AT&T's Open Letter for ETF Increase

Last may, AT&T decided to change its termination fee to $325 for smartphones and $150 for feature phones. However, the announcement was preceded by leaks that draw the ire of some consumers. To counter this AT&T released an open letter to explain the ETF increase to their "valued" customers.

I know that this open letter is round two months old. However, this might offer some relief and information to consumers who are unaware of the reasons behind the AT&T' early termination fee increase for the best smartphones they can offer.

Here's the AT&T Open Letter:

An Open Letter to our Valued Customers

May 21, 2010

At AT&T, we work hard every day to provide you with a great wireless experience at competitive prices.

One of the ways we do this is to offer you the industry’s leading wireless handsets below their full retail price when you sign a two-year service agreement. In the event you wish to cancel service before your two-year agreement expires, you agree to pay a prorated early termination fee (ETF) as an alternative way to complete your agreement. Of course, if you prefer not to enter into a term commitment, we offer the same great selection of devices at their full retail price with no term commitment or ETF, as well as prepaid GoPhone options.

We are now making changes that will lower the ETF for many customers who agree to new term commitments, and will increase it for others. Current AT&T wireless customers who are within their two-year consumer service agreement or have an existing enterprise service agreement will see no change to their current terms.

Beginning June 1, 2010, we will reduce the ETF in new and upgrade two-year service agreements for all customers who are buying basic and quick messaging phones. Whether you are new to us or upgrading handsets, the ETF will decrease to $150 from $175, and be reduced by $4 for each month that you remain with us as a customer during the balance of your two-year service agreement. After the term commitment is completed, the ETF will no longer apply.

For customers who enter into new two-year service agreements in connection with the purchase of our more advanced, higher end devices, including netbooks and smartphones, the ETF will increase to $325, and be reduced by $10 for each month that you remain with us as a customer during the balance of your two-year service agreement. After that, the ETF will no longer apply.

Thank you for being an AT&T customer. We hope you enjoy your AT&T wireless device and service. We appreciate your business and we will continue to work hard to earn it.

That's it for this post. Tune in next week for more news and information on wireless contracts.

The FCC's Advice on On ETFs of Wireless Contracts

The recent increase in early termination fees more mobile phone contracts of AT&T and Verizon Wireless has moved the Federal Communications Commission to issue advice addressed to cell phone consumers. The FCC has released a set of guidelines to help educate consumers on early termination fees.

The FCC hopes that this set of guidelines will ensure that consumers make informed decisions and avoid any extra charges when purchasing a contract mobile phone.

Here are the Federal Communications Commission guidelines on early termination fees:

• When signing up for a new cell-phone service, make sure you are fully aware of any “early termination fees” (ETFs) that may be associated with the contract you are signing. The salesperson may not mention an ETF, so be sure to ask.
• Ask how much the early termination fee will be and how it is prorated. Prorating means that the amount of the ETF you are responsible for decreases month by month. But different carriers prorate different plans in different ways. For example, one $240 ETF might decrease by a steady $10 a month over two years, while another high ETF might drop by only $5 a month until the last four months.
• Ask if it would be possible to buy a handset at full price and avoid an ETF.
• Think before you make any changes in your contract, such as buying a new phone or more minutes that your carrier might offer. This could trigger a new two-year contract with another ETF.
• Ask about the trial period during which you can cancel the service without an ETF penalty. This is typically 14 to 30 days. Also ask whether you will get your first bill before the trial period is up – and if not, whether you can find out about your costs during the trial period in another way.
• If you use your phone sparingly, consider avoiding the whole ETF issue by buying a pre-paid phone. These phones do not involve a contract.

That's it. Hopefully, these guidelines will lessen the number of mobile phone contract disputes. However, I'd prefer to have the FCC impose stricter policies tha would prevent carriers from implementing fees that are unfair towards consumers.

AT&T to Increase ETF for Smartphone Wireless Contracts

AT&T has become the second major US carrier to increase its ETF in the last several months. Verizon decided to increase its charge for early contract termination for mobile phone contracts last November. Now, AT&T is set to ramp up its early termination fee next month.

The folks at WSJ blew the whistle in this upcoming change in AT&T wireless contract policy. The carrier plans to almost double the fee for terminating a contract for its smartphones and laptops. New contracts signed for smartphones and laptops next month will carry a hefty $325 which will fall by $10 for each month a customer stays in his/her contract. The previous fee was set at $175.

On the other hand, AT&T decreased the fee for its feature phones. Perhaps increasing the fee for these devices will be too much.

The early termination fee for AT&T feature cell phones will be $150 and will fall by $4 for each month a customer stays in his/her contract. The previous fee was also set at $175.

