RSSAT&T to begin prorating early termination fees for new contracts
By Michael Hatamoto | Published April 3, 2008, 4:31 PM
AT&T Wireless announced Thursday it will prorate early termination fees (ETFs), giving consumers "greater flexibility" to opt out of their contracts without paying the full $175 penalty.
Beginning May 25, customers who are under a one- or two-year phone contract will have $5 taken off the termination fee per month for the length of the contract. AT&T customers who agree to a one- or two-year service agreement before May 25, however, will still have to pay the entire $175 fee.
The move was expected, as AT&T announced the plan last October. However, it was scheduled to be introduced earlier in the year.
Customers who do not want to enter contracts or possibly suffer an early termination fee if they leave AT&T have several options, including buying a phone for full price and selecting a month-to-month contract, using a compatible GSM handset and purchase a SIM with a month-to-month plan, or purchasing an AT&T GoPhone.
Verizon Wireless started prorating termination fees in late 2006, with T-Mobile and Sprint Nextel expected to announce their own prorated early termination fees sometime in 2008.
ETFs have long been a thorn in the sides of consumers, with lots of fine print and hidden fees around every corner.
To help consumers, Senator Amy Klobuchar and Senator Jay Rockefeller introduced a bill in late 2007, the Cell Phone Consumer Empowerment Act of 2007, which would have forced mobile service providers to offer "simple, clear information on their services and charges" before customers entered a long-term contract.
Furthermore, subscribers would have been given a 30-day grace period to exit a mobile contract without having to pay a fee - and all ETFs would be prorated to benefit the consumer. But since its introduction last year, the bill has yet to leave committee and may never actually receive a vote now that carriers are proactively moving to prorate ETFs.
I got into every phone contract expecting to break it. I have in my mind that I am going to pay $175 or whatever and that it is still cheaper than suffer with bad service for 24 months. Do the math people.
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No only you suffer with bad service. Once you pass you grace period, you get no support whatsoever. They yell at you because you can't do nothing. Ask to transfer to "supervisor" you will hear a click. Verizon is crown for this. If you want to give them business, you will have to sign up for their two years contracts.
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Wow - even our incumbent telco from hell (run by Americans) has a pro-rata termination fee for mobile contracts. Always has. It'd be fairly brutal paying $175 because you wanted a new phone after 22 months with a crap one. :P
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Well this is good news. I wish the phone companies did this long ago.
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Indeed, it's nice to see the companies finally give consumers a fairer way out of a contract without having to pay the entire penalty.
I don't even want to think about how long I am locked into my Verizon Wireless cell phone account. :(
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I can't believe this didn't come about as the result of a class action lawsuit.
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I wouldnt worry too much being as there is no cellphone company with better service than Verizon. I've had them all.
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