digg

Join DiggAbout

Introducing Digg Dialogg!
Check out the first Digg Dialogg with Nancy Pelosi. More guests to be announced soon!

See the original image at arstechnica.com

AT&T: Termination Fees Ultimately A Great Deal for Consumers

arstechnica.com — Those early termination fees (ETFs) that consumers pay for switching cell phones in mid-contract are a great deal, an attorney for AT&T told the Federal Communications Commission yesterday. However many customers beg to differ ...

Bury
show profanity settings
expand all
  • sinrtb, on 06/13/2008, -2/+21It wouldnt be so bad if you could get a real choice with scalable prices I like the 2 year contract because I can get a new phone for a couple hundred dollars off, however I would much prefer to pay a bit more for less of a contract or less of an ETF.
    • notoneofus, on 06/14/2008, -0/+9That's a typical deal in Japan. You can pay more up front and less over time, or vice versa. Don't many other countries/mobile carriers do this, too?
    • yoda133113, on 06/14/2008, -0/+4Well when I got my contract I had that option, spend more on the phone with the 1 year contract, or get the phone free with the 2 year contract, many carriers let you do that, I would rather get the 2 year contract and get the phone for free.
      • DocHoliday22, on 06/14/2008, -0/+4I would do the opposite. Mobile operators have a nack of enticing new buyers to make a purchase, but once you have made the purchase, six months down the line you find out they are offering a better service to their new customers and existing customers get scraps... I would much rather pay for the phone and get an annual contract, this way I have piece of mind on two fronts: One I can upgrade for cheaper and or receive a new phone for free, two; I'll be able to get a latest phone model and three; I can negotiate and search around for better prices and play operators off against one another to get a cheap deal.


        • lcohiomatty86, on 06/14/2008, -0/+3At least when it comes to ATT, i would disagree. The current plans that they have are NO better than the plan that I got over 3 years ago. It is also very easy to switch plans at anytime. The contract is just that you keep service going with them, you can raise or lower your minutes in the plan at anytime.
      • KibibyteBrain, on 06/14/2008, -1/+1But the point is there should be more options. The one-fee-fits-all way of sort of turning their one and two year contracts into a two sides fit all solution is not fair. Especially when they throw more penalties on top of the contract discount phones like carrier locks that further increase the hurt of getting out of contract. Basically, for a contract, its not a very equal exchange going on, especially when they build in reasons to basically cut you off whenever they feel like at no real cost to them.
    • Alex.w, on 06/14/2008, -0/+2That's exactly what we do here (UK).

      I paid ~£50 for my TyTN II (AT&T call it a Tilt) with a 12-month, would have been less with an 18 month, or free at 24. You never know where a telecoms company is going to be in 24 months, so I'd rather not end up stuck.
    • awuwish, on 06/14/2008, -1/+6The whole point of early termination fees is to keep customers. Majority of the time if you are terminating your contract/service, you are moving to a different carrier, which of course ATT would not like, so they slap a hefty ETF on the contract to discourage anyone from terminating. If there were less or no ETFs or contracts, then anyone could switch around to whatever carrier they wanted for whatever phone they wanted, they would probably just have to pay a higher price for the phone. The carrier wouldn't get hardly any money for the phone, as they actually lose money when selling a free or really cheap phone with contracts. They make all their money during the actual contract. It works out to the benefit of the carrier to have contracts and ETFs because that is where they make their money. So it's hard to say that ETFs benefit the customer.
  • larryjgallo, on 06/13/2008, -12/+69Lawyer: I think charging consumers for wanting to cancel their cell phone service is good for the consumer.

    (gun fires, lawyer's brains blown out)

    Everybody: Cheers!!!!!!!!!!!!!!!!
    • Daggity, on 06/14/2008, -0/+10I believe that lawyer's death was good for the lawyer.
  • indochris609, on 06/14/2008, -15/+3AT&T = iPhone.

    i love consumer America.

    /sarcasm.
    • indochris609, on 06/14/2008, -2/+4I know i may not speak for the majority of well-off, technologically adept diggers, but I'm not going to ***** to all of digg.com about the iPhone. I cannot afford it. Great, it's the new technology. Great, all of you early adapters are having so much fun with price drops, with firmwares, and with new generations. I have absolutely no problem with that.

      I can only hope that probably a quarter of the people that talk ***** about iPhone actually own it without trying to be so cool and talk ***** about it. Last time I checked, digg wasn't middle school. Kiss me.
      • AzureRise, on 06/14/2008, -0/+7I don't kiss on the first date.
        • indochris609, on 06/14/2008, -0/+4I was hammered when I wrote those two comments. I replied to myself. I'm a ***** idiot.
  • BIOHazard87, on 06/14/2008, -6/+35Good for the customers? No. Good for AT&T? Sure.
    • lcohiomatty86, on 06/14/2008, -2/+1How is this not good for the consumer to have the option to get a contract and get a free phone? Honestly, how many people do you think would have cell phones today in comparison to how many actually do, if it cost $1000 UP FRONT to buy 4 phones for your family verses getting them free? ya it kind of stinks that they have the ETF for those that want out of their contract, but you are very free to buy a phone full price if you want to and not get a contract. you are also probably free to get a phone off of ebay for relatively cheap and have no contract.
      • Taiyoryu, on 06/14/2008, -0/+5You do realize you're not getting the phone for free. The cost of the phone is already factored into the contract. You're spreading the cost of the phone over the life of the contract and probably then some. In fact, if you keep the service and phone after the contract ends, you're actually paying MORE for your phone because they don't drop your service price after the phone is theoretically paid-off, which encourages you to upgrade even if your phone meets all your needs.
  • youareretarded, on 06/14/2008, -3/+36So how many here would prefer to pay full retail for a phone and have no contracts? How many average Americans do you think would be willing to pay more for a phone and not have a contract?

    At what price difference would you be willing to sign a contract (2yr)?

    $50, $75, $100, $150, $200, $250+
    • sam54m, on 06/14/2008, -2/+26hey that's how the rest of the world is buying their phones. Nokia is the world's no.1 phone seller and they sell mostly in Europe where you usually have to pay full price for your phone.

