AT&T to impose $175 early iPhone cancelation fee

Posted:
in iPod + iTunes + AppleTV edited January 2014
AT&T has spent $50 million to beef up its relatively slow wireless network in anticipation of next week's well-hyped iPhone debut, but any customer who isn't wowed by the new gadget will find it costly to cancel the service, reports Boston.com.



Though it has become customary for wireless providers to charge customers who breach their contracts, the measure is usually applied to help providers recoup handset subsidies offered to customers when they first agree to a new two-year agreement.



Even though Apple's $499 and $599 iPhones are not subsidized items, AT&T still plans to charge a $175 termination fee for users who want to break their two-year contracts.



The early termination fee is "a little odd," said Michael Gartenberg, vice president of JupiterResearch in New York. At the same time, however, the analyst doesn't believe it will be an issue for most consumers.



Gartenberg added that AT&T's termination fee is likely a bid to boost its revenues by raising the bar for cancellation and hanging onto these affluent customers as long as possible.



AT&T has not yet said how it will handle, or what it plans to charge, customers under existing contracts who want to upgrade to iPhone early.
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Comments

  • Reply 1 of 116
    thataboythataboy Posts: 47member
    I don't mean to be naive, but are we 100% sure that is legal?



    What are we getting for the $175 concession (should we choose to cancel)?
  • Reply 2 of 116
    tenobelltenobell Posts: 7,014member
    Boy AT&T is giving us bad news before they give us any good news.
  • Reply 3 of 116
    Hrm...does this sounds like a *bad* deal to anyone else?



    $500 phone, 2 year contract with *very* expensive data plan, $175 fee with breach of contract, bad service with AT&T, and no replaceable battery in the device?



    It sounds like if you sign up AT&T has you by the balls.
  • Reply 4 of 116
    It's BS, but atleast it isn't the 500 bucks you had to pay a few years back. I'm sure there's a penalty for breaking a contract with anyone.
  • Reply 5 of 116
    jbellajbella Posts: 29member
    Isn't $175 their normal contract cancellation fee? If I were to get a 1 year contract with a free phone, I think this is the amount of money I would still have to pay to get out of that contract. This does't seem to be news.
  • Reply 6 of 116
    agnuke1707agnuke1707 Posts: 487member
    Quote:
    Originally Posted by jbella View Post


    Isn't $175 their normal contract cancellation fee? If I were to get a 1 year contract with a free phone, I think this is the amount of money I would still have to pay to get out of that contract. This does't seem to be news.



    Exactly my thought. I have Cingular now ... if I break my 2 year with them, it'll cost me $175. Verizon would charge you $150. I dunno how much T-Mobile, Sprint, etc. would charge you, but I dunno why this is an issue ... if you're breaking the contract, then you're breaking the contract. Same thing happens when you lease an apartment - if you break the lease early, usually they'll charge you a fee in addition to an extra months rent. Yes, I know the iPhone isn't being subsidized, but without knowing the rate / data plans for the phone, how do we know the plans themselves aren't being partially subsidized. Someone on a board yesterday made mention of a rate plan with like 1000 anytime minutes, unlimited nights & weekends, rollover, and unlimited data for $100. (I think if they did this it would be a bit pricier, somewhere around $149 maybe...) If AT&T does this, especially since their unlimited data (with WiFi) plan is $99.99 a month right now, it makes since that they would still impose this fee...



    Now is it shitty to have a 2 year contract, of course. I had AT&T back before the Cingular and AT&T merger 3 or 4 years ago, and it was by far the worst experience I'd ever had with ANYTHING as far as customer service and communication goes, but it would have cost $175 to get out and go somewhere else, so I was pretty much stuck. The service gradually got better, especially after they acquired Cingular, but it's the risk you take signing ANY contract. You're gambling on whether or not you'll be happy with the service. It sucks, but that's the way it is right now. But really, this is a non-news item, AI could have picked up any AT&T or Cingular contract and seen that the cancellation fee is standard across the board for any phone or any plan.
  • Reply 7 of 116
    wilcowilco Posts: 985member
    Quote:
    Originally Posted by jbella View Post


    Isn't $175 their normal contract cancellation fee?



    That's for subsidized phones, Einstein. What justification does AT&T have for such a fee in this situation?



    Any more bad news, and Solipsism may need a new piece of technology to wank to.
  • Reply 8 of 116
    m01etym01ety Posts: 278member
    Quote:
    Originally Posted by deliciouspoison View Post


    Hrm...does this sounds like a *bad* deal to anyone else?



