Anyone signing an AT&T contract after June 1 is in for a nasty surprise if ever in the mood to break it: The early termination fee for smartphones is being raised from $175 to $325. Here's AT&T's ridiculous explanation:
The idea is, and we think that it's fair approach, that if you spend less on a device, your early termination fee should be less. If you spend more, your early termination fee should be more.
So following that reasoning, AT&T is in fact "lowering the ETF on feature phones and messaging phones by $25 to
$125 [$150]." This means that the individuals content with AT&T's feature phone and messaging phone offerings will be saving a whopping $25 while those of us who are with the company for one of its better devices—such as the iPhone—are stuck with an additional $150 punishment if we decide to flee.
Now, to make this increase of the smartphone ETF easier to swallow, AT&T is also increasing the amount by which your ETF is lowered as you near the end of the contract:
For customers who enter into new two-year service agreements in connection with the purchase of our more advanced, higher end devices, including netbooks and smartphones, the ETF will increase to $325, and be reduced by $10 for each month that you remain with us as a customer during the balance of your two-year service agreement. After that, the ETF will no longer apply.
In the past, that reduction was $5 per month.
All in all, this increased ETF reduction rate and a slightly lower dumbphone ETF are supposed to comfort me when I renew my iPhone contract and agree to nearly double my old ETF. [AT&T via WSJ via Dallas News]
Update: Some clarification added regarding the gradual ETF reduction.