Wednesday, June 25, 2008

T-Mobile Announces New Approach to Early Termination Fees

Here's some interesting wireless contract news for T-Mobile fans. According to, T-Mobile has just announced that they are taking a new approach to the early termination fees for their mobile phone contracts to provide greater flexibility for their customers.

Well, it seems that that ETF's are still a hot issue in the mobile phone industry. This announcement may also be related to AT&T's announcement that they have begun prorating their early termination fees. Here's a statement from Sue Nokes, Chief Customer and Operations Officer, T-Mobile USA, regarding this new approach,

“T-Mobile continues to set the pace in offering customers a number of flexible plans and services that don’t require a contract to help them stay connected to those who matter most. In addition, by providing this flexibility and choice, our hope is that T-Mobile customers will be happy customers for years to come.”

Let's discuss the details of this new T-Mobile early termination fees approach as it may be a bit confusing. T-Mobile wants their customers to know that starting on June 28, 2008, the ETF for customers who choose a one-year or two-year service agreement will decline during the course their contract.

This means that if customers terminate service with 91 to 180 days remaining on their agreement, then the ETF decreases from $200 to $100. It will then decrease again to $50 with fewer than 91 days remaining. Now in the event that a customer want to terminate in the last 30 days of their term, then the ETF is $50 or their standard monthly charge, whichever is less.

Now according to Gizmodo, this new approach to the ETF's of wireless contracts is not the same with pro-rated ETF's because the fee goes down in increments and never touches zero.

I think that this is a positive step towards resolving the wireless contract disputes between the mobile phone carriers and customers. Much of those complaints are focused on ETF's so any move towards reducing it should appease customers. Even the FCC has made proposals to reduce the conflict over early termination fees for cell phone contracts. Perhaps this move by T-Mobile will encourage other carriers to develop their own consumer friendly approach towards ETF's.

Tune in to this blog for more wireless contract news and information.

Tuesday, June 17, 2008

FCC Plans for Wireless Contract and ETF

In my last post I discussed the struggles that are centered on the controversial ETF or early termination fees that are charged for canceling a wireless contract.

Mobile phone companies usually charge early termination fees that can range from $150 to $225. These fees help them to recover the cost of devices, which they subsidize under long-term wireless contracts. These ETF's also lessens the burden signing up new customers. However, these fees have been assailed because they have curtailed the freedom of customers to shift to another carrier. The imposition of these fees have resulted in class-action lawsuits in several states and legislative proposals.

Now it seems that the FCC has decided to act and laid out some proposals on ETFs. Hopefully, these proposals will solve some of the problems concerning this policy but let us first take a look at the FCC proposals.

Kevin Marti, the current FCC Chairman, expressed that the proposal is similar to an industry plan that was offered by mobile phone carriers headed by Verizon Wireless. He also expressed that the proposal was drafted because ongoing class-action lawsuits would probably not provide an answer to the ongoing issues about the unpopular fees.

Here are the main elements of the proposal:

  • the ETF would be related to the actual retail price of the device being purchased so that a $100 handset would have a cheaper ETF than a $300 phone
  • ETFs should be prorated and reduced over the length of a cell phone contract
  • wireless contracts should only last for a reasonable length of time
  • Extended wireless contracts should not necessarily have their ETFs reinstated
  • allow class action lawsuits regarding ETFs against certain carriers to move forward

These proposals seems to provide some answers to the problems that are plaguing the mobile phone industry, However, some experts think that the proposal lacks many vital elements. For instance, the proposal did not offer specific information on the government body that would be in charge of monitoring ETFs. The proposal also did not propose any federal program that would preempt state governmental rights.

I guess we have to wait for more updates on this development. Let's hope that the FCC and the mobile phone companies can come up with plans to provide the best service to customers. Tune in to this blog for more wireless contracts news and information.

Wednesday, June 11, 2008

The Battles Over the ETF Policies of Wireless Contracts

I have often blogged about ETFs or early termination fees in this wireless contract blog. That's no surprise because ETF's are probably the most controversial fees charged by wireless contracts.

These fees are very restrictive and expensive. The huge numbers of contract disputes and consumers complaints arising from early termination fees have been documented. All you have to do is to visit consumer rights websites, and you'll see that plenty of consumers are unhappy with these fees and the wireless contract policies that enforce them.

Currently, significant battles or disputes over early termination fees raging in major courts while carriers are being encouraged to make commitments on embracing consumer-friendly practices and opening their networks. The current scenario indicates that the foundation of a decades-old reign of ETF's are under attacked on all sides and it could be on its way out. I'm sure many consumers would like to see the demise of ETF wireless contract policies. Let us explore it more deeply.

the mobile phone industry’s long-held argument that ETFs allow carriers to recoup costs associated with subsidized handsets are being undermined by a series of class-action lawsuits in California state court against national cellular carriers. Complainants feel that ETF's have another purpose and they intend to show the ETF was embraced as an arbitrary penalty. Experts say that other suits will use the same line of argument in pending class actions.

The disputes are also being held in the nation's capital.
CTIA continues to lobby the Federal Communications Commission to approve a 2005 request to declare ETFs a component of wireless rates and therefore off limits to states. A 1993 law pre-empts state regulation of wireless rates, but reserves limited powers over “terms and conditions” to states. Some senators are also pushing a wireless consumer empowerment bill that would mandate pro-rated ETFs.

Experts are also saying the the impact of these battles over wireless contract ETF policies might be significant. For example, if courts rule in favor of the complaints then carriers may be forced to pay huge amounts of money. Some estimates say that the figures run in the billions.

The disputes over early termination fees might also have a huge impact on
churn or the transfer of consumers from one carrier to another. Some carriers may be deeply affected if frequent shifts in subscribership results from the absence of wireless contract ETF policies.

I guess there's nothing we can do but wait. the battles are still raging and there are no clear winners. Tune in to this blog for more updates on wireless contracts, early termination fees and related topics.