    $500 phone, 2 year contract with *very* expensive data plan, $175 fee with breach of contract, bad service with AT&T, and no replaceable battery in the device?



    It sounds like if you sign up AT&T has you by the balls.



    Except they haven't announced anything about the data plan's price. So you're speculating.
  • Reply 9 of 116
    cosmonutcosmonut Posts: 4,872member
    This kind of stuff just sticks in my craw. Whether it's an apartment or cell phone lease, it's completely unreasonable for any company to make sure they're going to get their money out of you even if you have found that their service is pathetic and despicable.



    Always get dropped calls? Pay up to get out of the contract.



    A/C always breaking down in your apartment? Pay two months rent to leave.



    Pathetic.
  • Reply 10 of 116
    anantksundaramanantksundaram Posts: 20,280member
    Where's Congress!? The FTC!?



  • Reply 11 of 116
    anantksundaramanantksundaram Posts: 20,280member
    Quote:
    Originally Posted by anantksundaram View Post


    Where's Congress!? The FTC!?







    The smiley should have been:







    (Sorry -- still haven't figured out how to change a smiley in "edit post").
  • Reply 12 of 116
    pt123pt123 Posts: 696member
    Long lines, crowd control, $499, termination cancellation fee, and people have even tried out the device yet. Wow!
  • Reply 13 of 116
    Here in Denmark carriers are only allowed to tie you to a 6 months contract, and we still get pretty cheap phones. Guess that's why we have to wait so long for the iPhone...European markets are very different from the US.



    But all said...you still get to buy the damn thing!
  • Reply 14 of 116
    $499 for the 4G, which I'm sure they will be out of and say "we only have the 8G available" for $599.

    Quote:
    Originally Posted by pt123 View Post


    Long lines, crowd control, $499, termination cancellation fee, and people have even tried out the device yet. Wow!



  • Reply 15 of 116
    giffengiffen Posts: 30member
    Quote:
    Originally Posted by pt123 View Post


    Long lines, crowd control, $499, termination cancellation fee, and people have even tried out the device yet. Wow!





    The $175 cancellation fee being so low, can only mean that the data plan for the iphone will not cost a lot per month. Think about it, if the plan was 50 per month then the cancellation fee being only 175, you recoup that in only a bit over 3 months after you cancel, while if instead the data plan is 20 per month it takes a longer time...about 10 months to recoup that cost.



    What this means is that the data plan will probably be lower price than what some on here are predicting, else that cancellation fee would not be much of a disincentive now would it?



    Also any contract you sign can have a cancellation clause with a fee attached, it is your choice to sign the contract in the first place, no one forces you, so the amount is totally up to the provider of the contract.
  • Reply 16 of 116
    cam'roncam'ron Posts: 503member
    Did you guys actually think you could buy the phone with a contract, call into AT&T and cancel the next day and wait until someone finds a way to unlock the device? I am sure it will be unlocked at some point, so how does AT&T benefit if you buy this phone and walk away with no penalty?
  • Reply 17 of 116
    pt123pt123 Posts: 696member
    Quote:
    Originally Posted by Giffen View Post


    Also any contract you sign can have a cancellation clause with a fee attached, it is your choice to sign the contract in the first place, no one forces you, so the amount is totally up to the provider of the contract.



    Yeah but I usually get a discounted phone with a cancellation fee clause. Glad to see you are such a defender of the phone company.
  • Reply 18 of 116
    davegeedavegee Posts: 2,765member
    Quote:
    Originally Posted by anantksundaram View Post


    Where's Congress!? The FTC!?



    In June? Out on a Communication Industry Lobbyist Sponsored junkets to the Caribbean I'd imagine.. Why do you ask?



    Dave
  • Reply 19 of 116
    davegeedavegee Posts: 2,765member
    In a related line of thought...



    How does this fly with the notion that Apple will be selling the iPhone in their retail stores and NOT signing up AT&T accounts/contracts?



    Dave
  • Reply 20 of 116
    ...But if you paid a cancellation charge, would you be able to use the iPhone on any other carrier?



    (I admit, this would be the only way I would spring for an iPhone. I had--and left--Crapular twice in the past, and would never use them as a company again. So, I'm probably just waiting for the iPhone 2G, 3G, mini, nano... when they're outside Crapular's "exclusivity" or unlocked.)



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