California judge rules early cell phone termination fees illegal

[one...two...tree 2,762]

Somebody here on VJ helped me get out of my Verizon account without being charged any early cancellation fee, but I'm glad to see this!!!! Hellz yeah!

In one of the most significant legal rulings in the tech industry this year, a Superior Court judge in California has ruled that the practice of charging consumers a fee for ending their cell phone contract early is illegal and violates state law.The preliminary, tentative judgment orders Sprint Nextel to pay customers $18.2 million in reimbursements and, more importantly, orders Sprint to stop trying to collect another $54.7 million from California customers (some 2 million customers total) who have canceled their contracts but refused or failed to pay the termination fee.

While an appeal is inevitable, the ruling could have massive fallout throughout the industry. Without the threat of levying early termination fees, the cellular carriers lose the power that's enabled them to lock customers into contracts for multiple years at a time. And while those contracts can be heinously long, they also let the carriers offer cell phone hardware at reduced (subsidized) prices. AT&T's two-year contract is the only reason the iPhone 3G costs $199. If subsidies vanish, what happens to hardware lock-in? Could an era of expensive, but unlocked, hardware be just around the corner? It's highly probable.

Of course, the carriers aren't going to take this lying down. Early termination fees are seen as critical to business, so carriers are expected to look for ways to reclassify the fees (such as by calling them "rates," part of the arcane set of laws that covers the telecommunications industry). The industry is also pushing for the federal government to step in and claim oversight over the early termination fee issue, which would invalidate any state ruling. The FCC is generally more tolerant of such fees, though Chairman Kevin Martin has proposed a plan whereby the fees are decreased the closer you are to the end of your contract.

The FCC may also buy the argument that, since carriers are nationally based (and consumers can use their phones anywhere in the country), that a single policy should apply across the nation, rather than creating a patchwork of legislation that could lead to confusion and chaos caused by having 50 different policies.

Is the early termination fee dead? Not yet, but it's looking a little haggard.

http://tech.yahoo.com/blogs/null/99655

[Heracles 417]

You left Verizon? They are the best carrier; in terms of coverage.

[one...two...tree 2,762]

You left Verizon? They are the best carrier; in terms of coverage.

Like most carriers, they were nickle and diming me to death. Everytime I changed my plan to try to save money, they were requiring me to accept a new 2 year contract from that point on. I was in a perpetual contract with them forever and that's BS if you ask me. I currently belong to a no contract carrier.

[Heracles 417]

You left Verizon? They are the best carrier; in terms of coverage.

Like most carriers, they were nickle and diming me to death. Everytime I changed my plan to try to save money, they were requiring me to accept a new 2 year contract from that point on. I was in a perpetual contract with them forever and that's BS if you ask me. I currently belong to a no contract carrier.

Nickel And dime. Like buying an Audi and then complaining about the price. Go with T-Mobile if you want a value added carrier.

[SteveLaura 0]

I say pah to cell phone networks.

[one...two...tree 2,762]

You left Verizon? They are the best carrier; in terms of coverage.

Like most carriers, they were nickle and diming me to death. Everytime I changed my plan to try to save money, they were requiring me to accept a new 2 year contract from that point on. I was in a perpetual contract with them forever and that's BS if you ask me. I currently belong to a no contract carrier.

Nickel And dime. Like buying an Audi and then complaining about the price. Go with T-Mobile if you want a value added carrier.

We're thinking about going with T-Mobile, but my wife really digs the iPhone.

Edited July 31, 2008 by Jabberwocky

[Amby 490]

bitchin. I have verizon and I don't mind being "stuck" with them forever. The only thing I dislike is they don't use sim cards.

[Lansbury 19]

So the people in California do away with early termination fees and the cell phones in that State will be sold for their full price of several hundred dollars when the companies stop subsidizing new phones.

Six of one half a dozen of the over.

[one...two...tree 2,762]

So the people in California do away with early termination fees and the cell phones in that State will be sold for their full price of several hundred dollars when the companies stop subsidizing new phones.

Six of one half a dozen of the over.