      Me I always buy my phones contract free, unlucked for full price, oh and with a great clean firmware, no junk-ware.
      • manutdfan2850, on 06/14/2008, -2/+12i so wish it was like this in the US. the rest of the world has it so much better off its unbelievable. i was recently in Dubai and couldn't help but notice that even the janitors and people cleaning the streets had better cell phones than most people in the us do (nice nokias vs cheap samsong/lg flip phones)

        it made me quite sad to be living in the us and stuck with this pathetic system that only benifits the cell phone companies.
        • youareretarded, on 06/14/2008, -0/+7With at&t you can buy your phone from them at full retail and do no contract or you can buy a compatible phone from somewhere else and do a no contract plan.

          Even bestbuy is now carrying unlocked phones.
        • ValleyWorker, on 06/14/2008, -9/+1are you retarded? the system in america is not pathetic. more advanced phone that you see in other countries are not free. they were bought at full price. you, an american, too can buy them if you want. you can buy any ***** phone you want at full price. AND, you have the option to buy phones at much cheaper price in exchange for a contract. You got more choice, yet you complain and blame it all on American companies. You are completely retarded. you hate all corporations and think business are evil do you? Think all lawyers are trying to get u, do you? Guess what? go die.
        • youareretarded, on 06/14/2008, -2/+7Everyone always thinks the grass is greener on the other side;)
        • manutdfan2850, on 06/14/2008, -3/+10@ValleyWorker
          guess what? the cell phone sysem in the US is retarded. go to europe or anywhere else in the world and you will see for yourself how much better off they have it. But you are so ignorant you probably havent even left the US before. *****.
    • rolf, on 06/14/2008, -0/+9You can buy a pay as you go phone, no contracts, at Walmart for $15. There are several different models and providers at $20 and $35.

      I don't mess with cell phones a lot, but short of an iPhone/smartphone, they look decent. It's not like I can even do all that much with my previously expensive Razr.

      I don't see why phones have to be expensive. Most people just want something that makes calls and keeps a history/address book perhaps.
      • lcohiomatty86, on 06/14/2008, -1/+3Mayby the cell phone companys only choose to carry phones that are currently expensive enough to warrant the contract to make it free. How many people do you know that buy a cell phone actually do more work than just call up the company or go to a store and say "i want a phone, what do you have?" people are not creating the demand for basic phones, thus they are not being made anymore.
      • vision777, on 06/14/2008, -0/+5I had a cell phone sales person at Verizon ask me what I want to do with my phone when I went in for an upgrade. I told her make phone calls and she seemed as if she could not believe that was the main reason I wanted a phone. I didn't care about a camera or music, got dedicated devices that do these things better.
        • Assezdefromage, on 06/14/2008, -0/+2Same with me. Convergence is nice, but not when it does these things *****. I bought a RAZR V3 unlocked for my phone since it was slim and made phone calls. Anybody who likes pictures at VGA resolution needs some help.
        • PopcornDave, on 06/14/2008, -0/+1What? You mean you don't want to watch television clips on your cell phone? What are you, a consumer terrorist?
          /sarcasm

          I'm in the same boat you are. I want a phone that I can call people on, receive calls, and play a few games when I'm stuck waiting somewhere. I don't need my phone to be a jukebox - unless they're going to come out with a phone with 250G of memory so I can take *all* my music with me. I'm not recording ***** video from my phone so I don't need that. Picture quality is about as good as my first Kodak digital camera that was about the size of an over-sized paperback book.

          On top of all that, my eyes aren't as good as they used to be so I want/need something with a larger screen area.I would love a Nokia (700 or 800 series?) that I could get internet enabled to be able to do VNC remotely, but until Verizon opens up it's network Im stuck with their *****. Hopefully they're going to do that sooner rather than later.
    • smotpoker1, on 06/14/2008, -1/+5supply and demand would make the phones dirt cheap within the same year so I see the ETF as a draconian measure to make people continue to use shoddy corupt phone companies.
    • skyshock1, on 06/14/2008, -1/+3That's what I did. I bought an unlocked Nokia phone. No contracts for me. The phone was $350. In order to get me to sign a 2-year contract, that same phone would have had to be free. The 1-year contracts were okay for a while, but when they started yanking them up to 2 years, that's when I gave them the finger.
    • SlipStream89, on 06/14/2008, -0/+2I payed full price for my Nokia N80 but i was all ready on a T-Mobile 2yr plan, but i had a ***** phone
    • diggerphelps, on 06/14/2008, -0/+3Face it, a lot of math-challenged Americans would opt for free phones and higher monthly fees.
      Who do you think keeps the Rent-A-Centers and pay day loan places in business?
  • Margh, on 06/14/2008, -2/+32Tom Tauke is Kelsey Grammer's long lost twin.
    • jbrand45, on 06/14/2008, -0/+1I definitely see a resemblance. Maybe this is what Kelsey would have looked like had he not had such an affinity for firewater.
  • notatrumpetpro, on 06/14/2008, -7/+8Early Termination Fees are ridiculous.
    • Philbert, on 06/14/2008, -1/+15What's ridiculous is a $30 data plan.
      • cliffr39, on 06/14/2008, -0/+2or a $600 "smartphone" (full price - no contract) that cost more than my laptop and isn't as comparable to it in power/features. It can't really cost $600 for that phone when technology has advanced as much as it has.
  • kipmartin, on 06/14/2008, -11/+5everyone wants the iPhone. AT&T has the iPhone. the iPhone costs less beginning next month. service cost less and includes options of unlimited calls to other carriers, but those customers pay more for out-of-network calls. they want to talk for fee so they join AT&T. AT&T can lower their ETF because...no one uses it.

    sounds like someone came up with a pricing scheme that works for AT&T. thats why they grew 40+% last year and Verizon lost customers. sounds like capitalism to me. if you dont like it, dont look at iPhones because youll want one too.
    • Vonauda, on 06/14/2008, -2/+3I honestly cannot understand why people clamor for this device. I got an ipod classic for christmas, went back to college and came to appreciate the convenience of being able to control my music in split seconds without the need to remove my headphones to hear people because I could pause the music with a simple bump under my ipod's case cover to the play button.

