Bill Introduced To Limit Early Termination Fees
from the terminate-this dept
Some Senators have introduced a bill that would limit early termination fees from mobile operators, saying they couldn't charge more than the subsidy they provided for the phone itself, and that the rules for any early termination fee needed to be quite clear. Not surprisingly, the mobile operators and their lobbyists are saying this is "unnecessary" because (due mainly to gov't pressure, not competition, as they claim) the operators have already made the ETF process less ridiculous by going with pro-rated fees based on how long is left on a contract. Of course, if it's true that the law is unnecessary, then it's not clear why they're against it...Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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Filed Under: early termination fees
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Just because a law is unnecessary, it does not mean that you simply introduce it. That is what starts building up bureaucracy and redtapism in law
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I bought a Droid at $200, retail is $550 without contract. I'm not sure if my early termination fee is the standard $175 or the higher $350 for some smartphones (their wording was very ambiguous when I got it). Either way, this 'law' wouldn't do anything about that already-ridiculous $350 termination fee since it matches the subsidy.
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My "Contract"
now, heres the kicker with my AT&T crap. Even if its at the end of my contract, and i decide NOT to renew, they will charge me a fee for ending my service. So basically, im damned if i do, damned if i don't.
I didn't have this crap of a problem when it was Cingular.
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Re: My "Contract"
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Same crap on Verizon
In their eyes, no. Tough nuts.
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how about when they break contracts they pay me
OH i get it i as a poor unlawyered person have to learn the legal system ( months and months ) then sue them with cash out of my pocket and hope they dont have or use sme technicality or i make good forbid a mistake in court.
YEA something damn well does need be done.
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At the turn of the century, I was a buyer for Alltel. The $200 termination fee didn't over the phone subsidy for even the cheapest of phones. My friends indicate to me that this still isn't the case. Today's current WARPU (Wireless Average Revenue Per User) dictates that a customer must remain for 24 months just to make break even - this comes from one of my friends who is still in the biz. This statistic was floated around when I was in the biz too - and back then they featured mostly 12 month contracts (the 24 month contract became popular when port-a-number became mandatory).
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Indian Telecom Scene Rules
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Re: Indian Telecom Scene Rules
People expect to buy a $500 dollar smartphone for $100 with no consequences.
Verizon heavily subsidizes their phones. In the past you could get a subsidized phone with a 2-year contract, cancel your service and ebay the phone for a profit even after the ETF. So they upped the ETF. Makes sense to me.
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Re: Re: Indian Telecom Scene Rules
Last time I checked with AT&T you couldn't. Even if you already had your own phone they still wanted a 2 year contract and early termination fee on their regular plans. And they didn't discount the plan any for you already having a phone either.
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I'm sure if this bill passes, you'll see the same thing with cell contracts.
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the subsidy is a lie!
SO yeah, this whole termination fee because of "the subsidy" is bull crap. Its simply a way to grab more money and deter people from switching to a different carrier.
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Re: the subsidy is a lie!
If the price of the plan were lower without the subsidy, then it wouldn't be a subsidy - it would be a payment on the phone.
Not saying that would be a bad idea, but that's not the way they currently work.
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example of early termination abuse
so under law we have the right to say no and you cant give me early termiantion right?
not according to BCE
they stuck it too me and i taped that they knew it was wrong and then gave me a credit of it back then went the following month and STOLE IT OFF A CREDIT CARD AND STOLE MORE THEN THEY SHOULD HAVE
this is why this needs ot be addressed
maybe they should have paid everyone a early termination fee
for there breech of contractual law
most people they do this too are too poor and not educated enough to launch a lawsuit over 100$
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Corporations Have a Choice - They Coose Poorly
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Termination Fees
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"Senator X is tough on crime, tough on big business, and tough on the things that matter to you!". Basically, he introduced unpassed laws that would have criminalized sex in the back of moving ambulances (illegal in one state now), the cell phone termination fees, and moved to triple welfare payments and lower the requirements to get in. None of those ever get passed, but the senator uses them next time to show he is on "your side".
Reports like this should be ignored until the bill actually comes up in the house or senate, and actually is getting debated, otherwise it's just political gas passing at it's finest. Mike knows this, but why miss a good moral outage story? ;)
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Don't See the Point
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Re: Don't See the Point
I don't see the point of more legislation. If you don't like the terms of the contract . . . don't sign it?
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That might have some merit in a free market situation, which the mobile phone market is not.
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Don't like Verizon's ETF? Don't sign with Verizon. Or buy the phone yourself and pay month-to-month.
(Curiously, despite your unsupported insistence that the mobile phone market is not a "free market", your solution seems to involve having the government dictate a "reasonable" ETF to the carriers, and we know that nothing makes a market more free than when the government determines prices by fiat, right?)
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Re: Re: Re: Re: Don't See the Point
A very limited number. I wish I only had to compete with 4 or 5 other people in the job market; I'd be very wealthy.
(B) you can always just shell out the money for the phone up front and go month-to-month without a contract anyway,
No, that isn't true, you can't.
(C) there are several mainstream pay-as-you-go options,
At much higher rates than if you *did* get a phone. What a deal.
Don't like Verizon's ETF? Don't sign with Verizon. Or buy the phone yourself and pay month-to-month.
Last time I checked with AT&T, you still have to sign a contract with ETF on anything but a pay-as-you-go plan, even if you buy your own phone. I don't know why you keep saying otherwise, but it isn't honest.
Curiously, despite your unsupported insistence that the mobile phone market is not a "free market",
It isn't. It requires gov't permission to operate and that permission is limited to a very few.
your solution seems to involve having the government dictate a "reasonable" ETF to the carriers, and we know that nothing makes a market more free than when the government determines prices by fiat, right?
It's already gov't regulated. A free market would be preferable, but the only thing worse than a gov't protected market is an unregulated gov't protected market, which what you're arguing for.
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Verizon (the very company people are bitching about here) offers a monthly plan with no contract. (I'm month to month right now, in fact. I won't be in a week or so when I get them to subsidize a new Droid for me, but then I have no problem with the huge ETF . . .) Looking at the other major carriers' plans, they all allow you to choose a plan with no contract. T-Mobile's month-to-month is lower than their with-contract, in fact.
Also, in the future, before you accuse someone of dishonesty, make sure you've done your homework first. Thanks.
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Not completely necessary...
What this bill SHOULD do is not worry about capping anything (that is what competition is for), but rather focus on making these fees more apparent for the consumer - make a "required diagram" like all credit card contracts have that clearly lists out all the fees, how they are charged and why. This would make it easier for a user to see $350 and decide not to sign. These days people just assume the fee is there, buried, and assume it's something like $150 or $175. Little do people know, it's gone up throughout the years. Requiring cellphone companies to display a clearly readable chart, listing these extra fees, would assist in the consumer confusion AND help lower the ETFs through competition when consumers starting seeing the real costs.
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