate about pushing back against unfairness,” said Jon Colgan, the company’s CEO and founder, who launched the start-up in May of last year after graduating from the University of North Carolina at Chapel Hill.
The start-up went live with a mostly manual agreement-breaking service in January, but is looking to launch software that would automate that process as early as September. The new version would allow the company to analyze customer service agreements to see if they’ve been breached using the customer’s account name and password, and then break the service.
To help with the launch, Colgan said, the company plans to use a grant that CellBreaker recently won from N.C. IDEA, a Durham-based nonprofit focused on providing funding to technology companies in the state. The company was one of six winners of a combined total of $250,000 in grant funding.
Last year, the company launched a test version of their service from July to December. In January, it launched with the mostly manual version.
Currently, a user might spend about 20 minutes corresponding with the company through email, Colgan said, and they have to upload documents to the website.
With CellBreaker, customers come to its website and undergo a “break analysis.” In the analysis, he said, the company looks for an “actionable breach” that would allow the customer to get out of the contract without an early termination fee.
The company looks for price increases, changes in terms, and deficiencies in performance, or whether the customer has been getting the service he or she is paying for.
“The key insight is that these breaches happen all the time,” Colgan said. “The problem is, in a single instance, for any consumer, for any one contract, the amount of money in one instance is not enough to hire an attorney or for you to fool with it yourself and automating technology takes 90 percent of the cost out.”
If CellBreaker finds a breach, it can move to break the contract and switch carriers.
“You’re going to know within 30 seconds of coming to our website whether or not we can help you,” Colgan said, with the new version of the program.
The start-up has two full-time people and several contractors working on the project. CellBreaker’s offices are in Groundwork Labs, a community of entrepreneurs based in a basement of the American Tobacco Campus.
An impetus for CellBreaker’s launch was an experience that Colgan said he had in 2008. He wanted to switch carriers, but faced an early termination fee of $750. Laws around early termination fees have changed since then, but Colgan said that lessons he learned from that experience have stuck.
Colgan used the idea in an entrepreneurship class at Wake Tech Community College, where he attended before going to UNC-Chapel Hill. He was given an assignment to write a business plan for a company that would “fix something that bugs you.” Colgan wrote about CellBreaker.
After the class in May 2009, he put up a website as a feasibility test. He said it was a one-page website on which he described problems he thought customers were having, and said he would try to help people if they put $30 into an online account. He ran it for 30 days, and said he got 65 people who put in $30 each.
He said he was able to get the first eight people out of their contracts using methods he’d learned through his own experiences. He wanted to scale up the idea and use technology, so he said he ended up refunding everyone’s money minus the eight.
While CellBreaker is now focused on cellphone service contracts, Colgan said he wants to move on to new markets in the future: cable TV contracts and contracts for satellite TV, Internet service, health clubs or auto leases.