      I then won an ipod touch at school. I was happy at first because "ITS LATEST TECHNOLOGIEZ LIKE THE IPHIZZLES." but when attempting to use it in the manner that I always used the classic, it became apparent that the touch screen was just an impractical novelty. I've recently reverted back to my Classic.

      This realization holds true for the iphone. I prefer the speed of use that I get out of my blackberry rather than fighting with sketchy recognition of items that are place too close together on a device that can allow at&t charge for the most ridiculous of items.
      • ModernGeek, on 06/14/2008, -1/+4Then give me your iPod Touch.
        • Vonauda, on 06/14/2008, -2/+5Too late. Gave it to my cousin. You should have asked me earlier random internet person I've never met before.
      • shank2001, on 06/14/2008, -1/+1Wow. You seriously are insane.
    • klineja, on 06/14/2008, -0/+3This is one of the stupidest thing I have read on digg
      "AT&T can lower their ETF because...no one uses it."
      Also "thats why they grew 40+% last year and Verizon lost customers."
      You better check your facts, verizon had the lowest churn, and did better than the year before in customer adds.
      dugg down.
    • iamlacroix, on 06/14/2008, -0/+2AT&T Wireless had a higher churn rate than Verizon Wireless last year. In case you didn't know, churn is bad. Also, AT&T did not grow 40% last year. Making up facts does not accomplish much, apart from making you look silly.
  • digitaldivinci, on 06/14/2008, -2/+2Generally I haven't really given this much thought with my plan, simply because I checked the necessary information such as coverage/signal strength before I signed. I do know that AT&T drops it 10 dollars for every month you are a customer from their 200 dollar starting price down to, I believe, 100 for their lowest breaking point. I don't see any reason to change providers for most people and really this shouldn't concern the average Joe that much.
    • cliffr39, on 06/14/2008, -1/+0I had AT&T in Georgia a few years ago (2004) - they all of a sudden (many months into the contract) had no native service in a part of the city that covered my home and work, and it roamed on SunCom (which, at the time, wasn't sending caller ID, no data and therefore no MMS). A call to them they said it was a tower down and should be up within 24 hours. Well, 3-months later it was STILL down, with calls in weekly about it. After 3-months I decided to port to Verizon and AT&T demanded the full ETF. Of course I got it waived with a letter to the BBB.

      Last year here in Central NY I switched back from VzW to AT&T for the iPhone and again had problems with AT&T where callers would dial my number from the address book and get "the number is no longer in service". Then if they hit redial it would work just fine. Also happened to me dialing others I know on AT&T. AT&T said it was a system failure (not an "all circuits busy" type issue). They seem to have problems in many states so I don't see it being something that "shouldn't concern the average Joe".
  • jbrand45, on 06/14/2008, -3/+8Of course a representative of AT&T is going to flout the ETFs as a "great deal." If this same man were to be under the employ of a consumer attempting to sue AT&T over these same ETFs I'm sure he would be denouncing them as the unfair business practices that they are.
    • lebruf, on 06/14/2008, -5/+1So I guess whoever is paying you is the puppet master pulling your marionette's strings. No surprise after smoking some pot and contemplating how ***** up the real world is. Moving right along...
      • jbrand45, on 06/14/2008, -0/+1"So I guess whoever is paying you is the puppet master pulling your marionette's strings."

        Yeah, that's usually how things work.
    • raptor87, on 06/14/2008, -4/+3I dont see how and ETF is unfair, you signed a contract and there is a penalty for breaking one. If you don't like it don't sign any contracts. You could get a prepaid phone or pay full price for one and go month to month. Its no different than leasing an apartment even if you leave, you still have to pay.
      • jbrand45, on 06/14/2008, -1/+4I understand being bound to it in cases where you just want to switch providers, or are maybe tired of having the phone in general. There's no real reason to break the contract other than you don't want the service anymore.

        In other cases, such as when you are not getting the services you paid for (no signal in your neighborhood, text messages aren't working properly, etc) you shouldn't have to pay an ETF to move to a carrier that will actually work. Unfortunately, most cell phone service providers do not let you test out their service before signing the contract. There are some, but they are few and far between.

        If they cannot provide you the service you signed up for, the contract should be null and void.
        • youareretarded, on 06/14/2008, -0/+4At&t and most other nationwide carriers offer a 30 day trial (I think verizon even offers a 30 day free trial!).

          But what do you say to those that did the trial and the service was great and then they moved and it no longer works, whose at fault here? Should anyone be required to pay an ETF in that situation?
        • jbrand45, on 06/14/2008, -2/+1Where I am at you cannot get a free trial from any provider except US Cellular. I have specifically asked several carriers (Verizon, AT&T (Cingular), Sprint, Unicell and T-Mobile) about it and they were not able to do that for me.

          I would think a situation like the one you mentioned, where the network worked at first for the customer, then didn't, would still apply to the company not being able to provide you with the service you are contracted for. The contract does not specify you must live in a certain house . . . therefor by moving you have not invalidated your contract. However, since your service no longer works, the company is not able to fulfill their end of the contract. You should be able to opt out of it without having to spend an extra $200 or so on an ETF.

          I would not be against the company requiring some proof of the service not working. Send a representative out to check out your phone and/or situation, and if they find that the service does not work, through no fault of the consumer, then you should be off the hook.
  • pradaaddict, on 06/14/2008, -0/+8Its not as bad as it is in Canada. They charge you $20 for every month left and people often sign 3 year contracts. I knew someone who had to move out of the country for work 6 months after getting his phone and had to cancel. Cost him $560... his phone was worth maybe $200
    • psYcon, on 06/14/2008, -5/+0he should have refused to pay the bill. worst case it goes to debt collection. ***** it.
    • sectech, on 06/14/2008, -0/+1Which is why if we need to cancel a cell phone (usually it's for pretty drastic reasons) in Canada we just let it go to collections and ignore them... It's not like collectors would have our phone number if our phone is disconnected... Usually though whenever I had to do it (usually the result of loss of a job + a long delay in getting another) I'll just buy a pre-paid until things settle over.
  • DigitAl56K, on 06/14/2008, -3/+31If early termination fees are about phone subsidies and the subsidy is paid off by the end of the contract, then I would like the early termination fee to be limited to the value of the subsidy, which the phone company should have to be able to justify in court is accurate, and be pro-rated for the term of the contract so that if you quit half-way through you only pay half the fee, and that once the fee is paid the service provide must unlock the phone since effectively you've now paid 100% for it.