This decision is sure to catch the ire of the FCC. The commission recently questioned carriers about their practices and stated that competition has "dramatically eroded and is seriously endangered by continuing consolidation and concentration in our wireless markets."

Well, see how the market reacts to this new development. Tune in to this blog for more news and updates on US wireless contracts for mobile phones and other devices.

Verizon Removes 10 Phones from $350 ETF Advanced Devices List

It appears that Verizon Wireless has felt the pressure from consumers, the FCC and other government officials. The carrier has covertly removed ten mobile phones from the list of phones that require its new $350 early termination fee.

The carrier has recently imposed a bold wireless contract policy that required a $350 ETF (early termination fee) for a select group of smartphones and “advanced devices.” Naturally, this action was met by stiff resistance from consumer groups, the FCC and a few senators headed by Amy Klobuchar.

I posted the complete list of "advanced" or multimedia phones several weeks ago. Well, that list has to be updated now that Verizon has chopped off ten devices. The devices taken off the list include the Motorola Krave, Samsung Rogue and five LG devices.

But why did Verizon remove ten devices from its $350 ETF advanced devices list? Well, a Verizon spokesman was unable to answer queries about the change. Some experts say that pressure from the FCC, who criticized Verizon's $350 ETF explanation and from other groups has moved the carrier into removing the devices from the list.

That's it fro this post on Verizon's controversial wireless contract policy. Tune in to this blog form more news and updates on wireless contracts and related topics.

iPhone Reponsible for Two-Year Wireless Contract Surge?

It appears that the number of consumers that are signing two-year mobile phone contracts are on the rise. A study conducted by the folks at Ofcom.org indicated that more than two in five mobile phone users have signed up to a two-year wireless contract. This number has reportedly increased significantly in the last few months due to the popularity of the Apple iPhone.

The iPhone 3GS has recently become widely available to mobile phone consumers throughout the globe. Apple's hit mobile phone was released in the U.S., Canada and six European countries on June 19, 2009, in Australia and Japan on June 26, and in other international markets in July and August, 2009.

The subsidized price that come with a two-year cell phone contract has made the iPhone more accessible to consumers. Customers also recognize that they can reduce their monthly bills since phone companies reserve the best rates for customers willing be tied in for a long time.

However, signing a two-year agreement also comes with some disadvantages.

For instance, the contract may restrict a consumer's choice for two years. This means that a user may not be able to keep track of the latest technologies to hit the market while being committed to a two-year agreement.

There are also some stiff penalties for consumers who decide to terminate an agreement. Verizon Wireless has recently taken heat for imposing a $350 early termination fee or ETF on its advanced devices.

Consumers should weigh the advantages and disadvantages of signing- a long term contract before they sign on the dotted line.

That's it for this post. Tune in to this blog for more news and updates on the wireless contracts industry.

FCC Demands Improved Increased ETF Explanation from Verizon

In my last post for this wireless contract blog, I posted about FCC member, Mignon Clyburn's comments on Verizon Wireless explanation for raising the ETF on advanced devices.

Clyburn expressed that Verizon's 77 page statement in defense of its new wireless contract policy is "unsatisfying" and "troubling." This time Federal Communications Commissioner Julius Genachowski has spoken out against the carrier's ETF increase explanation.

The commissioner was clearly unsatisfied with the carrier's explanation. Genachowski said, "I thought that response raised more questions than it answered. The bureau is looking into that... There's a very real level of consumer confusion around these areas"

However, Genachowski declined to say what the FCC's next move to mend this problem.

I guess we'll have to wait and see if the government exerts pressure to turn back the Verizon's ETF from $350 to $175.

Tune in to this wireless contract blog to keep tracks of developments in this story.

FCC on Verizon ETF Explanation: "Unsatisfying" and "Troubling"

A few weeks ago, Verizon Wireless released a 77 page statement in defense of its decision to increase the early termination fee or ETF for its "advanced devices" at the request of the FCC. This time, the commission has released its response to the carrier's defense of its increased ETF.

Well,. it appears that the 77 page statement did not impress the FCC. Mignon Clyburn, a Federal Communications Commission of the, described Verizon's official response to the FCC's query as "unsatisfying" and "troubling."

Here's more from Clyburn:

"Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. It is hard for me to believe that the public interest is being well served."

Those are some pretty scalding words for the Verizon Wireless. Let's see if they respond to these comments.

The FCC plans to investigate the matter further when it reconvenes in 2010 so tune in to this mobile phone contract blog to get the updates to this wireless contract news.

Verizon Wireless Defends Increased ETF for Advanced Devices

Verizon's decision to increase the ETF for it's advanced devices have attracted a lot of attention including US senators like Amy Klobuchar. Recently, the FCC has requested the carrier to explain the reasoning behind the increase in early termination fees from $175 to $350 for "advanced devices" (Click here to see the list of Verizon's Advanced Devices).

