AT&T to impose $175 early iPhone cancelation fee
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.
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.
Comments
What are we getting for the $175 concession (should we choose to cancel)?
$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.
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.
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.
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.
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.
Where's Congress!? The FTC!?
The smiley should have been:
(Sorry -- still haven't figured out how to change a smiley in "edit post").
But all said...you still get to buy the damn thing!
Long lines, crowd control, $499, termination cancellation fee, and people have even tried out the device yet. Wow!
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.
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.
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
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
(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.)