    THAT sounds fair to me. Why don't you get right on that, AT&T.

    p.s. The best way to keep your customers is to provide good service. My BlackBerry service has been sucking lately and your customer service people provided a level of service that was akin to trying to fix computers by turning them off and on again.
    • youareretarded, on 06/14/2008, -1/+2Lol, That's exactly what at&t does. In most states the early termination fee is $175, discounts on the phones in exchange for a two year contract average about $175, at&t then drops the price of the etf every month (I believe it bottoms out at $100 after a year). They then let you upgrade with another discount in about 18 months (assuming you have been in good standing).


      So what was it you were saying again?
      • DigitAl56K, on 06/14/2008, -2/+2How is that exactly what they do if it bottoms out at $100, more than half of what it originally was? And do they unlock your phone for free?
        • youareretarded, on 06/14/2008, -0/+2You got me there, I guess they suck after all.


          And yes they do unlock your phone free (except the iphone), after 90 days of service or if you bought it from them for the full retail price.
        • youareretarded, on 06/14/2008, -0/+1My mistake:

          From their website:
          "The fee will begin at $175 per device and decrease by $5 each month for the term of the agreement. If phone is returned within 3 days, activation fee will be refunded. If phone is returned within 30 days in like-new condition with all components, early termination fee will be waived"

          http://www.wireless.att.com/cell-phone-service/leg ...
  • bwa236, on 06/14/2008, -1/+10here's what I don't get, if you sign up for a 2 year contract and get a new phone for free, your monthly rate is, say, $40 (and the company makes back over time what they may have lost on giving you the phone for free, plus a little more in many cases).
    Now if you already have a phone, and sign a 2 year contract and don't get a new phone from them, your monthly rate is...$40 (and the company profits what they would have lost by giving you the phone, plus the little more they'd already have made).

    In an age where some people are going to trend to keeping their phone for a longer period (say, iPhones, Blackberries, and comparable headsets), if you don't take the company up on the offer for a new phone, then you shouldn't have to pay the regular rate for service. In short if I don't get a phone when I sign the contract, I expect to pay less per month than the guy who did.
    ETF's are just a consequence of them not making up that money they lost on giving you the phone, and a REASONABLE compromise would be a pro-rated ETF that reduces in value starting at the beginning and toward the contract end.
    But companies will hold on to the profits they've enjoyed as long as they can, it's the nature of these things...
    • youareretarded, on 06/14/2008, -1/+1It's a business, they aren't in it to break even which is what you are proposing.
      • bwa236, on 06/14/2008, -0/+4Actually, I expect them to make profit, but this action does not make sense, and underlines an underhanded way of doing business.
        Say a phone they'd be including in a 2yr contract is $120. Over two years that would be $5/month. If I take the phone and contract, it's $40/month. If I don't need the phone, why shouldn't it be $35/month? If they're able to take the $120 hit by giving me the phone, why isn't that the same as not taking that $120 hit up front and reducing monthly fees accordingly? I'm not dipping in their pockets here, if they can cover operating costs and expand/research/develop one way, they can the other too. But it seems stupid that it's set up such that the consumer is an idiot not to take the phone, even if they don't need it.
        • youareretarded, on 06/14/2008, -0/+2Hey if you can get a majority of Americans to buy their phones at full retail price and not do contracts, I can almost guarantee that the price of plans will be lower.
  • et3rnalnigh7, on 06/14/2008, -0/+4The article doesn't mention that ETF's are usually pro-rated in that if its a $200 ETF at the start of the contract canceling half way through is only $100. As far as being locked into a carrier with bad service I'm pretty sure all the major carriers have at least a 30 day period you can try out their network which should be plenty of time to make sure they work fine wherever your going to be most often.
    • Kidtuf, on 06/14/2008, -1/+1Not for T-mobile it isn't. The ETF is $200 throughout the term of your contract regardless of when you cancel.
    • campingstick, on 06/14/2008, -1/+1Nor is it true for Verizon. That's the rub for me. Which kind of makes the case that ETF's are not about phone subsidizing, instead, it's about lock-in and preventing you from switching carriers.
  • klineja, on 06/14/2008, -1/+7Alltel: $200 per phone line
    CellularOne: $200 per phone line
    Centennial: $250 per phone line
    AT&T: $175 per phone line
    Nextel: $200 per phone line
    Sprint: $200 per phone line
    T-Mobile: $200 per phone line
    Verizon: Prorated (Starting at $175 per phone line, Drops Each Month $5)
    • youareretarded, on 06/14/2008, -0/+6From at&t's website, first line, second sentence:
      "The fee will begin at $175 per device and decrease by $5 each month for the term of the agreement. If phone is returned within 3 days, activation fee will be refunded. If phone is returned within 30 days in like-new condition with all components, early termination fee will be waived"

      http://www.wireless.att.com/cell-phone-service/leg ...
    • lebruf, on 06/14/2008, -1/+5quick communications lesson here:

      Don't assume your audience will automatically know what you're talking about.
      Give context when you're quoting facts - otherwise they're useless facts

      But really... what are you trying to say here? I'm guessing it's interesting.
      • youareretarded, on 06/14/2008, -1/+2lol

        He is just listing the ETF for the various carriers.
      • sw33tsting, on 06/14/2008, -1/+5Did you read the headline, article, or any other comment? Or did you just randomly click on a link and scroll to that comment and decide to be a *****?

