According to Ars, one AT&T attorney told the FCC yesterday that early termination fees we pay for leaving our contracts before the designated time are actually a great deal for us. His reasoning was that "ETF-backed term contracts give consumers the ability to lower their monthly charges and upfront handset costs in exchange for their promise to pay monthly charges for the life of the contracts or alternatively to pay the ETF in lieu of the remaining charges." On the one hand, that's a punch in the nuts. On the other hand, he kinda has a point.
By taking a subsidy on your phone up front (such as on the iPhone 3G), you're paying less in exchange basically telling AT&T that you're going to stick with them for 2 years. If you want to leave, you can pay that $175 and get out of your contract. In this case, with the iPhone 3G, it basically lets you walk away with a iPhone 3G that you can use on T-Mobile for $374. That's not too shabby.
But a recent AP report said that Sprint waived all ETFs to a government agency that was signed up with it, essentially because "the government will never, never accept such penalty amounts." [Ars Technica]