FCC considers proposal to change early termination fees

By Justin Mann on May 21, 2008, 4:40 PM
Have you ever signed up for a new service then found out a few months later it completely sucks? In the modern world where most of us have a plethora of choices to choose from, such as with cell service carriers and ISPs, it's usually just a matter of terminating your old contract and picking up a new one with a new company. If you have done that, however, you've also likely run into early termination fees. These companies want so badly to prevent you from leaving that just about all of them have steep penalties for anyone leaving a contract early, with most early termination fees ranging from $100 to $200.

The FCC sees that as excessive, and is now considering a bid to limit these fees. The FCC seems to be considering an overhaul with the system, giving consumers the right to cancel with no penalty in the first month of service, reducing the maximum size of the termination fees and allowing the fees to “taper off” the longer service has been established. The proposal itself was actually sponsored by Verizon – one of the largest cell companies in the U.S. Why? While hiding behind a proposal that seems to be consumer-friendly, in actuality they are seeking immunity from lawsuits related to just such fees. Class-action lawsuits in multiple states have been filed at multiple times against these companies for these fees.

The cell companies claim such fees are necessary to recoup losses from cell phone sales and the cost of setting up and supporting new customers. The customers, on the other hand, believe it's just a way of strong arming you into sticking with their service, whether or not you are unhappy with it.




User Comments: 6

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bigjigga said:
The point of the ETF is to recover the "loss" on hardware. Because when you sign a contract you get 150 off the actual retail price of the phone, and even when the carriers do get their ETF like the 3 million people that canceled and payed their ETF's in 2006 the industry as a whole lost a 1.4 billion dollars. So it's either that or were looking at being like europe where wireless is so ridiculously expensive it's hard to think anyone actually talks on their phone. Just my .02 but it would just drive the cost of doing business up and at some point those cost get passed down to the customers.
bigjigga said:
One more thing the cost per acquisition for most carriers hovers around a thousand bucks per customer, which means when you walk into a cell phone store weather independent or otherwise you signing a contract cost them a grand. If the wireless carriers did business with standard month to month billing not only would our service skyrocket in price but the networks themselfs would deteriorate. Besides when the new 3G BlackBerry comes out do you really want to pay $500 for it?
windmill007 said:
I hardly think the phones cost what they say and I also believe the carriers are makin tons of cash with there monthly fees which haven't gone down but actually up over the years. Plus they charge you extra for everything when it should included. Cheapest rate you can find with all the taxes and bs is is like $35 a month. And they have most people on the $50 a month or higher plan. You should be able to give the phone back to them and end the contract early no fee. And when someone signs up if they want it cheaper sell them the used phone cheap. Its not rocket science but for these greedy companies it is.
jlsdev said:
[b]Originally posted by bigjigga:[/b][quote]The point of the ETF is to recover the "loss" on hardware. Because when you sign a contract you get 150 off the actual retail price of the phone, and even when the carriers do get their ETF like the 3 million people that canceled and payed their ETF's in 2006 the industry as a whole lost a 1.4 billion dollars. So it's either that or were looking at being like europe where wireless is so ridiculously expensive it's hard to think anyone actually talks on their phone. Just my .02 but it would just drive the cost of doing business up and at some point those cost get passed down to the customers.[/quote]You are very correct to put the word "loss" in quotes - it is entirely fictitious as the prices on new models of cellphones are horribly inflated in the US just so the cellphone companies can FOOL us into thinking we are getting some kind of "special" deal from them for signing up and so they can supposedly "justify" the ridiculous ETFs they want to charge. Most of the cellphones are EXTREMELY CHEAP to manufacture because they are built with substandard parts and manufacturing processes - example: just like gremlins, don't ever, ever, ever get one wet - even the moisture from being in the pocket of gym shorts during a workout can KILL a cellphone.Want further evidence: Go into any phone retailer and check the RETAIL price (with no contract) of any latest model then go back in 6 months and check the same, on the same model, and notice that it is about HALF or LESS in just that little time.
Xempler said:
[b]Originally posted by bigjigga:[/b][quote]The point of the ETF is to recover the "loss" on hardware. Because when you sign a contract you get 150 off the actual retail price of the phone, and even when the carriers do get their ETF like the 3 million people that canceled and payed their ETF's in 2006 the industry as a whole lost a 1.4 billion dollars. So it's either that or were looking at being like europe where wireless is so ridiculously expensive it's hard to think anyone actually talks on their phone. Just my .02 but it would just drive the cost of doing business up and at some point those cost get passed down to the customers.[/quote]Regardless, if a comsumer can prove that they are getting poor service or even a change in their service they should be able to cancel without having to pay a Cancellation fee of $100-$200.
OUTLAWXXX said:
People would "flip out" if we had to do the same for cable services, lighting, gas, omg I'm glad the world is not like that cause then everybody would be used to that shit and wouldn't think to complain...
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