        But really... you are probably just a complete moron.
    • psocket, on 06/14/2008, -0/+1I'm not sure about any other cell companies, but there is a way to get out of a Sprint contract (last I checked) without paying the ETF. Somewhere in their service agreement it says that if you use X number of minutes of digital roaming (which is free and part of most of their plans) then they will automatically cancel your account/contract without an ETF charge. So, just set your phone to roaming only and you should get a notification in a couple of weeks.
  • trixterIreland, on 06/14/2008, -2/+6if you dont like AT&T here is a simple way that worked at least with current iphones to get them to subsidize them but not pay the ETF or monthlies :)

    Step 1. buy iphone from AT&T
    Step 2. cancel service more than 14 days but less than 30 days
    Step 3. sell iphone on ebay and profit

    The iphone is only returnable (or at least used to be) if it was within 14 days of purchse. AT&T had a 30 day opt out clause in their service contract that let you cancel without penalty. In essence you can cancel but are forbidden from returning the phone. Reading contacts is fun!

    Remember its legal to do this, since you are playing by their rules, they created the contracts they cant do anything to you for following them. If they have multiple bonus packages to choose from you may be able to do this multiple times, sometimes for example they have subsidised phones or credit on your bill. At some point though I am sure they will refuse to give you new service.
    • trixterIreland, on 06/14/2008, -0/+2I wanted to add that "youareretarded" quoted what seems to be their current contract, and the activitation fee now seems to be linked to the phones return. You may be able to argue with some of the "highly trained" sales people at an AT&T store over this, I dont know. But if they did change their contract they may have closed the loophole.
    • youareretarded, on 06/14/2008, -1/+1First off the original iphone was not subsidized and therefore at&t lost no money doing what you did.
      Second, this only worked because of the deal apple had set up with at&t, that deal no longer exists and apple now plays using a standard model all other carriers and phone manufactures use and because of that you would no longer be able to do what you did with any current or future phone including the iphone.
      • trixterIreland, on 06/14/2008, -2/+1Really it wasnt? Are you sure? It wasnt hyped but it was subsidized. Part of the price that apple sold the phone for was included in the cut of service fees that apple got. When AT&T pays a phone maker additional over the purchase price that is a subsidy.

        Nice attempt though, I will give you that. You do give me cause for concern on quoting you though, since you were so wrong about this.
        • youareretarded, on 06/14/2008, -0/+1No it wasn't subsidized in fact at&t made money off of the original iphone itself.

          Have you seen at&t's purchase price for the original iphone? No?

          I have.

          Thanks for playing.
  • fr0ng, on 06/14/2008, -7/+1Actually, it is a great deal if you are getting an iPhone 2.0

    8gb iPhone2.0 with 2yr contract- $199
    AT&T early termination fee - $175

    The price you can sell an unlocked 3g iPhone for on eBay - a lot more than $374

    So he is right. But dumb people can't see past the 'ZOMG I HAVE TO PAY THIS FEE I ALREADY AGREED TO PAY IF I BROKE THE CONTRACT??!' to see how it can actually benefit them.

    Great deal indeed, sir. Great deal indeed.
    • trixterIreland, on 06/14/2008, -2/+1what are the terms on said iphone for returns? The current one (4 year old technology) was 14 days, so a "race condition" existed where you can return and not pay the ETF.

      Not only can most customers not see past the ETF but they refuse to actually read the contract and see what rights they do have.
      • fr0ng, on 06/14/2008, -0/+330 days. It's nobody but the customers responsibility to know what they're signing.
    • DigitAl56K, on 06/14/2008, -0/+1But not everyone gets an iPhone.
    • Taiyoryu, on 06/14/2008, -0/+1I seriously doubt the eBay demand for the iPhone 3G will not be as great as the first one since most of the buyers on eBay were from foreign countries where they could not buy the iPhone locally. Apple will be releasing in 22 countries on launch day and will be expanding into a total of 70 countries by the end of the year. Unless there's a lack of supply (doubtful since Apple had excess stock when the first iPhone launched), prices will not be that high.
  • smacksaw, on 06/14/2008, -1/+3If you had to pay full retail for the phone up front, many people would not upgrade. Upgrades allow them to sell new services to you since phone technology moves forward allowing these new services.

    That's why they want you to have a "free" phone.

    In reality they should sell the phone at cost (eliminating resellers). The phone should be prorated over the life of your contract, and if you sign a bigger plan or longer contract they could build in discounts for the phone. The problem is that the cancellation fee is arbitrary in that it does not reflect the actual cost of the phone.

    Maybe I'm a stooge for the wireless industry in that I can buy the whole "free/subsidised phones" thing. There are advantages to it. The problem is not that they recoup the cost of the phone, the problem is that the phone, the plan, EVERYTHING is obscured from plain view. You don't know what you're paying for.

    The bigger problem is that the people who do know, those who buy a-la-carte with prepaid plans are penalised heavily for that. We need better regulation of phone contracts, real breakdowns of cost, truth in advertising, etc. I wished a state like Oregon or Vermont would pass laws making wireless simple. If they can't comply, that's when you push back. But not with a class-action to make lawyers rich. But the state AG busts them in the head.

    If I can get 1000 minutes for $40, but I can get 3000 for $80, give me a plan of tiered discounts. My 1st 1000 minutes are $0.04 ea. If I use less, I spend less. No minutes I don't need. Then, between my 1001th and my 3000th minute, charge me $0.02. So on and so forth.
    • youareretarded, on 06/14/2008, -0/+1I don't see anything other than taxes that are obscured from people when they sign contracts.
      At&t prints a summary of your rate plan at the time of activation with everything you have added to the base plan, it shows how your first bill will be prorated, it shows roughly what a normal bill would be (I say roughly because the taxes that are shown are at default rate which is based off of the highest amount any one would pay in taxes) and it shows what other charges you can incur (such as text, data, 411, etc).