No they won't. With true choice, they'll know that consumers can now easily change carriers, so they will make the phone prices competitive, although probably higher than what most people have been paying. The key is consumer choice. You don't really have choice when you get locked into a contract everytime you adjust your monthly minutes plan.

[Steve Y Jessica 1]

I don't mind the early termination fees. You get the phone for alot cheaper. If they do away with the fees, then the price of the phones could double. Also, with most, you can choose if you want 1 year or 2 years. And with Verizon, the termination fee goes down the closer it gets to the end of the contract. I think At&T also.

But as far as extending your contract when you change price plans, they are not supposed to do that. My daughter has Verizon and I change plans all of the time. The length of her contract only changed once, so I talked to a person at Verizon, and they told me it was a mistake and corrected it.

[Heracles 417]

We're thinking about going with T-Mobile, but my wife really digs the iPhone.

Iphone only works with AT&T. They are really good but expensive like Verizon.

If you want a good deal I would look at Sprint. I had them for years. They provided good value for money with not bad coverage.

So the people in California do away with early termination fees and the cell phones in that State will be sold for their full price of several hundred dollars when the companies stop subsidizing new phones.

Six of one half a dozen of the over.

That is exactly what is going to happen. Carriers will no longer subsidize phones there and force customers to buy the phone outright.

The terminations fees are cheap here anyway. I am used to $800+ fees back in Aus..

Edited July 31, 2008 by Aficionado

[one...two...tree 2,762]

I don't mind the early termination fees. You get the phone for alot cheaper. If they do away with the fees, then the price of the phones could double. Also, with most, you can choose if you want 1 year or 2 years. And with Verizon, the termination fee goes down the closer it gets to the end of the contract. I think At&T also.

But as far as extending your contract when you change price plans, they are not supposed to do that. My daughter has Verizon and I change plans all of the time. The length of her contract only changed once, so I talked to a person at Verizon, and they told me it was a mistake and corrected it.

The cheap phones up front is a gimmick. Think about it. In most other countries, you can use your cell phone with just about any provider so there's less of this buy a new friggin cell phone every time you change your underwear. If customers actually paid the full price for the phones up front, they'd be more discreet about how often and which ones they buy. That in turn will make the phone producers to focus more on economy rather than feature driven. Honestly, as cool as all the features are on the new phones, we need them like we need a hole in the head.

[Amby 490]

termination fee for tmobile in england 400 quid so about $800. screw that! $150 for verizon is nothing! also, if you cancel your contract within a month of changing it then you don't pay the cancellation fee. we found that out last month when my sister got rid of her line.

eta: steven, I need gps, mp3, internet, keyboard, camera, calculator, games, email, news, video camera, IM, text, alarm clock, voice recording, bluetooth, voice commands, planner, etc etc etc

Edited July 31, 2008 by Amby

[Heracles 417]

termination fee for tmobile in england 400 quid so about $800. screw that! $150 for verizon is nothing! also, if you cancel your contract within a month of changing it then you don't pay the cancellation fee. we found that out last month when my sister got rid of her line.

Tell me about it. The carriers in Aus would charge you $800 for canceling the contract 5 minutes after signing up.

Thank God Three and Orange are not here. I hate those carriers with a freakin passion.

[Heracles 417]

The cheap phones up front is a gimmick. Think about it. In most other countries, you can use your cell phone with just about any provider so there's less of this buy a new friggin cell phone every time you change your underwear. If customers actually paid the full price for the phones up front, they'd be more discreet about how often and which ones they buy. That in turn will make the phone producers to focus more on economy rather than feature driven. Honestly, as cool as all the features are on the new phones, we need them like we need a hole in the head.

The issue here is that Verizon and Sprint do not let you change phones as easily because you have to register the phone with them. Whereas with AT&T and T-Mobile you can buy the phone from anywhere around the world and simply swap the sim card. Handset choices are quite limited here to what the carriers provide.

Sim / service only plans are also unheard of here yet quite popular in most other countries around the world. Where you bring your own phone and are not locked into a contract.

Edited July 31, 2008 by Aficionado