Thinking of getting a new iPhone this summer? If you do buy one, you’d better not change your mind, or you’ll pay a hefty price.
Following the lead of rival Verizon Wireless, AT&T says it will raise the penalty for canceling your new two-year smartphone contract early to $325, starting June 1 — and yes, that includes the iPhone — the Wall Street Journal reports. At the same time, AT&T will lower the early termination fee (or ETF, as it’s called in the biz) for its less advanced “feature” phones to $150, from $175.
The move comes about six months after Verizon jacked up its own ETF for “advanced” devices (read: smartphones) to $350, or double the carrier’s original $175 fee for ducking out early on a two-year contract.
The news hits just weeks before Apple is expected to introduce the next iPhone — meaning that any new iPhone customers will be snared by AT&T’s new, steeper ETF policy. (For the record, AT&T spokesman Mark Siegel told the Dallas Morning News that the carrier’s ETF hike is “unrelated to any device announcement or future plans.”)
Meanwhile, both Sprint and T-Mobile are holding their respective ETF lines at $200, as noted by the Associated Press. All four of the big carriers prorate the fees to the tune of $10 for every month you honor their service contracts.
Why the stiff fees for bailing early on your cell phone contract? Well, the big carriers argue that’s the price you pay for getting a discount on a pricey new smartphone. For example (and as the Journal story points out), the $199 price tag for the 16GB iPhone comes only after a hefty subsidy from AT&T, which the carrier then makes back through monthly service fees. If you cancel your contract early, AT&T argues, it won’t get reimbursed for the big subsidy it gave you.
The other side of the debate has it that the carriers are hiking up their ETFs just to keep you from switching to the competition, with the big carriers facing scrutiny from the Federal Communications Commission and settling a series of lawsuits over that very question.
What do you think? Is it fair for AT&T to raise its early termination fees? Willing to buy the next iPhone knowing you’d owe as much as $325 for canceling your two-year contract early?
No Comments