      So can you please elaborate and explain to me exactly what is obscured.
  • ValleyWorker, on 06/14/2008, -5/+0i can't believe how many stupid people are here. stop thinking every corporation is there to screw you okay? There is merit in the current system. Do you think people would be better off to buy their phones at full price like in other countries? If you think so, then guess what, you can do that too. Buy it on ebay or celluloco. American wireless carriers give you the choice to 1. buy your own damn phones or 2. buy a phone from them at subsidized price in exchange for contract. You got more choice, but because you have more choice now, you are complaining more.

    More information: 1. Yes, sometimes if you use your own phone for a new service, you still need to sign up for a 2 yrs contract. But this can be cancelled/waived if you speak to a high level supervisor. Most people don't buy their own full price phone, even less people know this trick. I have done it twice so far. 2. Most carriers will allow you to unlock the phone that you buy from them at the subsidized price as long as you have established some history with them. I have done this w/ 4 of my blackberries.
    • manutdfan2850, on 06/14/2008, -1/+1yeah but it doesn't make senseto do that if you can just sign a contract and get a free or very cheap phone? its not just the fact that the phones are locked, its the whole system and way they price the plans that is messed up.

  • icndvl, on 06/14/2008, -2/+4You agree to the contract; you can also chose month to month if you buy the phone. You agree to the terms. They are not hidden, in fact most phone companies are very upfront about the duration of the contract. Don't sign a contract you don't agree to. If you don't plan on using the phone long, just buy a cheap phone at a pawn shop and go month to month.
  • andreusboy, on 06/14/2008, -3/+8Is it just me or does all these fat cat executives, prick ass lawyers, lying crock of ***** politicians, Dick Cheney all look the same? You know half bald, whitey, 50 - 60ish year old ***** faced individuals.
  • tweetsa, on 06/14/2008, -6/+5you signed a ***** contract. If you don't agree with ETF, then don't sign the ***** contract
    • TheBigSquid, on 06/14/2008, -2/+3In most cases people don't have much other choice than to sign the contract. Pay as you go rates are too expensive.
      • youareretarded, on 06/15/2008, -1/+1With respect to at&t, they do have a choice, they don't have to sign a contract and can pay full price for a phone and they can get the exact same type of rate plan at the exact same price as if they did sign a contract.

        It's really that simple!
      • revocation, on 06/15/2008, -1/+1You just said it. they have the choice of pay as you go. its more expensive, but it is a choice... I work for a cell company and ALL i hear every day is "I want the free phone" You take away the ETF, and you just took cell phone service away from a huge percent of the American public...
  • locojones, on 06/14/2008, -4/+12One of the reasons I hate Digg is the overwhelming sense of entitlement everyone has. Not only should they be entitled to cheap unlimited data plans, but their phones should be subsidized regardless of cost, and they should be able to breach their contracts at will with no penalties. That's just ***** dumb and immature.

    You signed a contract. As part of the consideration, the phone company is giving you a phone and losing money on it because they're subsidizing it in exchange for your promise to pay your bills for the next 12 to 24 months. If you break the agreement, there's a built in penalty clause where you have to pay for the benefit you were given for signing up. It just happens to be an amount to cover the companies loss on the phone. If you didn't pay that back, and you got to breach yoru contract at will and keep a cheap phone, companies just wouldn't stay in business very long. That's called unjust enrichment, and it's simply not fair to expect as a consumer. If you don't like the structure of the current system, vote with your dollar and don't get a contract.
    • Stallionism, on 06/14/2008, -0/+4*applauds*
      Someone that thinks rationally about things on digg. I agree totally.
    • moduc, on 06/14/2008, -3/+3I am not so sure about an expensive phone, but for a cheap phone, I can get off ebay for a dirt cheap price, and do I have to agree with a contract? Can I go month to month with the regular monthly price? Probably not.

      Saying it's great deal is just stupid because it's not backed up by any independent study.

      If I return the phone, would I still have to pay $175 early termination fee?

      Would they open up their network, let people buy whatever phone that they want like a PC, and then just sign up and pay monthly? That would increase competition and reduce the price for the consumer, unless there's some murky business like the oil industry these days.
      • youareretarded, on 06/15/2008, -1/+2Yes, as has been said many times (and not just in the comments on this article), you can go month to month when you bring in your own equipment or buy phones at the full retail price!
  • conostrov, on 06/14/2008, -0/+0The plan I got is a good alternative concept I think(you get a tab for the cost of your phone and a percentage of your bill goes to pay it off every month), I just get screwed because its a discount brand(old phones of a major) verse a real competitive carrier. I hope it proves very successful and spreads though.
  • Stallionism, on 06/14/2008, -0/+6I find this hilarious. What is going to happen is the FCC is going to remove it, people that are dishonest and break contracts will get off easy, and the good customers will have to make up the difference.

    I love this ideology. Help those that did bad and punish those that do good. Brilliant.
  • samyoungguitar, on 06/14/2008, -2/+3***** that *****
  • mrblonde314, on 06/14/2008, -1/+3When you sign a wireless contract you are saying that I will use this piece of equipment with your service for two years (or one year depending on what price you pay for the phone). In most cases the phones are discounted to a point where they rely on your service to make up for what they lost on giving you that phone at the price you paid for it. People don't realize that your "free" phone was actually $150. When they drop it in water and don't have insurance they automatically feel like, "Hey, I pay 40 bucks a month for the bare-bones cell plan every month". They don't consider that these companies pay $millions and $millions to have millions of towers put on land that isn't there's. They don't consider that cell sites and switches are all very real thing that are run by real people who need to get paid. They don't realize that natural disasters may occur which result in having to repair a tower and you may be out of service temporarily. They don't even consider that these companies invest 5+ $billion every year back into their network so that you can have service on top of a mountain in BFE. Nope, all they care about is, "Durrr you solds me this phone ands now it doesn't works.... its a piece of ***** I want a new one NOWS!" Quick solution??? Every manufacturer sells their own damn equipment at full MSRP completely unlocked on both CDMA and GSM. You buy the phone with or without insurance from that manufacturer and take it to whatever wireless service provider you want. Eliminate contracts all together along with ETF's..... or is it better the way it is because you're not spending $500+ for a phone so quitcherbitchin.
    • campingstick, on 06/14/2008, -3/+1Last Quarter Verizon made 1.64 billion (BILLION) on revenues of 23.8 billion. That was 1 quarter. I'm not going to break out the tiny violins for their infrastructure costs. Also, I have a hard time believing that the cheap "free" phones cost much more than $35 for a discount buyer like Verizon. Maybe even less. Phone costs might have been high 8 years ago, but that is just no longer the case.

