AT&T to increase iPhone contract early termination fee to $325
Starting June 1, new AT&T iPhone customers who wish to cancel their contract with the wireless carrier will need to pay a $325 early termination fee, up from the existing $175 cost.
The new fee will apply to all smartphones, including Apple's iPhone, as well as connected netbooks. For feature and messaging phones, the fees will drop to $150, according to Dow Jones Newswires.
Though there has been speculation that AT&T could lose exclusivity of Apple's iPhone over the next year, an AT&T spokesperson reportedly said that the increase in the ETF to $325 was not related to one specific device.
"The changes come amid increased regulatory scrutiny and class-action lawsuits over the issue," the report said. "The Federal Communications Commission has expressed concern that onerous fees make it difficult for consumers to switch their service. Wireless carriers argue the fees are necessary to recoup the costs incurred by the subsidies they provide to lower the initial cost of the handset."
The change follows a previous move by competitor Verizon, which began charging a $350 ETF for smartphone users. Google and T-Mobile also charged a combined $550 fee for those who canceled their contract on the Nexus One. Both of those recent developments have brought ETFs under scrutiny from the U.S. Federal Communications Commission.
AT&T and Apple offer the iPhone at a subsidized rate, starting at $99 for the iPhone 3G, with a two-year contract for the device. Starting in March, Apple began selling contract-free iPhones at a much higher price, as it has done in previous years, to help clear out inventory before the launch of new hardware.
In addition to recouping lost money from a canceled contract, ETFs are also designed to deter customers from jumping to another network. The timing of the ETF increase will undoubtedly result in speculation about the potential of the iPhone becoming available on a carrier other than AT&T.
Apple is expected to introduce its next-generation iPhone when it kicks off the annual Worldwide Developers Conference in San Francisco on June 7.
Rumors of a Verizon iPhone have been persistent since March, when The Wall Street Journal reported that Apple is working on two new iPhones, including a CDMA-capable model that would be compatible with Verizon's network. That report alleged that CDMA iPhones would not go into mass production until September.
When he was asked this week about the prospect of the iPhone on other carriers, Ralph de la Vega, president and CEO of AT&T's Mobility and Consumer Markets division, said he isn't concerned. He said his company's family talk and business discount plans do a good job of retaining customers.
The new fee will apply to all smartphones, including Apple's iPhone, as well as connected netbooks. For feature and messaging phones, the fees will drop to $150, according to Dow Jones Newswires.
Though there has been speculation that AT&T could lose exclusivity of Apple's iPhone over the next year, an AT&T spokesperson reportedly said that the increase in the ETF to $325 was not related to one specific device.
"The changes come amid increased regulatory scrutiny and class-action lawsuits over the issue," the report said. "The Federal Communications Commission has expressed concern that onerous fees make it difficult for consumers to switch their service. Wireless carriers argue the fees are necessary to recoup the costs incurred by the subsidies they provide to lower the initial cost of the handset."
The change follows a previous move by competitor Verizon, which began charging a $350 ETF for smartphone users. Google and T-Mobile also charged a combined $550 fee for those who canceled their contract on the Nexus One. Both of those recent developments have brought ETFs under scrutiny from the U.S. Federal Communications Commission.
AT&T and Apple offer the iPhone at a subsidized rate, starting at $99 for the iPhone 3G, with a two-year contract for the device. Starting in March, Apple began selling contract-free iPhones at a much higher price, as it has done in previous years, to help clear out inventory before the launch of new hardware.
In addition to recouping lost money from a canceled contract, ETFs are also designed to deter customers from jumping to another network. The timing of the ETF increase will undoubtedly result in speculation about the potential of the iPhone becoming available on a carrier other than AT&T.
Apple is expected to introduce its next-generation iPhone when it kicks off the annual Worldwide Developers Conference in San Francisco on June 7.
Rumors of a Verizon iPhone have been persistent since March, when The Wall Street Journal reported that Apple is working on two new iPhones, including a CDMA-capable model that would be compatible with Verizon's network. That report alleged that CDMA iPhones would not go into mass production until September.
When he was asked this week about the prospect of the iPhone on other carriers, Ralph de la Vega, president and CEO of AT&T's Mobility and Consumer Markets division, said he isn't concerned. He said his company's family talk and business discount plans do a good job of retaining customers.
