I don't have a personal cell phone, just a work cell phone, so I'm somewhat of an anomaly these days.

However, the idea of an early termination penalty that is not pro-rated sticks in my craw. If the network I've chosen sucks, I have no recourse against them without paying a fortune. There's no way to know what you're signing up for until it's too late. It's a service industry and we should have the ability to cease to use services at whim, without penalty.

I realize that phones are subsidized based on the fact that they'll get their termination fee (and hence cover the cost of the phone) if you end your service with them prior to contract expiration. So, the cost of phones will rise. It's like the car industry right now - people are buying cars they NEED, not cars they want with all the bells and whistles. When the crunch comes, you see a shift towards less extravagant purchases. Same thing will happen with cell phones and services.

Either way, rates are going to rise or cell phone costs are going to rise (probably both). The cell phone providers will get their money, one way or the other, if this ruling is upheld.

 

Why do most people switch phone companies? In my case it was the network or the service that sucked. In those cases I totally understand this ruling.

BUT like someone else pointed out the guys who go into it just to get the latest whizz-bang phone are the real reason for the early termination fee.

How do you protect the consumer from crappy service and the company from the "live in the moment" who have no regard for anyone around them?

 

Good...now the cell carriers won't have to subsidize the cost of phones...this will put the power of the handset feature list in the consumer's hand...they will control the market and handset manufacturer's will do a better job listening to customers.

I work for a cell carrier...the subsidized cost on equipment is high. at&t recently began subsidizing the cost of 3G iPhones with 2 year contracts. It's a good way to get started...but consumers should pay retail which would have them value the phone and reduce the overall costs of rate plans, features, etc.

A good move!

...but I don't see that it's illegal. You sign a 2 year contract to keep service and the carrier reduces or eliminates the cost of the phone/equipment.

Looks like Cable, DirecTV, Dish, etc. will need to look at their contracts.

 

That was one of my first thoughts too.

 

If you live in California.

 

I agree with you about the contract. However if you dont have the service or
coverage your screwed. Changing service is a PIA, if i get good service i'll
stay with em, but i wont pay for something that doesnt work for me.

 

Cell carriers (like the one I work for) make great efforts to ensure you have coverage. We have online coverage checks and require our employees to ensure you have adequate coverage in 3 places...

• Where you live...
• Where you work...
• Where you play...

Of course, this doesn't always cover every square inch of where you'll go, etc...but the coverage checks are pretty good.

Most cell companies give a 15 day period where you can return the equipment and cancel the agreement with no fee/cost.

Don't get me wrong...I think the days of contracts MUST come to an end. Consumers need to recognize that phones shouldn't be subsidized by carriers...it becomes a big issue for us when high-end phones, especially data-centric phones have an issue...the carrier provides the service...but the manufacturer should own-up and cover the issue/concern. Many times, to satisfy the customer, the carrier has to absorb that cost of returned equipment, exchanges, etc. All of this cost finds a way to come back to the consumer and so as you can imagine, that's higher retail cost on equipment, rate plans, features, accessories, etc.

 

Cox Communications has no fee for canceling, however, if you decide to join up a month later, you'll be paying for "hookup fees" and "Professional Installation".

 

I just don't buy this.

My Blackberry Pearl 8120 was $299. That was WITH a one-year contract. The Razor 2 is $199 with a contract. These things cannot be that expensive to produce.

It's not like people are getting blackberries for free.

 

I agree...they can't cost that much to produce...but they really do cost that much to the carrier...I see invoices here all the time for many of our phones and the Motorola V8 (RAZR 2) is sold to us from Motorola for a whopping $329.

Online...with a 2yr contract, the phone can be had for $99. So, $230 is being subsidized over a 2yr contract. That's a lot of money.