      The whole reason you sign a "contract" is for accounting reasons. Because after you sign a contract, they have a guaranteed revenue stream for a guaranteed period of time. That is worth a lot of money to them as it ensures steady income and cash flow. It's a predictable revenue model. The ETF is a way for them to make sure you don't back out, or if you do, they still get paid. What other industry makes you sign up for something like that? Electricity? No, Regular phone lines? No. Cable? No. It's not a free market.

      Should carriers be allowed to make a profit despite the fact that they are using public airwaves? Sure, but there needs to be more transparency in costs, and non pro-rated ETF's should be made illegal.
    • mrblonde314, on 06/15/2008, -0/+3"Last Quarter Verizon made 1.64 billion (BILLION) on revenues of 23.8 billion. That was 1 quarter. I'm not going to break out the tiny violins for their infrastructure costs"

      Neither am I but infrastructure costs are a very real thing whether or not you care.

      "Also, I have a hard time believing that the cheap "free" phones cost much more than $35 for a discount buyer like Verizon. Maybe even less. Phone costs might have been high 8 years ago, but that is just no longer the case."

      Okay, but you could argue the same fact towards any retailer. It's business not charity. Plus, you having a hard time believing it doesn't make it fact. I will agree that they probably don't pay MSRP for the phones but Best Buy doesn't pay MSRP for their electronics or car dealers don't pay MSRP for cars.

      "The whole reason you sign a "contract" is for accounting reasons. Because after you sign a contract, they have a guaranteed revenue stream for a guaranteed period of time. That is worth a lot of money to them as it ensures steady income and cash flow. It's a predictable revenue model. The ETF is a way for them to make sure you don't back out, or if you do, they still get paid."

      Agreed. That's obvious.

      "What other industry makes you sign up for something like that? Electricity? No, Regular phone lines? No. Cable? No. It's not a free market."

      None of these industries also provide you with free electronics that utilize their service. If Comcast wanted to give me a free/heavily discounted 50 inch TV with a 2 year contract and an ETF I would sign. Not to mention, most of these services are not a "free' market because, in my case at least, I have the choice between comcast and lets see... comcast.

      "Should carriers be allowed to make a profit despite the fact that they are using public airwaves?"

      Public? Buddy if you got a few billion lying around by all means make your own network and give yourself free access until then you're using a PRIVATE company to access it. Not to mention nobody is making you own a cell phone.

      "Sure, but there needs to be more transparency in costs, and non pro-rated ETF's should be made illegal."

      You started this quoting Verizon so lets stay on topic and point out Verizon does have pro-rated ETF's

      Edit: Let me also state I agree with your Utopian view on wireless service but wake up and smell the ***** of greed and money
  • uselessexpert, on 06/14/2008, -0/+5The best quote I found in the AP article:
    "A spokesman for Sprint-Nextel, John Taylor, said the company determined it could not assess the termination fees in its federal contract because it would have been against the law. "
    It's funny how the law only applies to the government in this case but not the consumer.

    • my10cent, on 06/14/2008, -1/+0oh it does apply to consumers also, you just have to have balls enough to stand up to them, in the end you won't pay that fee.
      • dkla, on 06/14/2008, -0/+1Really? Can you fill us in on how this is done? Thanks! :)
    • SoonerRoadie, on 06/14/2008, -0/+2Many laws don't apply to the federal government because of concepts like sovereign immunity. The only reason that you can sue the U.S. in many cases is because it has specifically passed laws which say that they apply to the government - like the Federal Tort Claims Act. The FTCA acts as a limited waiver of sovereign immunity.
  • ZombieSociety, on 06/14/2008, -1/+2I believe, don't quote me on this, but I believe that ETFs are rather illegal, as various states are cracking down on them. I ALSO found out that if you e-mail the president of your phone company and mention this fact, they'll waive your ETF. I e-mailed the president of T-Mobile about the problems I'm having with my contract with them, and I basically said "let me out without this fee or I'll take you to court." This, of course, was 100% ***** on my part, but they waived my ETF immediately. In fact, the woman answering the e-mails even made a snide little remark about how she waived my "valid" ETF...if it's so "valid," why would they give me such special treatment for no reason?
    • revocation, on 06/15/2008, -0/+1you are the reason that ETF's are there... its ***** like you that make every other customer out there pay more. i doubt any company would believe you are going to take them to court. they just decided that your dumb ass is better off without them.
  • Rustymetal, on 06/14/2008, -1/+5If people really love the ETF, why did nexel waive them for the government employees?

    Anyway, I find it funny that the original iphone was $400 un-subsidized, yet you still were technically required to get a 2 year contract. And pay the ETF. Why? the phone was not subsidized?

    ETF and the whole idea of a phone contract is outrageously anti-competitive and theres alot of price-gouging techniques.. It only hurts the customer in the end

    I mean cmon, there's a reason Google tryed to hard to keep the 900mhz network OPEN ACCESS. Meaning there won't be any locked or subsidized devices unless you are trying to get ripped off.
    • youareretarded, on 06/15/2008, -0/+1It hurts the customer? So you think your average American would rather pay more for phone instead of a contract?


      If you do, then luckily for you, thats an option!
  • rickr0ck, on 06/14/2008, -2/+0ETF are easy to get out of, that is IF you have a valid reason for wanting to leave the carrier. I got out of Sprints contract and was paid $50 by Sprint to cover bogus charges that were coming up. It takes work, a well written demand letter and a valid reason. Why leave without a valid reason anyway???

    Also I have found that if you ruin your phone (I did) and you call your provider (AT&T for me) I had my phone replaced for $99, it lists for almost $400 on att web site.