Comments
Rogers did the same thing in Canada last year by doubling their ECF fees ($400 ECF for voice and $200 for data). A couple months later Apple announced Bell and Telus got the iPhone (and then Virgin). Likely Rogers got a heads up from Apple and decided more expensive termination fees would help prevent a flood to bell. AT&T has got to be just as concerned. Rogers was in an even worse spot though, since customers that unlocked the iPhones could just move over to the new carriers (I think) whereas AT&T customers would have to buy a new Verizon phone. The increase fee just makes it even more expensive to switch.
You don't need to quote the whole flipping article -- it's right there in the first post.
That being said, I think this is another indication that Verizon is getting the iPhone.
I AGREE.
This could be a sign that Verizon iPhone is on the horizon...
You don't need to quote the whole flipping article -- it's right there in the first post.
That being said, I think this is another indication that Verizon is getting the iPhone.
Sorry, my mistake. Corrected. I get used to hitting 'reply' instead of 'post reply'.
Funny, customer that buy feature phones (and presumably have cheaper plans) get their ECF reduced. Customers with smart phones (and higher bills) get their ECF doubled.
So, if you are low revenue, we will make it easier for you to leave. If you are a better customer and pay us more, we are going to make it pain in your ass to leave.
nice.
AT&T are beginning to look more and more evil every day. (as if we didn't already know they were)
On a semi-unrelated note, I'm betting that *if* Verizon or other carriers do get the iPhone this year, it'll be a "announce in june ship in a few months" type thing. OTher than occasional rumor here and there I haven't seen too much hard evidence - like a prototype leak or some taiwanese employee video - showing off anything but a GSM phone... which indicated to me that IF there is to be alternate iPhones on any carrier other than T-mobile, they wont come out until probably Holiday quarter. No FCC leaks. No production ramps, and therefore no manufacturer leaks, nothing.
If the ETFs are required for the company to recoup subsidy costs of your phone, then why does the cost of your contract not decrease after two years? Or if you buy an unsubsidized phone, why do you still need to pay that rate? And why can't I buy an unsubsidized iPhone and get a month to month contract with AT&T? Oh, yeah, that's just MORE profit for them then.
..and why aren't phones automatically unlocked after the contract expires. You have paid off your commitment to them. You own the phone. But are required to continue to pay them to use it.
This sure seems like an indication that the exclusivity is done next month, and that the iPhone might be on Verizon and others. After paying AT&T over 100 bucks a month for the last year, they sure better have recouped their investment on my 3GS by now and still had enough money to support my measly little service costs to them.
AT&T are beginning to look more and more evil every day. (as if we didn't already know they were)
On a semi-unrelated note, I'm betting that *if* Verizon or other carriers do get the iPhone this year, it'll be a "announce in june ship in a few months" type thing. OTher than occasional rumor here and there I haven't seen too much hard evidence - like a prototype leak or some taiwanese employee video - showing off anything but a GSM phone... which indicated to me that IF there is to be alternate iPhones on any carrier other than T-mobile, they wont come out until probably Holiday quarter. No FCC leaks. No production ramps, and therefore no manufacturer leaks, nothing.
I think you are right that it won't launch immediately with Verizon. If so, then this announcement wouldn't help AT&T, since they say existing customers won't have their fees doubled. But if AT&T knew verizon wasn't getting it for a few months more, then this would help lock in any new customers/contracts that sign up for the 4G.
If AT&T changes their TOS and I don't agree with it I assume I will be able to cancel out of the contract.
I bet that AT&T knew about this possibility as well.
iPad SIM for $30/month without contract = unlimited VoIP, unlimited SMS with GV, and unlimited data (obviously).
It still makes sense to go the iPad route financially, but it's probably not worth the hassle anymore.
If the ETFs are required for the company to recoup subsidy costs of your phone, then why does the cost of your contract not decrease after two years? Or if you buy an unsubsidized phone, why do you still need to pay that rate? And why can't I buy an unsubsidized iPhone and get a month to month contract with AT&T? Oh, yeah, that's just MORE profit for them then.
There's nothing wrong with profit but this is a thumb in the eye of customers already irritated with ATT - like me!
If VZW can get away with higher ETF for smartphones with no phone that is nearly as popular ad the iPhone. There is little reason AT&T could not follow suit.
That being said, I think this is another indication that Verizon is getting the iPhone.