Well, Verizon Wireless has released a statement in defense of its decision to increase the controversial fees for some of its products. Unfortunately, the carrier released a 77 page response which would be impossible to post here in its entirety.

So let me just give a brief summary of the highlight points of Verizon's defense of the $350 early termination fee for advanced devices.

• the increased ETF allows the carrier to provide more capable handsets at lower upfront costs, and to reduce its losses if/when a customer chooses to leave their contract early.
• Verizon claims that the new rules causes the company to lose money when customers who choose to cancel their contracts during the 23rd month, during which time they would still owe $120 ETF.
• Advertising and marketing collateral are sufficient to make sure customers are informed of these new wireless contract policies.
• In 2003, the FCC stated that it doesn't support the concept of customers breaking contracts and that carriers have a right to recoup those fees.
• the additional cost it incurs to procure the devices on its advanced list is greater than the difference between the two ETFs ($175) on average.
• Advanced devices strains the broadband network up and extra guaranteed revenue is needed to keep the network at optimum performance.

Well, this has certainly turned interesting. I didn't expect the change in wireless contract policy would trigger such reaction from the government. Perhaps the tough economic atmosphere is making the government more aware of possible consumer abuse.

That's it for this wireless contract update. Tune in to this blog for more developments on this important mobile phone contract issue.

No Changes in Sprint ETF Policy

Verizon Wireless recently announced its decision to increase the early termination fee or ETF for its premier or advanced devices. Starting the 15th of November, the ETF for Verizon's high-end products will be $350 declines by $10 per month through the life of the contract.

I was wondering how other major carrier's will react to this change in major wireless contract policy. Well, so far only Sprint has issued a statement via Twitter:

One more tweet on ETF policy. We won't be following suit as other carriers increase fees. Official Sprint ETF policy

Sprint is Verizon's main competitor among CDMA wireless networks. Maybe the Now Networks is trying to gain an advantage by not emulating the ETF increase instituted by its rival. Well, they probably need all the help they can get as they are planning to cut costs by cutting jobs.

It will be interesting to see how this plays out. Some experts think that this shift in wireless contract fees will lead people to purchase devices for its full price to avoid any trouble with the ETF. However, the full price is quite heavy and with the weight of the recession, consumers may go for mid range devices which charges the normal $175 early termination fee.

That's it for this post. Tune in to this blog for more news and info on the wireless contract issues.

Confirmed: Verizon to Raise ETF to $350 on Premiere Devices

A couple of days ago I blogged a rumor claiming that Verizon Wireless might raise its early termination fees for high-end products to dissuade scammers. Well, that rumor has been confirmed.

According to the folks at Phonescoop, Jeffrey Nelson, a Verizon Wireless spokesperson has confirmed the rumor.

This means that the $350 early termination fee will apply to new wireless contracts for advanced devices beginning Nov. 15. The will fee will decline by $10 a month.

The early termination fee for non-premiere devices remains at $175.

However, the devices that will incur a $350 Verizon Wireless early termination fee have not been specified. the new policy will not be limited to mobile phones and will also apply to notebooks.

So what do you think? Well, I don't really mind. After all, this only applies to a limited number of consumers. Those who choose to close the service before the term is up and those who are after the premiere devices.

The strategy aims to prevent people from reselling handsets on online auction sites. I think it's a good strategy on the part of Verizon since it protects their exclusive handsets. I wonder if other carriers will also adopt this wireless contract policy.

That's it for this update on the Verizon Wireless early termination fee increase. Continue to visit this blog to get the latest news and views on wireless contracts.

Rumor: Verizon Wireless Early Termination Fee to be Raised?

Here's some intriguing news for Verizon Wireless consumers. According to the folks at BGR, the carrier maybe considering raising its early termination fees to thwart scammers.

The report say that the Verizon Wireless early termination fee for high-end phones such as the Storm2 and Motorola Droid will be raised to to $350. This will be implemented on Nov. 15 and will decrease by five bucks every thirty days. The usual ETF amounts to around $150-200 so the rumored increase is significant.

But what is the main reason for this possible increase in Verizon Wireless early termination fee for high-end smartphones?

Well, it appears that the carrier is trying to crack down on scammers who purchase a new smartphone on contract and then cancel the line, pay the termination fee and sell the phone for twice or three times its original price.

We've already explained that contract fees are the primary tool that allow carriers to recover the subsidies they’d lose on early contract terminations. This means that this increase in Verizon Wireless early termination fee can be justified.

Well, this is just a rumor so it may not happen. Tune in to this blog for more updates on this increase in Verizon Wireless early termination fee rumor. Drop by often to get the latest news and views on wireless contracts.