  • Papajohn56, on 06/14/2008, -1/+4Don't sign a contract you can't pay for, how about that?
    • my10cent, on 06/14/2008, -2/+0I didn't sign any contracts when I got my phone, he "read" the rules to me and gave me the phone, so good luck getting that fee *l* been 2+ years since I canceled now, and not ONE attempt to get the money from their side.
      • Papajohn56, on 06/14/2008, -0/+1maybe you should learn to read for yourself then.
  • mjbaltazar, on 06/14/2008, -0/+0This guy has to have been a divorce attorney.
    Basically it's phone alimony.
  • Haecceity, on 06/14/2008, -0/+1I initially read this, with great puzzlement, as saying that early termination fees COST a great deal according to a lawyer, but that customers disagreed. It's a very ambiguous piece of writing.
  • pabster, on 06/14/2008, -2/+2Wireless, the only industry where you pay NOT to use a company's service. It's brilliant, and a huge cash cow.
  • bblande, on 06/14/2008, -2/+1But hey, AT&T has the iPhone so it has to be good, right?

    Right?
  • mpeters13, on 06/14/2008, -1/+4Getting raped with a rusty spoon is also much nicer than getting sawed in half. That, however, doesn't mean it feels nice.
  • my10cent, on 06/14/2008, -2/+1You are all a bunch of sissies, if you cancel your phone, DO NOT PAY the fee, tell them to stick it where the sun don't shine, in the end they can do nothing, and I bet there is a bunch of judges itching to get their hand in a case like that.

  • lmarshall8675, on 06/14/2008, -0/+4I'm sick of hearing all the boo-hoo's about ETF's. All carriers can sell you a phone with NO CONTRACT TERMS. You want it? Pay the the full price for the phone. I cant see why people don't understand they're, in most cases, holding a valuable piece of electronics in their hand. Even a POS model has an average cost between $100-$200. I'm usually the last person to stand on the side of big business, but this is just common sense. I do however favor proration of an ETF (only fair)
    • Rustymetal, on 06/14/2008, -1/+1I did pay full price for my iPhone, $400. How come I still have a ETF?

      My phone was not subsedized, why should I have to pay $200 for a ETF that supposably is about subsetise and not just anti-competitive tatics.

      The same type of tatics that got AT&T broken up back in the 60's. But I doubt there will be much care about that anymore with pro-rich-business people like bush.
      • youareretarded, on 06/15/2008, -0/+1Because that was the term of the contract required in order to purchase the iphone. Don't like it? Then blame apple for going against standard operating procedures.
  • highonfire, on 06/14/2008, -0/+1while i don't totally agree that it is a "good deal", i do think the phones being subsidized and allowing consumers out of their contracts with only a simple fee that doesn't even usually cover the amount of the provider's subsidy is fair though. sadly, most consumers are just unwilling to research contract law and the economics of the industry, they just want a brand new 300gb iphone w/ satellite tv access for free and not have to sign any contract. where these providers really bone the customer are the rate plans
  • srufus, on 06/14/2008, -3/+3When you lose a job, we don't get a Early Termination Comp? ETF is a scam. Look around world...
    • youareretarded, on 06/15/2008, -0/+1You don't get severance pay? You can't collect unemployment?

      Give me a break.
  • Arcueid01, on 06/14/2008, -2/+2Yeah this is a scam completely and this lawyer should be able to come up with a more colorful argument than this utter hogwash. Att needs to get the heat over this one because their business model doesn't not serve society at all. They are greedy and blatant.
  • theutopian, on 06/14/2008, -0/+3If ETF's bother you so much then pay full price for a phone. If a store won't let you pay full price then simply buy one on eBay you don't have to sign a contract if you don't want to,
  • letherial, on 06/14/2008, -2/+1i have a very very hard time buying that it keeps the prices of cell phones down, I think its the opposite. by using this contracts to keep the prices down they are taking away from supply/demand, they also lock people into certain types of cell phones (iphone for one) to stop the supply/demand that runs a free market

    This is a excuse, if the market was open the price of phones and the service would drop dramatically, and so would profits as the competition and the supply is high. Service contract is a loop hole in a free market, its a way to reap the benefits of a free market without having a free market, the very concept of free market is that at any time you can go to a competitor

  • jurnei, on 06/15/2008, -1/+1Wow I guess somehow he's thinking that it actually promotes competitive prices and customer service. What pile of garbage he trying to spin.
  • fabDisaster, on 06/15/2008, -1/+0i knew it was all ***** frasiers fault
  • jtown, on 06/16/2008, -0/+0Didn't bother to read the article...

    No carrier wants to collect that fee. Do the math. A 24 month contract at $80/month is $1920 in revenue. If a customer cancels after 3 months and pays a $200 fee, the carrier has collected a total of $440. That's nearly $1500 that just walked out the door.

    On the flip side, paying the $200 releases the consumer from their obligation to pay an additional $1680 for a service that is not meeting their needs. Or, more likely, the service met their needs when they signed up but they made changes in their lives (moved, unexpectedly require services the carrier doesn't provide, new job provides a phone, etc.) after the 30 day window closed and the available services are no longer adequate or have become unnecessary. In a situation like that, paying $200 to end the contract is preferable to having to pony up the entire $1680.
  • enzomedici, on 06/17/2008, -0/+1
    Who gives a *****, just cancel and don't pay. What are they going to do? Nothing. They are not going to take you to court.
    • lasarletter, on 06/17/2008, -0/+0Sometimes ETFs just automatically show up on your credit card.

      The problem with not paying is that the default does damage to your credit rating. Some of these class action suits involve people who refused to pay the ETF and wound up with downgraded credit.
  •  

    Login or register to add a comment

    Create a new account or login to join in the conversation on Digg. You'll also be able to Digg stories to help promote things you like.


© Digg Inc. 2008 — Content posted by Digg users is dedicated to the public domain.
DIGG, DIGG IT, DUGG, DIGG THIS, Digg graphics, logos, designs, page headers, button icons, scripts, and other service names are the trademarks of Digg Inc.