Ask Jonathan Colgan why he started his company CellBreaker and he’ll explain how he wants to improve the cell phone customer experience, which he characterizes as troublesome to consumers in a number of ways.

Pry a little more and he’ll talk about rights, obligations and ethics – concepts more fitting of a philosophical discussion. After all, Colgan was a philosophy major at the University of North Carolina at Chapel Hill, where he was also captain of the ethics debate team. But Colgan insists his passion for philosophy fits the foundation of his company, particularly in the context of how philosophers view breaches of contract.

“If there’s a breach, there has to be a consequence,” he said.

CellBreaker is the consequence. The Durham startup aims to help consumers who want to get out of their cell phone contracts without paying hefty termination fees. For $77– considerably less than a termination fee – CellBreaker will take on a wireless carrier and get it to release a customer from the contract. For $17, the startup will give consumers the tools to do it themselves.

Contract law meets technology

Contract law and technology come together in forming CellBreaker. The service term language in wireless contracts states a carrier’s obligation to provide full coverage within a specified service territory. CellBreaker’s software identifies instances where they’ve failed to fulfill that contract obligation. The CellBreaker software first automatically retrieves pertinent information user information, such as service plan and the type of contract that was signed. The software then identifies the breaches of that contract. Breaches could be instances where the user did not actually have full coverage, had dropped calls or experienced delays in text message transmissions – issues that nearly every cell phone user experiences at one time or another.

After documenting the problems CellBreaker gives the carrier the opportunity to fix them. But Colgan says no carrier, having been presented with the information, has fixed the network in response.

“We consider that a breach,” Colgan said. “We demand a cancellation on the consumer’s behalf.”

There’s another philosophical concept key to CellBreaker’s business model: power of attorney. In order for customers to engage CellBreaker they must give signed, written permission for the company to act on their behalf. This power of attorney has limits and typically lasts only 90 to 100 days – long enough to identify a breach in a billing cycle or for a breach to occur. But without that permission carriers are under no obligation to even talk to CellBreaker.

So what’s to stop carriers from changing their contract terms in a way that renders CellBreaker useless? They could, Colgan says. But they probably won’t. The Federal Communications Commission in 2009, responding to a growing service complaints from consumers, raised the prospect of more regulation. Legislation was also proposed in Congress.

The wireless industry group CTIA responded by coming up with uniform standards for its carrier members. While the exact service contract language differs from one carrier to another, the content of the contracts is the same. CTIA hasn’t really policed its members and carriers haven’t shown interest in deviating from these contract standards, which so far have been enough to forestall additional regulation. Meanwhile, consumers continue to express frustration about service, contracts and termination fees, which Colgan sees as opportunity for CellBreaker.

Accidental entrepreneur

Colgan is an entrepreneur by accident. Right out of high school, he worked in sales and marketing in the financial services industry. After five years, he decided to pursue a college degree, enrolling at UNC. Besides philosophy he also studied global studies and minored in sustainability.

The idea for CellBreaker came from Colgan’s own experiences with a wireless carrier. Colgan wanted to find a way out of his contract without paying the termination fee. He found that a carrier breach did the trick for himself; he also had success helping 85 family members and friends get out of their contracts.

This spring, while still a UNC student, Colgan decided to test the idea for the company in the Carolina Challenge, a UNC business competition. CellBreaker advanced to the finals. Colgan started the company after graduation. CellBreaker has been in private beta testing since May and is now getting ready to transition to public beta testing.

CellBreaker is self funded right now and while the company isn’t racking up expenses, it’s not yet making enough to pay salaries to Colgan and two others, who are working for equity. Joining Colgan are a network engineer who still works full-time at Cisco Systems and a computer engineer who also has a pipeline of freelance IT work. Colgan pays his bills by working as a musician at night.

Colgan says he will probably seek outside funding as the company makes progress with some software advances, which the company plans to eventually make available to its customers. CellBreaker is currently working on a mobile app that takes coverage events and turns them into usable data that can later be used to contest a wireless contract.

“Nothing like that exists,” Colgan said. “Before this, the only people holding this data were the providers. And they’re not going to give that to customers.”