Wednesday, July 22, 2009

AT&T Defends Early Termination Fees Against Government Review

There were recent news of a possible government review against major wireless carriers based on accusations of anti-trust violations. AT&T and Verizon Wireless were named in the review to be headed by Sen. Herb Kohl, chair of a congressional antitrust panel.

The government review was directed towards major issues in the mobile phone industry including texting prices, large carriers failing to cooperate with smaller carriers to resolve roaming disputes, disputes over spectrum, deals that give one or another carrier exclusive access to popular phones and early termination fees attached to wireless contracts.

Well, AT&T decided to take defensive measures against this government review on possible anti-trust violations. The company responded to all the issues covered by the review. However, our interest here lies in the carrier's defense of early termination fees attached to wireless contracts.

AT&T started that the early termination fees on wireless contracts are necessary because they allow the company to recoup money spent discounting handsets. For instance, AT&T offers the iPhone 3GS for $199 with a two year contract instead of the hefty full price. The ETF or early termination fee discourages the customer from breaking the wireless contracts and paying for the subsidized device.

AT&T is currently implementing a prorated early termination fee which means that the penalty for breaking a wireless contract will be progressively lowered by $5 during each month, every month, for the term of the contract.

Well, I expected the carrier to defend itself actively. But it would also be interesting to find out what this government review will achieve. Perhaps it would initiate practices that would be more beneficial to wireless consumers.

That's it for this post on AT&T's defense of early termination fees attached to wireless contracts. Tune in to this blog for more news and updates on wireless contracts.

1 comment:

Sandy said...

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