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.

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