The mobile phone industry’s practice of ramped-up Early Termination Fees (ETF) have been a source of concern to consumers and regulators for years. Now, the Federal Communications Commission may make a Faustian bargain to limit the amount and conditions under which customers are charged.
Many consumers, consumer groups, and legislators are outraged by the practice. Cell providers claim the fees are tied to the cost of discounted cell phones, but providers’ business practices–demanding contracts even when customers provide phones, extending contracts every time customers switch service plans–suggest the real intent is to discourage customers from switching providers.
Customers have gotten together and filed a number of class action lawsuits, and members of Congress and state legislators have offered a number of bills. Faced with this legal onslaught, the providers surely came to realize they would do better dealing with an FCC that will remain friendly at least until 2009.
Thus, Verizon Wireless has proposed that the FCC usurp jurisdiction, void pending lawsuits, and force the rest of the industry to adopt something remarkably close to Verizon’s current business model: 30 day trial period, ETFs pro-rated over the course of the contract, and no contract extensions for changing one’s service plan.
Customers who’ve sued are outraged; part of the proposal is that past fees could not be refunded.
Read more at Wired News.
It’s really an AP story, and it masks the venue-shopping perniciousness with a cheery headline and opening. Prospectively, the policy change would be a positive development, but when the industry proposes it, you know something funky is about to go down.
In addition to cutting a few zillion-dollar lawsuits off at the knees, Verizon is desperate to avoid state or federal legislation on the issue. The FCC is a much friendlier venue, and any regulation passed there is likely much better for the industry. Even if the rules are the same, there’s no reason the FCC can’t just undo or modify this restriction in the future.
On a personal note, I just switched to T-Mobile, and they’re pretty ruthless with extending contracts for any service change (thus imposing ETFs for leaving, even after you’ve done your time), so I’m hoping I don’t have to change plans any time soon. But at least I got a BlackBerry Curve (MASSIVE Flash warning) out of the deal. So far, I am in LOVE with this phone.
I got it at LetsTalk.com, where I paid $49.99 for the phone, and I still get the T-Mobile $100 mail-in rebate. Even after the $35 activation, T-Mobile will have paid me $15 to take a Curve and a 2-year contract. My wife (who, of course, also had to get a new contract) also got a nice new phone.
My wife and I have wanted to get on the same carrier for awhile (she’s been with TMo for years), and we had both fulfilled our contracts when she lost her paleolithic handset last week.
It was Verizon’s demand for a contract that kept us from switching her to them and not vice versa. Having picked up an old Blackberry on eBay so that I could add the data plan, I had 2 VZ phones free and clear.
All we wanted was to activate a line for my wife with my old phone. Verizon wouldn’t do it without a 1 year contract.
Which brings me back to the story: Yeah, sure, contracts and ETFs are only necessary to pay for subsidized cell phones…